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My son went to the US three years ago and has not visited India since. His bank account is resident Indian, and the bank is deducting tax on FD interest. But his total annual income from this is less than 2.5 lakh. Can he give Form 15G to the bank as if he is a resident? Or should he claim refund in ITR 1, stating he is a resident?

—R. Sampath

 

Form 15G can be filed by those who are resident in India for tax purposes. NRIs are not eligible to file Form 15G. NRIs are also required to inform banks of the change in their residential status and convert their resident accounts to non-resident accounts.

The status of your tax residency must also be duly declared at the time of filing your income tax return in India. Where excess TDS has been deducted, a refund will be processed by the income tax department.

I would like to transfer my multiple financial holdings in India to the US for my own use and to gift a part of it to my children. Will taxes be levied on me or my children in this case?

—Name withheld on request

As per the Liberalized Remittance Scheme (LRS), a resident Indian is allowed to remit an amount of up to $250,000 a year as a gift or for maintenance of close relatives, or for other specified purposes mentioned in the scheme. Also gifts to ‘relatives’ are exempt from tax in India. Your children are included in the list of “relatives" specified as per the Income Tax Act.

Please approach your bank to understand the documents they may require to make this transfer. As such, this kind of transfer does not require declaration in Form 15CA. However, the bank may require a declaration from you that this transfer is being made from income that has already been subjected to tax and is exempted from being included in Form 15CA. Therefore, no specific declaration in Form 15CA may be required.

Archit Gupta is founder and chief executive officer, ClearTax.

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