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 Information
provided is for general knowledge only and should not be
deemed to be professional advice. For professional
advice kindly consult professional immigration advisors
or tax consultants depending on your personal situation.
This website is a one person operation, Please spell
check your questions as I normally just cut and paste
questions from emails. Answers to most questions asked
are usually posted within five days. Answers are posted
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Email questions to: V. K. Chand at:
question@nriinformation.com
Answers are normally posted in five days.
Nri income tax issue - Double taxation treaty India - Russia
I am Non-Resident India living in Russia. Since Feb. 2007 I am working officially in U S Consulate-General in St.Petersburg, Russia and because of bilateral agreement between India-Russia on Income tax, my Income tax is not deducted in Russia, would be very happy to know whether I have to file my Income-tax returns in India.
Now accounting firm is changed in our Embassy and new firm is saying that if I am not paying taxes in India then I have to pay in Russia, even back dated from 2007.
Kindly advise the better course of action for me.
Thank you,
Sincerely,
Babu Hebbli
A: Tax treaties are signed so that people of either country are not penalized by double taxation. It does not exempt them from paying taxes at all.
The source of income and residence are two factors that come into play in such cases. Normally such income may be taxable in the source country if stay exceeds 183 days in a financial year. A link to the Indian Income tax dept on India's Double Tax Avoidance Agreements is provided HERE.
Buy agricultural land
in India in parents name 
Q: Dear Sir
I need some clarification.
I am OCI card holder settled in UK.
I aware I am not supposed to buy agricultural land in India.
However Can i buy land on my parents name and later transfer to
my name "As I am getting from parents " . Please advise.
Jabez David
A: Whether you can buy agricultural land in India in your parents name would depend on the State in India where your parents live and where they wish to buy agricultural land.
Many States in India do not allow non-farmers to purchase agricultural land even if they are Indian citizens. Some States do not allow agricultural land to be sold to people who do not reside in the State where the agricultural land is located.
Q: Hi,
I am a British Citizen and I hold OCI card. We are planning to
return to India and start all over again. I assume that I am
fully eligible to work in private sector as I hold the OCI card.
How does the Indian tax system treats OCI card holder? Are the
rules different to Indian citizens? Also, do I have to pay tax
in India for the returns on investment made in UK?
Any input is greatly appreciated.
Regards,
Raj
A: The Indian tax system will treat you the same way as Indian residents are treated for taxation purposes. Before leaving UK you should notifiy the tax authorities in UK of your intention of leaving UK that you will be considered as a non-resident for UK tax purposes. Normally this notification is done by filling form P85. You can see form P85 HERE.
You may also consider checking out 'Residents and non-residents Liability to tax in the United Kingdom' Check section 2.7 'Leaving the UK permanently or indefinitely' The link to the document is provided HERE
As far as your investments in UK are concerned an accountant can give you professional advice on the best method of declaring this income so as to minimize the tax impact. Good luck with your move to India.
Wealth Tax in India for NRI
Q: Mr. Chand,
What an excellent resource you have created! Thank you.
I am a US citizen resident in the US holding an OCI card. I had inherited a flat in Pune in 1985 from my father who is an Indian citizen.He had bought it in 1983 for Rs. 15 lakhs.
I had also purchased a flat in Goa in 1985 for Rs. 13 lakhs out of funds submitted from US to my NRE a/c in India . I have no other income arising in India and both properties are for personal use when i visit for 2months a year.
Q.1 I wonder if the Goa flat would have exceeded the Rs 15 lakh wealth tax threshold by now?
Q.2 Since I now own 2 properties am I liable for wealth tax? I understand that one property is wealth tax free and the second is liable to wealth tax if over Rs.15 lakhs.I have no other income arising in India and both properties are for personal use when I visit for 2 months a year.
Q.4 My confusion arises from the fact that since balances in NRE a/c are free from wealth tax , won't the Goa property be wealth tax free since it was bought from those funds.
Q.5 Also I had heard if 2 owned properties are in different states the second one does not attract wealth tax.
Q.6 I understand there are provisions where an Nri who returns
to India for permanent residence will not attract wealth tax
liability for 7 years on assets brought back from outside and
asset purchases from those fund . Seems to me that this
provision should be applicable to OCI's also whether they are
resident in India or not since property is being purchased from
funds remitted from abroad.
Again I appreciate the time and effort you take !
K.voh
A: I believe as of March 31,2010 the
threshold limit for wealth tax was raised from Rs. 15 lakhs to
Rs. 30 lakhs. Furthermore The Indian Finance Minister, Mr.
Mukherjee has proposed in the draft direct tax code to increase
the threshold limit from the present Rs. 30 lakhs to Rs 50 Crore
and reduce the tax rate from 1 percent to .25 percent. This bill
is currently open to public debate and is expected to be
introduced in parliaments winter session. If passed it will
become into force from April, 2011.
To the best of my knowledge for resident non-citizens, only
assets situated in India will be assessed.
You should consult a professional tax consultant in India for
advice, a good consultant can guide you properly and help reduce
your tax liability.
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