shatrughan singh (nil) (28 Points)
29 October 2013Dear Member,
I am going to receive a fund from a Foreign investor which will be transferred to my saving bank account. The amount is around 1 million dollar. The foreign investor has no company in foreign and the fund he got after retiring from service. My question are as follows :-
1. is this amount taxable.
2. what are the document required which has to be showed to the bank, so that the fund get credited to my account.
your early reply will be highly appreciated.
thank you very much
Nikhil Kaushik
(Fellow CA)
(85637 Points)
Replied 29 October 2013
Dear Shatrughan,
Whether it is taxable or not, shall depend on many factors:
1. are you receiving this money as an individual or as a company?
2. is this in form or equity investment or loan?
3. what is the documentation for this?
you need to comply with FEMA. If the money is received as equity or loan, then not taxable. However, if it is not refundable then it shall be taxed.
shatrughan singh
(nil)
(28 Points)
Replied 29 October 2013
Dear Mr. Nikhil Kaushik,
Many thanks for you reply.
1. I am receiving this fund as an individual. the amount will be credited to my saving bank account.
2. They will give as a gift.
3. I don't know the documentation, what are the documentation required ?
4. does it comply with FEMA rules or not ?
Many thanks for your help.
Nikhil Kaushik
(Fellow CA)
(85637 Points)
Replied 29 October 2013
In case of a gift no FEMA compliance needs to be done. However in Income-tax, taxability of this money shall depend on your relationship with the person sending you this money.
if the non-resident giving you this money is not a relative as per the definition of Income tax, then this money shall be taxable as income from other source.
The definition of relative is:
(i) spouse; (ii) brother or sister; (iii) brother or sister of the spouse; (iv) brother or sister of either of the parents; (v) any lineal ascendant or descendant; (vi) spouse of any of the relative at clauses (ii) to (v); of the individual.
shatrughan singh
(nil)
(28 Points)
Replied 29 October 2013
Dear Mr. Nikhil Kaushik,
Many thanks for your answer.
1. Yes the person is not a relative.
2. how much amount will be given as tax.
3. is there any ways to reduce the taxable amount under any documentation.
4. will the bank ask any document to credit the amount in my account.
Many thanks for your concern
Nikhil Kaushik
(Fellow CA)
(85637 Points)
Replied 29 October 2013
at normal tax rates.
to reduce the taxation through documentation, you need to hire a professional to do it who can sit with you and structure the transaction.
bank will ask for the purpose of transaction ie gift/ loan etc, amount of remittance, remitter details such as name, address etc.
shatrughan singh
(nil)
(28 Points)
Replied 29 October 2013
Dear Mr. Nikhil Kaushik,
Many thanks for your input,and appreciated.
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