Legal & income Tax


Long-term capital gains (asset held for more than 12months) are taxed at 10%. Short-term capital gains are taxed at normal rates, maximum being 30% for income exceeding INR 150000. If the total income exceeds INR 850000, then a surcharge on tax of 10% would apply. Exemption from tax for BSE 500 shares held for more than 12 months has expired as of 1st March 2004 and may be revived subsequently. If the activity of purchase and sale gets classified as business then the concessional rates as applicable to LT assets won't apply. Filing of return of income is waived if all the taxes on income are deducted at source.
  1. Are all banks (authorized dealers as well as other banks) in India required to withhold same percentage of interest income from the bank accounts for tax purposes?
    The withholding requirements are the same for all payers of interest.
  2. Is there an amount of interest income below which no income tax is paid?
    No threshold limit in respect of a non-resident. Withholding arises on all payments.
  3. Is it cumbersome to get a refund if interest income falls below the limit?
    If you are not liable to tax due to any reason, you can obtain a certificate from the tax office, based on which not tax will be withheld. Otherwise, a tax return should be filed for claiming the refund. The procedure is quite simple.
If you are an NRI there is no requirement of paying taxes in India since your contract of employment and origination of income is in Indonesia.
The mere process of investment does not require filing a return of income. You must have income liable to tax and above the minimum threshold limit to file a return of income.
  1. Assuming my tentative arrival date back to India is the 30th June 04, which account (NRI, NRO, FCNR, etc) I should open and deposit my US allowances so that they would be tax-free? Please note that I would like to avoid paying tax on both the amount deposited as well as the interest earned.

  2. If the arrival date back to India changes would there still be any change in the type of account I should open?

The deposit of money does not create any tax liability in India. However , prima facie, the dates mentioned implies that you will be a resident in India for tax purposes for both the financial years involved and would be liable to tax in India.
You can choose any of the accounts mentioned, as they are indifferent from tax point of view. However the other features vary which the banker would advice you.
You will not qualify as RNOR unless you have been in India for less than 729 days in the previous seven financial years. No taxes arise on bringing in the money into India on the facts stated by you.
Since you will be resident in India for tax purposes the income earned in dollars will be subject to tax in India. The tax paid in India can however be set off against the taxes paid in the U.S.
Basic Travel Quota is intended for residents intending to travel abroad for business or other purposes.
  1. Can I claim rebate on my Indian salary as I have already paid tax on that in the USA?
    If the salary is paid for the services rendered in India, then though you are an NRI, it is taxable in India. You can claim rebate in respect of the taxes paid at India in the US.
  2. My wife has taken housing loan in India. That house is currently locked with no one occupying it. Can we file a joint tax return in India and claim tax rebate for the housing loan? This year my wife has no income.
    There is no provision in the Indian law to file a joint return of income. Anyway the value of self - occupied house property for tax purposes has to be taken as nil.
If the stock is sold and taxable gains arise subsequent to your becoming ordinarily resident in India ,taxability would arise in India. Typically you will become ordinarily resident in India upon staying in India beyond two tax years.
Tax will arise as capital gains on your share, subject to applicable exemptions etc., the money is also repatriable under current RBI guidelines. Depositing in your mother's a/c should not pose any problem; however tax arises as stated above.
Tax on capital gains on long term assets is 20% and short term cases are subject to tax at the normal rates ,maximum being 30% on income exceeding Rs.1,50,000. A surcharge of 10% on tax is applicable for income exceeding Rs.8,50,000.
Presently the only way to follow up this is to meet the concerned officer with whom the return has been filed the pursue the refund. We do not have a online system of tracking such matters.
The tax on long-term capital gain is 10% plus surcharge without indexation. You can file a return here and get any excess TDS refunded.
You have a choice of holding the money either overseas or in India. In India the amount can be held in foreign exchange or in Indian currency. This would depend upon your perception on exchange rate fluctuation as well as the investment opportunity in India vs Overseas. From tax angle income earned by you outside India will not be taxable in India till you become an "ordinary resident" under the tax law. This will happen after the lapse of two years of residence or 730 days of stay in India. On investment opportunities, it would be good to consult a specialist advisor.
Some of the Banks like HSBC, CITI,HDFC and IDBI have services for wealth management. Many private CA firms offer this to thier clients. Bajaj Capital and India Infoline can also be approached. Kindly evaluate properly before selecting any agency.
The commission is taxable in India as business income. It appears that you are a sole proprietor and the tax rate will be as applicale to individuals on the slab rate basis the minimum being 10% and the maximum being 30% plus surcharge of 10% on the tax where the income exceeds 850000/-.
Transfer of title deeds perse does not have any tax implications more since there is no gift tax in vogue. You may have to transfer the status of the property from HUF status to INDIVIDUAL status for tax returns if any income arises out of the property in question.
This would require an Investment counsellor for advice; by and large, in today's context, one can get a yield of 6-7% in various instruments.
PAN is mandatory for any person who is to file a return of income and who is assessable under the Income tax Act. This is contained in section 139A of the Act more so where refund is claimed.