Does holding a joint account with parents create tax liability for NRIs?

I have been residing in the United Arab Emirates (UAE) for employment purposes for the past many years, while my parents continue to live in India. As they grow older, I would like to add my name as a second holder on their respective bank accounts in India, allowing me to operate them online on their behalf. This would not have any tax-bearing right?

—Name withheld on request

As a general rule, merely being added as a second holder to your parents’ Indian bank account does not, by itself, make you the owner of the funds or taxable on the interest income. Tax generally follows the beneficial owner (your parents), so long as the money belongs to them.

In fact, under the Foreign Exchange Management Act (FEMA) regulations, for resident accounts held jointly with a non-resident Indian (NRI) close relative, the arrangement is on an “either or survivor” basis only for operational convenience. It does not permit the NRI to acquire any beneficial interest in the account balance. The NRI close relative is permitted to operate the account only for and on behalf of the resident account holder, and only for meeting the resident’s domestic payment requirements.

Accordingly, if the funds belong to your parents and they remain the primary owners, there should be no tax implications for you in India.

However, proper reporting is essential. Banks may inadvertently report interest from a joint account against both PANs, which can lead to overlapping disclosures in both taxpayers’ AIS and potentially trigger queries.

I live in the US and bought a flat in India more than two years ago. But due to oversupply in that locality, the prices didn’t appreciate and instead depreciated. I now want to sell it off. What is the procedure for applying for a tax officer certificate for no tax deducted at source (TDS)? Can I apply it online?

—Name withheld on request

An NRI can apply for a lower or nil TDS certificate in cases of the sale of immovable property in India when the buyer is likely to deduct TDS on the gross consideration. To obtain this certificate, the first step is to register your PAN on the TRACES website, an online platform of the Income Tax Department designed to streamline TDS processes. After registering, you need to file an online application in Form 13 for the relevant fiscal year.

In the application, details such as the nature of income (sale of immovable property-capital gain), estimated sale consideration, cost of acquisition, and computation of capital gain or loss must be provided, along with the lower TDS rate requested. To substantiate the capital gains computation, supporting documents such as the purchase deed, proof of payment consideration made, proposed sale agreement, details of selling expenses, and the TAN of the proposed buyer are required to be uploaded. The application must be verified using a Digital Signature Certificate (DSC) or mobile OTP on an Indian mobile number.

Once submitted, the application is reviewed by the assessing officer, who may seek additional information or clarification. Once the officer is satisfied, a lower or nil TDS certificate is issued on the TRACES website specifying the approved TDS rate and its validity period, which is also usually shared with the buyer for proper TDS compliance. Though the procedure is online, the processing time may vary depending on the AO interaction and their responsiveness.

Harshal Bhuta is a partner at P. R. Bhuta & Co. Chartered Accountants.