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Business News/ Money / Calculators/  Non-resident can gift shares to an Indian resident
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Non-resident can gift shares to an Indian resident

The gift would not be taxable in the hands of the donor

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What happens when income is repatriated to India?

—Ganesh Mathur

Taxability of the income repatriated to India depends on residential status, nature of income, availability of benefits under the applicable double taxation avoidance agreement, and so on. An Indian resident’s global income is taxable in India. Once the income has been taxed, mere repatriation of it to India would not make it taxable again on receipt basis. If you are an NRI, income that accrues or arises in India or is deemed to accrue or arise in India or is received or deemed to be received would be taxed in India. If the income being repatriated falls within the ambit of the parameters above, it would be taxable in India. If such income accrues or arises outside India and it is merely repatriated into India, then the same should not be subject to further tax in India.

What are specified assets?

—Kamini

Income from specified assets that are in the nature of long-term capital gains are eligible for a beneficial tax rate of 10% in the hands of a non-resident Indian (NRI). Further, long-term capital gains that arise from sale of any specified asset that qualifies to be a foreign exchange asset, if invested in any specified assets or in specified savings certificate, would be exempt from tax to the extent of the cost of the new asset where the capital gains exceeds the cost. Where capital gains are less than the cost of the new asset, a proportionate exemption is provided. The specified assets have been defined under section 115C of the Income-tax Act, 1961, to mean any of these: shares of Indian companies, debentures issued by an Indian company that is not a private company, deposits with an Indian company that is not a private company, and any security of the central government as defined under the Public Debt Act, 1944.

Can an NRI gift shares to relatives? How is it taxed?

—Karthik

An NRI can gift shares to an Indian resident. The gift would not be taxable in the hands of the donor. The recipient of the shares would be taxed in India if the fair value of the shares exceed 50,000, and if the recipient does not qualify to be a relative as defined under section 56(2) of the income tax Act. Relative has been defined for this purpose as: a) spouse of the individual, brother or sister; (b) brother or sister of the spouse of the individual; (c) brother or sister of either of the parents of the individual; (d) any lineal ascendant or descendent of the individual; (e) lineal ascendant or descendent of the spouse of the individual; (f) spouse of those referred to in (b) to (f).

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Published: 19 Feb 2015, 07:05 PM IST
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