I am a non-resident Indian (NRI) based in Switzerland. I want to send ₹20,000 each to two NGOs in India from my German account. Can I get tax deduction for this or can deduction only be claimed if the money is sent from my Indian account?
—Name withheld on request
NRIs are eligible to claim deduction under Section 80G. Deduction is allowed on donations made to specified and eligible charitable institutions. Donations made to foreign trusts do not qualify for deduction under this Section. A maximum of ₹2,000 can be claimed for cash donations. Any amount exceeding that must be made via electronic means or through cheque.
We are British citizens and Overseas Citizens of India Cardholders (OCC). We moved to India for good in November 2019. Prior to this, we had visited India in July and August 2019 for 45 days. When would we become ordinary residents? Also, we have a property in the UK, which we intend to sell. Will the capital gains from the sale be inflation-indexed in India?
Your residential status depends on the number of days you spend in India. Based on the information provided by you, you are likely to be in India for more than 182 days in financial year (FY) 2019-20.
To be a resident in India for tax purposes, you must meet any of the following conditions and both the additional conditions. Conditions: a) You are in India for 182 days or more in the FY; or b) you are in India for 60 days or more in the FY and 365 days or more in the four FYs immediately preceding it. In case of b) above 60 days are substituted with 182 days for a citizen of India or a person of Indian origin, who, being outside India, visits India during the relevant FY. Additional conditions: you are a resident in India in two of the 10 FYs immediately preceding the relevant FY; and you are in India in the seven years immediately preceding the relevant FY for 729 days or more.
If you meet any of the first set of conditions and both the additional conditions, you shall be considered a resident in India. If you meet any of the first conditions but do not meet the additional conditions, you shall be considered a resident but not ordinarily resident (RNOR) in India. If you do not meet any of the first conditions, you shall be considered an NRI.You will meet the first set of conditions but not the additional conditions, so you will be an RNOR in India for FY20.
In such a case, the income which accrues or arises outside India shall not be taxed in India unless it is derived from a business controlled in or a profession set up in India. Your sale of property in the UK will, therefore, not be taxable in India in the absence of any business or profession set up in relation to the same in India. As the capital gains will not be taxable in India, you will not be able to avail the benefit of indexation in India.
Archit Gupta is founder and chief executive officer, ClearTax. Queries at firstname.lastname@example.org