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My NRI and OCI cardholder son is thinking of buying a house in his resident country. Is it necessary for him to show it in his ITR in India? If yes, then in which form?

—Bimla

 

An NRI (non-resident Indian) is required to file an income tax return when...

• The total income earned or accrued in India exceeds the basic exemption limit of 2.5 lakh.

• He/she has earned income from investments in India.

• He/she wants to claim a TDS refund for tax deducted on interest, rental income, etc.

• He/she wants to set off current year losses or carry forward and set off losses in subsequent years.

If an NRI does not meet the above conditions, he/she may not be mandatorily required to file ITR in India. In case an NRI is required to file an ITR, he/she cannot file ITR-1 and must file ITR-2 or ITR-3. Depending upon whether he/she has income from a house property, he/she may have to report such income in the ITR. As such disclosure of properties held is not required. Disclosure of assets under Schedule AL (Schedule Assets and Liabilities) is required when total income of the taxpayer as reported in the ITR exceeds 50 lakh. In such a case NRIs have to report assets situated in India.

Also, reporting of foreign assets is a must for a ‘Resident Individual’ under Schedule FA (foreign assets); but it is not applicable to NRIs.

 

We moved to Australia in 2015. We are no longer citizens of India. Recently, my father inherited some fixed deposits, rental property and other investments. Does he need to apply for a new PAN, or can he use the previous one?

—Name withheld on request

 

Your father can request for change or update details in the PAN card. If an individual already has a PAN card and later becomes an NRI, then they can continue using the same PAN card. Alternatively, it’s easier to just update your KYC in banks and for your investments.

 

I work from home in India for a US-based company. My salary is credited to an account in the US in dollars and then transferred to my Indian account. How will I be taxed on my income?

—Name withheld on request

 

According to the residential status rules of the Income Tax Act, you will be classified as a ‘resident’ in India for tax purposes. A resident will be liable to pay tax on their global income. Hence, salaries earned from the US company will also be taxable in India. However, India has a Double Tax Avoidance Agreement (DTAA) with the US. Hence, you will be able to claim the tax credit of the TDS deducted in the US from your tax liability arising in India. DTAA makes sure that a taxpayer is not doubly taxed for the income earned outside the country of residence. Taking the benefit of DTAA involves obtaining a tax residency certificate (TRC) that helps identify and certify your tax residency status.

Archit Gupta is founder, chief executive officer, ClearTax.

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