Legal & income Tax


Mere granting of the loan and repayment thereof does not have any tax implications. Any income arising out of the property in question is to be offered to tax as income from house property.
The tax residence in India will depend on the actual number of days stayed in the country during the previous year.
Presently, interest on foreign currency a/c with scheduled banks is exempt from tax.
The withholding requirements depend on whether the recipient is a non-resident. Any payment to a non resident which has income component has to be subject to withholding of tax at source.
I am assuming that the deposits, shares and bonds with Citinri are the deposits, shares and bonds in Indian company / firms. As a non-resident you are entitled as per law, to continue to hold, own these deposits, shares and bonds, which you had invested while you were a resident. The intimation of address depends on the facts of your place of residence. In case you are going to be in US only temporarily and your Dubai address is the permanent address there is no problem in continuing Dubai address. It is assumed that all communications from Dubai will duly received and responded, if need be. The interest/dividends flowing out of the investments are taxable in the U.S.A as per the taxation laws of that country.
If the investments were effected out of convertible foreign exchange, exemption from filing the return is available. However, from the facts stated it appears these investments were done in rupee funds. Return has to be filed if the total income exceeds the threshold limit of Rs50,000. Return form is available online on many personal finance portals as well as the website of Finance ministry. Online filing has to be followed up with hard copy of the tax return.
No tax will arise in India only for the reason that amount is remitted from US in to a bank account in India.
As regards PIO purchase and sale of property in India is liable to capital gains tax. In the case of long-term capital gains the rate of tax is 20% plus surcharge. There is scope to pay only 10% tax plus surcharge applicable to NRIs subject to certain conditions. In the case of short-term capital gains the tax rate is as per the slab rates with the maximum marginal rate being 30%.
Any interest earned on or after 1/09/2004 in NRE account will be taxable in India at the slab rate of 10/20/30% as the case applicable to Individuals. This is the position even for the existing deposits.
The interest on the NRI account will be taxable in India subject to the double taxation agreement setoff in respect of the taxes paid in the U.S. As per the double taxation agreement, the taxes paid in India can be set off against the taxes payable in the USA.
The 2% cess is on the tax payable in the interest on the NRI account.
You can avail of the concessional rate of tax of 20% under Chapter XII A of the Act if the account relates to and asset created out of convertible foreign exchange. You will have to ascertain the source of the FCNR Account before availing of this facility of 20% tax.