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Photo: iStock
Photo: iStock

An NRI can file ITR and claim credit or refund due out of tax deducted in India

In case you are an Indian citizen and you leave India as a member of the crew on an Indian ship; to be resident in India you must be in India for 182 days

I am a non-resident Indian (NRI) living in the UK. We recently partitioned our ancestral properties and I got my share of 75 lakh. I have decided to give this money to my brother. Will there be any tax implication?

—Satendra Yadav

You have received this money from the sale of inherited property. Any gains from the sale of an inherited property in India will attract capital gains tax. When the property is sold after holding for more than two years, the gains from the sale of such a property are long-term capital gains (LTCG), and are taxed at 20%. To calculate the period of holding, you can include the period for which the original owner held it. To calculate LTCG, one has to take the cost to the original owner, and the date of purchase of the original owner and index the cost by applying appropriate CII (Cost Inflation Index). Apply similar indexation to any cost of improvements made. Subtract this from the sale price. The resulting amount is your capital gains.

Your share in the capital gains shall be taxable in your hands. Even though you are an NRI, such a sale must be reported in your income tax return (ITR) in India. In case you do not want to pay tax on these capital gains, you’ll have to invest them in a property in India or invest through other means as per the rules applicable for claiming exemption on capital gains from the sale of a property. Note that there is no tax implication for you or for your brother to whom you plan to gift this some of the money. Additionally, since you are a tax resident of another country, you’ll have to comply with local tax regulations with respect to the sale of the property.

I have completed 230 article days in FY19-20. Out of which, I spent 173 days in international water and the rest in Indian waters. That means 173 days as an NRI. My company has deducted tax money and now they are saying that as I haven’t completed 182 days, they will not refund tax money. Will I get tax money back from the company?

—Santosh

In case you are an Indian citizen and you leave India as a member of the crew on an Indian ship; to be resident in India you must be in India for 182 days.

Such crew is considered as non-resident Indian (NRI) for income tax purposes, when they have spent less than 182 days in India. While calculating this stay of 182 days, the entire period mentioned in the Continuous Discharge Certificate (CDC) shall be excluded even though the ship may have been on Indian coastal waters in its journey. The period begins from the date entered in the CDC for joining the ship and ends on the date entered for signing off from the ship.

You can claim a refund out of the tax deducted by your company by filing your ITR in India. A non-resident can file an ITR in India reporting the income taxable in India and also claim credit or refund due out of the tax deducted in India.

Archit Gupta is founder and chief executive officer, ClearTax. Queries and views at mintmoney@livemint.com

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