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Business News/ Money / Calculators/  Income from invested remittance in India is taxable
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Income from invested remittance in India is taxable

Any income generated on investment of the remitted money in India would be subject to tax

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I will have to file my returns in India but how do I show my US savings, which I deposit in my account in India?

—George Tharakan

Earnings in the US that are subsequently remitted to an Indian bank account are not income for Indian tax purposes and not chargeable to tax in India. You should be able to explain the source of investment when questioned. Any income generated on investment of the remitted money in India, however, would be subject to tax.

For an NRI, are there any tax exemptions in India?

—Jyothi Kedia

There are certain incomes that are fully exempt. Long-term capital gain arising from transfer of equity shares or units of equity-oriented mutual funds, held for more than 36 months, are not taxed.

These include dividend income from domestic companies and specified mutual funds. Interest earned on FCNR or non-resident external bank accounts are also exempt. Interest income earned from notified securities, bonds and savings certificates are not taxed.

When a non-resident Indian (NRI) returns to India, what happens to her foreign currency non-resident (FCNR) deposit?

—Kamal Malhotra

When an NRI returns to India, the onus is on her to notify the bank of the change in the status from non-resident to resident so that the bank account can be re-designated to resident account from FCNR. As per Indian tax laws, interest income earned by an individual on her FCNR account is only tax exempt in India if the individual qualifies as a ‘person resident outside India’, as per the Foreign Exchange Management Act, 1999.

However, interest earned on FCNR account will be taxable when an individual becomes resident in India. Upon becoming a resident, one cannot avail the benefits available to under the NRI status.

Do I have to pay tax either in India or the US on the amount gifted to me by my father?

—Fahad

As per Indian tax laws any sum of money gifted by a father to a son is not taxable in India. No documentation has been prescribed under Indian tax laws but you may need to explain the source of this income to the tax authorities. So, it is advisable to maintain documents, such as bank statements, that can substantiate that the gift is actually received from a relative. The gift is likely to be taxable in the US.

Queries and views at mintmoney@livemint.com

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Published: 30 Apr 2015, 07:55 PM IST
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