Legal & income Tax


The best option is the 6.5% tax-free RBI Bonds. Some of these bonds are not available to NRIs. You will have to select to the bonds accordingly and then invest. The 8% interest bearing bonds are taxable and hence may not be attractive. The proceeds on maturity constitutes return on principal or capital and is hence not taxable in the hands of the recipient.
The provision on clubbing of income get attracted whether the assets giving rise to income were transferred directly or indirectly and hence there is significant chances of the tax authorities invoking the clubbing provision in the given case. One may build assets abroad in the name of the spouse but the income arising thereon will get clubbed in the hands of the transferor. The investments standing in the first name investor or depositor in the person liable to pay income tax on the income arising thereon.
Prima facie the savings in Saudi Arabia is not liable to tax in India. From the query the nature of allowances received in Saudi is not clear. The taxability of the allowances in India will have to be examined with reference to the contractual arrangement with the employer and the residence of the assessee.
The interest income is taxable, subject to limited exemption under section 80L (Rs12000) together with other eligible items if any. The final liability to tax would depend upon your slab, if you have other taxable sources in India.
If you happen to be in India for a period exceeding 60 days in a financial year and had stayed, cumulatively, for more than 365 days in the four preceding years, you will become a resident, but not ordinarily a resident in India. You can at best maintain this status for two years and then would become a normal resident and the worldwide income will be subject to tax in India. If in any year you exceed 182 days stay in India, and also have not been a non-resident for more than 9 out of 10 preceding years, you would become resident in India. These are alternative conditions and if you get covered by one of them you would be exposed tax on all income. The position with regard to Denmark should be ascertained locally there.
The car can be brought in to India after payment of applicable customs duties. The procedure for import would be assisted by a customs clearing agent.
  1. I am planning to move to India permanently. I am planning to put some amount of money in rupee account and live off the interest. What are the tax implications?
    The interest income would be subject to tax in India, depending on the tax bracket you would fall under.
  2. What about the principal amount I bring in? I already paid taxes on that in US. I am assuming that the principal will not be taxed. Am I correct? What about the amount sitting in my retirement? If I draw now prematurely I have to pay taxes here in US. Will that amount be taxed in India?
    No tax would arise on the principal in India. Pension withdrawals pertaining to past services in the US won't be taxed in India.
No tax would arise on remitting money from Germany to India. To qualify as NRI you should have resided outside India for more than 182 days in the year preceding the year when this determination has to be made.
The income, both periodical and onetime on disposal of the asset is subject to tax. The rate of tax could differ depending upon the nature of the income. Capital gains on Investments in specified shares made between 1-3-2003 and 1-3-2004, and if held for at least one year would be exempt from tax. There is no tax rebate/concession for the investments made in stocks or in mutual funds.
Dividend arising from share and Units of mutual fund are tax-free. Sale of shares and units beyond 12 months holding period gives rise to long term capital gains at 10% without indexation and 20% with indexation. This has to be increased by surcharge of 5%. There is no TDS on dividends from the bank side and the question of TDS on capital gains does not arise.
The transfer of 30,000 dollars to India, per se, has no tax implications. The amount can be invested in a house property without any tax issue. Needless to add, if the property is let out on rent, the rental income is liable for income tax.
Such a step would not be possible. There are no Tax-approved pension schemes for individuals in India, though certain schemes provide limited tax credit on investments made.
There is no limit on sending money to family. The limit mentioned by you is actually the physical cash that can be brought in on a person visiting India.
The nature of foreign pension has to be examined to decide whether it is taxable in India. If it emanates by virtue of employment outside India it is not taxable in India. Then there is no need to file a return of income in India since the other source of income is only interest on NRI account, which is any way tax-free here.
  1. How much of these liquid assets am I allowed to transfer to the new country?
    Currently, the foreign exchange regulations do not allow Indian residents to transfer fund out beyond a reasonable limit for living purposes. I would reckon that permission may be granted up to USD 100,000. The Authorised dealers like Citibank etc can help in this.
  2. What procedures are required to be done by me with respect to all the RBI and Income Tax Acts to get these funds transferred?
    The authorised dealer will take care of any RBI requirement. You will need a tax clearance certificate under section 230 of the income tax Act for which necessary application be made to the concerned tax officer in your city.
  3. Which Money exchange agency can help me transfer these funds to my account, which I shall be opening in the new country?
    Already covered above.
  1. Do I have to pay tax in India too on that income? If yes, then I will be paying 41% in UK and 35% in India? What can I do to avoid paying tax twice on the same money that I earn? I will be allowed to work from India 365 days.
    Once you come to India and physically reside here for over 182 days in a year you will be treated as a resident in India for tax purposes and your UK income will get taxed in India at the rates applicable here. You will be entitled to double taxation relief in respect of the tax suffered on the same income, which is paid in UK. The law and the rules prescribe the procedure to avail of the relief. You may also check the tax position of U.K just to make sure.
  2. Is it easy to avail double taxation relief in India? Do we have to pay the tax first and then apply for the refund to get double tax benefit relief?
    The primary liability in this case will arise in India and the tax paid in India can be set off in the UK and you can get in touch with the authorities there to ascertain the manner in which the credit can be availed.
Since you are a non-resident any income earned from NRE Account with a Scheduled bank is exempt as per section 10(15)(iv) (fa) of the Income tax act.
The concept of NRI in the Income Tax Act has nothing to do with citizenship or for that matter place of birth of the individual or his parents. It is limited to the no of days stay in India during the relevant previous year. If this exceeds 182 days in a year you will be treated as a resident in India for that year.