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Business News/ Money / Calculators/  Gift up to `50,000 by parents tax exempt for NRIs
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Gift up to `50,000 by parents tax exempt for NRIs

The amount credited by parents by way of a gift into your NRO account shall not be taxable

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Can you tell me the tax implications of debt funds for a non-resident Indian (NRI)? Is it the same as that for a resident?

—Deepanjali

Typically, there are two types of income streams for a unit holder in such funds—one is the interest income and the other is capital gain/loss on transfer/redemption of such units.

For an NRI, the interest income received with respect to mutual fund units would be subject to tax at the rate of 20% plus surcharge and cess in India. Further, on transfer/redemption of such units, LTCG would be subject to tax at the rate of 20%. However, short-term capital gains would be subject to higher tax rate of 30%. The units can be classified as long term or short term depending on the period for which the units are held. If the period is 36 months or less, then it shall be classified as short-term capital asset, else, it will be treated as a long-term capital asset.

Please note that the tax treatment of the income would also depend on the double taxation avoidance agreement.

Can long-term capital loss (LTCL) on shares held in India be set off against long-term capital gain (LTCG) on shares held outside India (no securities transaction tax, or STT, paid as shares held outside India)?

—Vivek Raj Singh

I assume that the LTCG arising from the shares held abroad is taxable in your hands in India. On this premise, the LTCL incurred in India would be eligible to be set off against the LTCG arising on shares held abroad.

Do note that LTCL arising on shares that have been subject to STT, would not be eligible for set-off. But LTCL arising on shares without STT would be permitted to be set off against the LTCG arising in the relevant assessment year and balance remaining, if any, after set off would be eligible for carry forward to subsequent years for set off.

My father lives in India and wants to gift me some money in rupees. If I deposit that money via a bank transfer from his Indian bank account to my non-resident ordinary (NRO) account, will that money be taxed?

—S. Vashist

Wherein any individual receives money in excess of 50,000 in any fiscal without any consideration, such money will be taxed as income from other sources in the hands of the recipient. However, this rule does not apply to money received from any relative, the definition of which includes your parents. Therefore, the amount credited by your father by way of a gift into your NRO account shall not be taxable.

Queries and views at mintmoney@livemint.com

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Published: 15 Jan 2015, 07:48 PM IST
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