The tax liability for insurance policies, NSC, PPF and equity mutual funds schemes is same whether you are a resident or a non-resident
I have moved to Singapore. I had invested in life insurance policies, NSC, PPF and equity mutual funds schemes when I was in India. Are the maturity/sale proceeds of these investments taxable?
Answer: The tax liability for the investment products mentioned by you is same whether you are a resident or a non-resident. The maturity proceeds of a life insurance policy are tax free under Section 10(10(d) if the premium paid for the life insurance policy did not exceed 10% of the sum assured during any of the premium paying years.
The maturity proceeds of PPF account are fully tax free in your hands. However, you are not allowed to extend the tenure of your PPF account beyond its original tenure of 15 years. In case the same was already been extended while you were in India, you cannot extend it beyond the running extension period of five years.
The profits made on equity oriented mutual funds schemes are taxed at flat 15% if redeemed within a one year. If the investment in equity schemes is held for more than one year, the same are treated as long term capital gains. On long term capital gains on equity schemes along with long term capital gains on listed shares you get an exemption for initial one lakhs rupees and beyond that the same are taxed at flat rate of 10% without any indexation benefits.
The interest on NSC can be offered for tax either on receipt basis or accrual basis. In case you offer it for tax on accrual basis, you get the deduction under Section 80C for interest accrued on NSC for all the years except for the year in which it matures as the interest accrued is presumed to have been reinvested.
Balwant Jain is a tax and investment expert and can be reached at firstname.lastname@example.org