Legal & income Tax


Sale of ESOP shares after holding it over 12months is treated as long-term capital gains and if it is a listed security there is no tax on such gains from assessment year 2005-2006.
Repayment of the loan and interest is entitled to tax rebate under section 88 of the Act subject to income limits and other conditions.
Since you are a resident and ordinary resident in India the global income is taxable in India. Consequently, capital gains on the sale of property in US is liable for tax in India.
You can bring back the investment from Singapore to India and there are no tax implications. The yields on these in India will attract tax depending on the type of investment.
  1. First and foremost transfer of the land to a trust will entail stamp duty at 13%. Later the trust selling the land will have to pay long term capital gains tax of 20% subject to indexation of the cost of the asset.
  2. This option looks better since you sell the asset in question retain the post tax proceeds in you name and use the funds to start the corpus for the trust. The constitution of the trust can be adequately structured to mitigate tax consequences.
Capital gains taxes are due on sale of property at 20% + surcharge of 10% on taxes (applicable if the taxable income exceeds Rs 850,000) and education cess of 2% (on tax +SC), if the property had been held for more than 3 years. Otherwise tax rate will be as per slab rates with 30% on income exceeding Rs 150,000. Tax liability in US on the same income will be as per US tax law and any tax paid in India should be allowed as a deduction from the taxes payable in US. However, no tax arises in US only on account of repatriation of the money there.
  1. What is the procedure for being an NRI for people like me (what documents would I need to submit?)
    NRI status is dependent on period of stay outside India and if you are staying in Israel, you will be NRI. No forms to be submitted.
  2. What are the advantages and limitations for an NRI resident?
    Advantages and limitations are difficult to enumerate. One advantage is Indian laws on exchange control don't apply to NRI. Limitation may be restriction on ownership of real estate in India.
  3. Now do we have to choose between applying for dual citizenship ( i.e. being an Israeli citizen and Indian citizen at the same time?) and applying for NRI status or can I be both ( dual citizen and NRI at the same time)?
    NRI status is automatic as stated above. Citizenship is matter of choice and no conflict between both.
  4. Lastly, will I have to pay anything to the Indian government for application as an NRI/dual citizen? If so, how much?
    The rules for applying for citizenship need to be checked with Indian immigration authorities and Indian embassy in Tel Aviv should help.
This needs to be clarified with the consulate and as such no information in public is available.