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Ask Mint Money | If your stay in India is less than 182 days, you don’t have to pay tax

Ask Mint Money | If your stay in India is less than 182 days, you don’t have to pay tax
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First Published: Wed, Jun 08 2011. 11 21 PM IST
Updated: Wed, Jun 08 2011. 11 21 PM IST
I will go to the US for a job. Though I will come back, but it may take a few years. Can I save on taxes if I take non-resident Indian (NRI) status?
—Shreyans
Assuming you are an Indian citizen, in the year you leave for the US, you would qualify as a “non-resident” (NR) of India if your total stay in India is less than 182 days during the fiscal concerned. Also till the time you are employed in the US, it is likely that you may qualify as an NR of India assuming your stay in India on account of casual/short visits does not exceed 182 days in aggregate in that particular year. The period on account of casual visits to India shall be reduced to 60 days from 1 April 2012 after the implementation of the Direct Taxes Code.
An NRI is liable to tax in India only on his India-sourced income or any income which is directly received in India; in contrast to an ordinarily resident who is liable to pay tax in India on his global income. Till the time you qualify as an NR, your income would not be taxed in India, provided it is not sourced out of India or received in India.
I am the only child and have inherited a house, bought in 1985, from my father. Its current value is around Rs 50 lakh. What will be the tax implications if I sell it next year?
—Mrinal Gupta
If you sell the inherited house before March 2012, the period of holding of the concerned house shall include the period for which your father had held the house and, therefore, the property would qualify as a long-term capital asset (since the total period of holding exceeds three years). Accordingly, the gain shall be taxable in your hands as long-term capital gains.
As per section 112 of the Income-tax Act, capital gains tax on the sale of such long-term capital asset shall be levied at 20% on the total value of long-term capital gains. This shall be calculated as the difference between the full value of consideration as reduced by expenditure incurred wholly and exclusively in connection with transfer; indexed cost of acquisition (in your case, the indexed cost of acquisition of the original owner, your father); and indexed cost of improvement.
It is noteworthy that as per the provisions of section 54, long-term capital gains on the sale of a residential house shall be exempt if the entire gain is reinvested within a specified period for the purchase or construction of another residential house. The specified period to purchase is one year before or two years after the date of transfer and the specified time period to construct is three years after the date of transfer. Further, if the entire gain is not utilized for specified purposes before the due date of filing tax returns of the year in which the original transfer took place, to avail exemption, the unutilized amount must be deposited in a Capital Gain Account Scheme before the due date of filing returns, to be utilized within the stipulated time frame for specified purposes.
Queries and views at
mintmoney@livemint.com
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First Published: Wed, Jun 08 2011. 11 21 PM IST
More Topics: Ask Mint Money | NRI | Tax | Property | Income-tax Act |