Legal & income Tax


The interest arising from the 1st September 2004 will be subject to tax. This applies even to existing deposits. Tax will be deducted at source by the bank and the tax rate applicable is as per the present slab rates, where no tax arises for income less than Rs 50,000.
Interest earned from FCNR Account is taxable in India from asst year 2005-2006. The tax is as per the slab rates of 10/20/30% as the case may be plus surcharge and cess. An NRI can opt for the concessional rate of 20% tax plus surcharge and cess under Chapter X11A of the Act subject to certain conditions. As far as detailed calculations one can visit
Money earned in Switzerland is taxable in India if you are a resident and ordinary resident. There could be set off as per DTA Agreement depending on the source and component of income earned there. Money transfer to India per se does not entail any tax liability.
Money sent as gifts to parents in India from US or for that matter any other country is not taxable in India.
  1. Can the rent of agricultural land be treated as income of my son in part or full for tax purposes?
  2. In addition to agricultural income how much of interest income can be exempt from tax for NRI?
  3. What is income limit for NRIs, which is exempt from tax?
  4. In case of joint account, is the tax liability in India is for main applicant only or for both?
  5. A NRI wife (without work permit) can have FNCR deposits in India and assessed as independent tax payee?

  1. Agricultural income is not taxable and is included only for determining the slab rate for taxing non-agricultural income. In any event, the inheritance by you cannot be treated as income of your son.
  2. Income becomes taxable if the threshold limit of Rs50, 000 is crossed
  3. Answered above
  4. Income is taxable in the hands of the owner and not based on how the joint account is structured
  5. If the funds belong to the husband and invested in the name of the wife, tax will arise in the hands of the husband only.
HUF is taxed a separate entity and hence will enjoy the exemption limit etc., as applicable to an individual.
  1. Is the money I sent to my parents back to India, either through an NRI account or just through a check which they deposit in their local account, taxable to them any way?
    No tax will arise on this
  2. Is there any way I can avail tax deduction on that money in US?
    This needs to be checked with a US tax advisor. As far as we know there is no deduction for these.
Taxability is based on the number of days stay in a country and not on the nature of visa. Wherever taxes become payable in two countries for the same income, tax credits are possible. We do not advice on the US tax implications, either federal or state taxes.
Yes you need PAN. Currently it is to be applied in hardcopy. You can engage a professional to do this, as you would need the assistance to file the tax return.
    1. US Social Security pension (for employment in USA for non-Indian companies)
      social security pension is taxable only in the US (Kindly refer article 20 of the Double taxation agreement with the US).
    2. a)US investment income (on US source savings)
      b)Minimal interest from local Indian banks(interest threshold for tax?)

      US investment income is taxable in India on the basis that you are a resident in India.
    3. Assuming US tax returns on worldwide income filed, and the presence of Indo-US DTAA exemption, would there be any residency restrictions in India as related to tax obligations?
      There are no residency restrictions here where the worldwide income is offered to tax under the Indian law.
    4. If interest from Indian Banks were zero, would an Indian tax return be required?
      Even if the interest from banks is zero here a return of income is to be filed in India if you are treated as a resident.
    5. Does inheriting a flat from parents require the filing of a return? Is "one in six" rule relevant here?
      Inheritance of a flat, per se, does not entail filing of a return.
    6. Any applicability of wealth tax because of foreign assets?
      There is no wealth tax on foreign exchange assets.
The cheque has to be converted into rupees by the authorised bank using the conversion rate. There are no tax implications on this.
  1. IS TDS applicable for interest derived from NRE Recurring deposit? If yes how?
    TDS is applicable for interest derived from NRE recurring deposit account and the bank will be deducting the same at the appropriate rate.
  2. I was told by a bank manager that there is no tax to be paid for any interest derived from recurring deposit be it NRE or NRO or resident one. Is it true?
    The information is wrong. Tax is applicable on such interest from 1.4.2005.