Basic Limit for Non Resident taxation

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Anushree (Querist)
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28 October 2009 A Senior Citizen Non-Resident Assessee earned Long Term Capital Gain income in India & has no other income hence how he will be taxed for the F. Y. 2008-09?? Does he eligible to get benefit of Unabosorbed Limit? Please explain with an Example.

Nilesh Damji Chheda

Nilesh Damji Chheda (Expert)
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28 October 2009 yes

Anushree

Anushree (Querist)
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29 October 2009 A Senior Citizen Non-Resident Assessee earned Long Term Capital Gain income in India & has no other income hence how he will be taxed for the F. Y. 2008-09?? Does he eligible to get benefit of Unabosorbed Limit? Please explain with an Example.

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Asha Kanta Sharma

Asha Kanta Sharma

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18 July 2024 For a Senior Citizen Non-Resident Assessee (NRI) who earned Long Term Capital Gains (LTCG) in India during the Financial Year 2008-09 and has no other income, here's how the taxation and benefit of Unabsorbed Losses would apply:

### Taxation of Long Term Capital Gains:

1. **Nature of Income:**
- LTCG earned by a non-resident individual from investments in India is taxable in India under the Income Tax Act, 1961.

2. **Tax Rate for LTCG:**
- For NRIs, LTCG from listed equity shares or equity-oriented mutual funds is taxed at a flat rate of 10% without indexation benefit. However, for LTCG from other assets (like real estate or unlisted shares), it is taxed at 20% with indexation benefit.

3. **No Other Income:**
- Since the individual has no other income apart from LTCG, their total taxable income for the year would be the LTCG amount.

4. **Tax Calculation:**
- Calculate the LTCG earned during the financial year.

**Example:**
- Let's assume the Senior Citizen NRI earned LTCG of Rs. 5,00,000 during the Financial Year 2008-09.

- Tax on LTCG @ 10%: Rs. 5,00,000 * 10% = Rs. 50,000

- Therefore, the tax liability for the year would be Rs. 50,000.

### Benefit of Unabsorbed Losses:

1. **Concept of Unabsorbed Losses:**
- Unabsorbed losses (including capital losses) arise when deductions or losses exceed the income in a particular year, and these losses cannot be set off entirely against income in that year due to various reasons (such as absence of taxable income).

2. **Carry Forward and Set-off:**
- Under the Income Tax Act, unabsorbed losses, including capital losses, can be carried forward to future years to be set off against future income of the same nature.

3. **Applicability in Example:**
- In the given example, since the NRI has no other income apart from LTCG, there would typically be no unabsorbed losses from previous years to set off against the LTCG in the current year.

4. **Future Utilization:**
- The LTCG tax liability of Rs. 50,000 would be calculated and paid for the current year. Any unabsorbed losses from this year (if applicable) could be carried forward to future years to offset against any future capital gains.

### Conclusion:

For the Financial Year 2008-09, the Senior Citizen NRI would be taxed at the applicable rate on the LTCG earned in India. Since there is no other income, the tax liability would be based solely on the LTCG amount. The benefit of unabsorbed losses would apply in subsequent years if there are losses that cannot be fully set off in the current year due to the absence of sufficient taxable income.

It's important for NRIs to adhere to tax regulations, including filing income tax returns in India for any taxable income earned here, such as LTCG, and to utilize tax benefits effectively, including carry forward of losses where applicable.