Photo: iStock
Photo: iStock

NRIs can allow an agent to do property deals on their behalf

Based on the understanding and mutual trust between the agents and the NRIs, the agents may receive the proceeds of the property in their own accounts

One of my NRI relatives wants to sell her property in Mumbai. All arrangement have been done but she recently informed me that she doesn’t have an operational account in the UK, as she was living in Africa. What can be the best solution to repatriate the fund to her after paying all the necessary taxes in India? She has assigned the power of attorney to execute the documents to a relative who was taking care of property for last 10 years.

My question is: can sale proceeds be deposited into the account of the relative who has power of attorney in India, until she gets her account sorted in the UK? Is it possible for her to open an NRO account, with this relative as the mandate holder, to take care of the transaction? Or is there any other way the fund can be repatriated to her or her immediate family members?

—A. Patel

With the help of a power of attorney, NRIs who are not physically present in India can allow their attorney or agent to carry out property transactions on their behalf. Based on the understanding and mutual trust between the agents and the NRIs, the agents may receive the proceeds of the property in their own accounts, which can later be transferred to the NRI. 

The agents can also open an NRO account jointly with the NRIs to deposit the proceeds of the property sale. The balance in an NRO account can be repatriated up to $1 million per financial year.

I live in Abu Dhabi. I bought bitcoins from an exchange here and sold it in an Indian exchange and made a profit. I have paid income tax on the gains. The proceeds of this trade are currently in my NRO account. Can I remit this money to Abu Dhabi under the NRI remittance scheme?

—Name withheld

Please be aware that as of now, the Reserve Bank of India (RBI) has not given any licence or authorisation to any entity, company or exchange to deal in bitcoins. The RBI has also cautioned citizens against dealing in any type of virtual currencies. Currently, the taxation of bitcoins is not directly addressed in the income-tax Act. There is not enough clarity currently on how the gains should be taxed. However, since you have sold them in India, it is advised that you include them in your tax return in India. To do so, you must calculate your gains. If these bitcoins were sold within 3 years of purchase, you can include them under short-term capital gains and pay tax according to income tax slab applicable on your total income. If these are held for more than 3 years, you may index your cost and calculate long term capital gains and pay tax at 20% on the gains. Do note that currently there is heightened scrutiny of those investing in bitcoins and therefore, we advise you to tread with caution on this matter. Further, the proceeds of this trade, which are lying in your NRO account, can be repatriated to Abu Dhabi up to a maximum of $1 million in 1 financial year. It is also advisable to furnish Forms 15CA and obtain form 15CB from a Chartered Accountant for submission to your bank before repatriating these funds.

My status has been ‘resident Indian’ for last 5 years. Prior to that, I was an NRI and had no income in India while I was an NRI. I came back to India and started filing all returns, including a ‘no income’ return for the years I was not a resident. As an NRI, I had savings for which I had created an NRE fixed deposit (zero coupon fixed deposit), which is about to mature in 2 years. Will the fixed deposit plus interest be taxable? If yes, why? The savings for creating the deposit were not earned in India. Kindly advice for taxation of the same.

—Apurva Dodia

Once you return to India, you must re-designate your non-resident account to resident accounts. Note that while your status as per income-tax laws may be non-resident for some time after your return, RBI and Foreign Exchange Management Act (Fema) guidelines require that your non-resident external account must be converted to non-resident ordinary account on your return. This includes any term deposits in your NRE account which may not have matured at the time of your return. Therefore, you must intimate the bank about change in your residential status. You’ll have to pay tax only on the interest income earned by you. This interest will be taxable, effective the date of your return to India, while no taxes would be payable on the principal amount of the deposit.

Archit Gupta is founder and chief executive officer of ClearTax.

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