Ask Mint Money | Tax refund can be claimed only by filing returns on time

Ask Mint Money | Tax refund can be claimed only by filing returns on time

I am a non-resident Indian (NRI) and have invested in shares and debentures of some Indian companies and mutual funds. I have made these investments from India after remitting foreign currency and also have a non-resident (external) rupee account (NRE account) in India. Do I need to file returns in India since I plan to sell shares and redeem units this fiscal year?

—Pradeep Singh

In case of NRIs, section 115E of the Income-tax Act provides that any income (other than dividend) derived from investment made in specified asset and long-term capital gains arising from transfer of asset other than “specified asset" is taxable at 20% and long-term capital gains arising from transfer of “specified asset" purchased in foreign currency is taxable at 10%.

However, such long-term capital gains shall be exempt from tax entirely/proportionately provided all/portion of the net consideration (sales consideration less selling expenses) is reinvested in “specified assets" within six months from the date of transfer as has been specified under section 115F. The amount so exempted shall, however, be chargeable to tax if the specified assets are transferred or converted into money within three years from the date of acquisition thereof. The term “specified asset" has been defined under section 115C to mean (a) shares in an Indian company; (b) debenture of an Indian public limited company; (c) deposits with an Indian public limited company; and (d) central government securities.

Section 115G gives exemption from filing returns for NRIs where no income other than long-term capital gains arising on transfer of specified asset has been earned during the financial year and all applicable taxes have been duly withheld thereon.

However, if you do not fit the definition mentioned above, then the return filing requirement would need to be adhered to.

My son had worked with a company for some time in FY09. He had received 49,000 after tax deducted at source (TDS). Form 16A mentions the payment as professional fees. However, he was not able to file returns in time. I was told it is too late to file the returns for FY09. Is there any way to get back 4,600 since he did not have any other income during the period?

—Suresh Jadhav

Since the total income earned by your son in FY09 was 49,000, which is below the maximum limit not chargeable to tax, your son was not required to file the return of income. However, for the purpose of claiming refund of TDS amounting to 4,600, your son should have filed his return for FY09 (for assessment year 2010-11) latest within one year from the end of the relevant assessment year, by 31 March 2011. Tax refund can be claimed only by filing returns though the total income did not exceed the maximum limit as prescribed by law.

Nitin Baijal is Director, BMR Advisors

Queries and views at