27 November 2009
Mr.x(NRI) works in dubai and sends major portion of his income to her wife in mumbai to meet house hold expenses and for saving purpose. the sent money gets directly deposited to their joint A/c Bank in mumbai. 1st joint holder is Mrs. x Mrs.x's only source of income is Rent from a shop ie. Rs.8000p.m. 1)Mr.x being NRI, can he still file his I.T. Return in india if yes how. 2)Mrs.x - is she from the above situation lible to tax. 3)wt balance of bank should we show in Mrs. x balance sheet, as 85% of the joint bank balance is of money from NRI husband. 4)Mrs. x also invested in LIC for herself, husband and children from the money sent form dubai, can she claim this under 80c thank you all in advance
27 November 2009
If Mr X continued to file his income tax return even after the change in his status then there would be no problem Mrs X can also file it as representative assessee on behalf of her husband and file a seperate ITR for herself if her income is above the threshold limit. Having a joint acccount for operational convenience is accepted and so will the LIC polocies taken by her for the children. Pl ensure that there is no flaw in documentation
27 November 2009
thank you ok than from the obove suggestion i can conclude that both of them hav a choice whether to file a return or not as 1)Mr.x is NRI (not compulsary to file a return) & 2)Mrs. x does not crosses the taxable limit. (though her joint bank A/c is credited with More than 3lacs during the financial year by her NRI Husband form dubai)
03 August 2024
### 1. Filing of Income Tax Returns by NRI (Mr. X)
#### **Can Mr. X File His I.T. Return in India?**
Yes, Mr. X, being an NRI, is not required to file an income tax return in India for income earned outside India unless:
- He has income that is taxable in India (e.g., interest income from Indian bank accounts, rental income from property in India). - He wants to claim a refund of taxes deducted at source or other benefits under the Income Tax Act.
**Filing Process:**
- **ITR Form:** Mr. X would use **ITR-2** if he has income from India. - **Income Disclosure:** Report any Indian income, if applicable. Income earned abroad is generally not subject to Indian tax. - **Bank Accounts:** If he has any income from Indian bank accounts, it should be reported.
### 2. Tax Liability for Mrs. X
#### **Is Mrs. X Liable to Tax?**
Mrs. X needs to file a return if her total taxable income exceeds the basic exemption limit (Rs. 2.5 lakhs for individuals below 60 years of age). Here’s how to handle the situation:
- **Income:** If her total income, including rent, does not exceed the exemption limit, she may not need to file a return. - **Bank Account Balance:** The balance in the joint account does not necessarily affect her tax liability directly, but large deposits may attract scrutiny from the Income Tax Department.
### 3. Bank Balance Reporting
#### **How to Show the Joint Bank Account Balance?**
In Mrs. X's balance sheet, the bank balance should be reported as follows:
- **Source of Funds:** If the funds from Mr. X are significant, they should be accounted for. However, only the income earned (like rent) needs to be declared for tax purposes. - **Documentation:** Maintain documentation showing that the funds transferred are from Mr. X’s income and are not taxable in India for Mrs. X.
### 4. Investment in LIC and 80C Deductions
#### **Can Mrs. X Claim 80C Deductions?**
Yes, Mrs. X can claim deductions under Section 80C for LIC premiums paid if the investments are in her name or her husband's name and the policy is in force.
**Conditions to Note:**
- **Policy in Name:** The policy should be in the name of Mrs. X or her dependents for her to claim the deduction. - **Documentation:** Ensure proper documentation for all premiums paid to support the claim.
### **Additional Notes:**
- **NRI Funds:** The source of funds in a joint account does not change the tax liability for Mrs. X unless it directly generates taxable income. - **Income Threshold:** Mrs. X should consider filing if she crosses the threshold limit even if she doesn’t have direct tax liability but has large amounts deposited or transactions that could attract scrutiny. - **Consult a Tax Professional:** Given the complexities of international income and joint accounts, consulting a tax professional can provide personalized guidance and ensure compliance.
### **Summary**
1. **Mr. X** does not need to file a return unless he has Indian income or wants to claim refunds. 2. **Mrs. X** should file a return if her total taxable income exceeds the exemption limit, even if funds are transferred from her NRI husband. 3. **Bank Balance Reporting:** Reflect the actual bank balance and maintain records to clarify the source of funds. 4. **Section 80C Deductions:** Mrs. X can claim deductions for LIC premiums if the policies are in her name or her dependents.
Understanding these nuances will help in ensuring compliance and optimizing tax benefits.
CAclubindia
