07 May 2008
Hi Friends, I want to know whether is it compusory to disclose the income earned outside india by a non resident in his income tax return along with his income earned in india(ie interest on Capital from partnership firm).In short Non resident has income from both outside india and from inside india,is it compulsory to disclose the income earned outside india since non resident's income earned outside india is exempt from tax as per Indian Income tax... Please Reply Friends...
07 May 2008
Under the Indian Tax Laws overseas income is liable to Tax in India only if the assessee is an ordinarily resident. A returning Indian who has been a Non Resident for consecutive 9 years or more, then for 2 successive years he shall be a resident but not ordinarily resident (RNOR) AND All income earned in India shall be taxable in India. Income which accrues or arise outside India will not be liable to tax in India unless it is derived from business controlled or profession set up in India. Interest on Non Resident External Account (NRE) and Foreign Currency Non-Resident Account (FCNR) [Section 10(4)(ii)] is exempt in the hands of a person who is a Person Resident outside India as per section 2(w) of FEMA, 1999 and defination of 'Non-Resident' under Income Tax is not relevant for this sub section. Income in respect of Interest, premium on redemption, other payment on notified securities, bonds, certificates and deposits are exempt u/s 10(15)(i) which covers: Interest on India millennium Deposits(IMDs)/Resurgent India Bonds(RIBs) issued by State Bank Of India (The exemption from tax continues even if the NRI becomes a resident and is also available to the nominee or the survivor of the NRI or to a donee to whom the bonds have been gifted by the NRI.). Interest on NRNR Rupee Deposits Scheme. The exemption is available to Non Resident only and therefore, interest on NRNR deposit is not exempt from income tax when a person becomes Resident but Not Ordinary Resident or Ordinary resident.
Interest paid by schedule banks to Non-resident or to a person who is not ordinarily resident on RBI approved foreign currency deposits (i.e. RFC deposits) is exempt (S. 10 (15) (iv)(fa)). The exemption, in respect of RFC account, continues till such time as the account holder continues to be "Resident but Not Ordinarily Resident" NRIs have been offered a separate concessional tax regime in respect of certain types of income under Chapter XIIA comprising section 115C to 115I. As per section 115E, concessional tax of 20 % is available in respect of investment income and 10% in respect of long term capital gains from the specified assets which are acquired out of convertible foreign exchange. The benefit of concessional tax treatment under chapter XIIA continues even after NRI becomes a resident. PL. VISIT www.nritaxservices.com for many more clarifications. r.v.rao
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