Chinnappan D M (Consultant) (96 Points)
13 October 2009My son is a Non-resident Indian having a flat which is fetching him a rent of Rs.30k per month. The rental amount is credited to his NRO a/c. As per current Fema guidelines the rental income can be repartriated to his country. Is there any tax payable on such rental income before remitting the amount in foreign c urrency?
Can an NRI avail Foreign currency loan for purchase of a residential property in India?
VARUN
(PCC STUDENT)
(523 Points)
Replied 13 October 2009
I think in ur case income is accruing, arising in India which is taxable for the NRIs.
praveen
(Chartered Accountant)
(6971 Points)
Replied 13 October 2009
yes if the property is India it is deemed to accrue or arise in India and hence tax is payable in India.
Juzer Sadikot
(CA - innovative solutions for Imports and Exports)
(1309 Points)
Replied 13 October 2009
Dear Mr. Chinnappan,
For payment of any Income to NRI section 195 of the I T Act comes into action. As per section 195 the tenant is require to deduct tax at source from the amount payable as rent. However many of such tenants fails to deduct tax and pay the full rental amount and insuch case, the Authorised Dealer (Banks) are adviced by RBI/Income Tax that before remitting any money outside India the remittor has to obtain/furnish form 15CA/CB which shall take care of applicable tax incidents. In your case too, before remitting the income of rent to NRE A/c. or outward Remittance in FC to other foreign country Account, Bank shall ask for these certificates and your son can obtain this certificate only after payment of applicable advance tax on estimated Income as TDS is not made.
Thanks
Rajeev
(www.rkmco.com)
(985 Points)
Replied 15 October 2009
Is tax not deducted by the payer ? , if its not deducted , there may be a reason to do so .
The Tax has to be deducted by the person who pays the rent , Its not to be deducted by you
But yes , your son is liable to tax in india since such income is deemed to accrue in india .
you are under no obligation to deduct tds, but yes he is under obligation to file his ITR and pay his taxes
he can also get his money transferred without any issues , its just a transfer from his own NRE a/c to his own account , its looks a capital transcation, the remitting bank may ask for some declarations as per Fema
Juzer Sadikot
(CA - innovative solutions for Imports and Exports)
(1309 Points)
Replied 15 October 2009
Dear Rajeev Sir,
In relation to your Experty advice i.e. "he can also get his money transferred without any issues , its just a transfer from his own NRE a/c to his own account , its looks a capital transcation, the remitting bank may ask for some declarations as per Fema" I would like to clarify below;
As per Para 3 of Master Circular No.04/2009-10, dated 1-7-2009
In view of para 3.2, AD has to satisfy himself about the tax deducted/provided which most of the AD relies on CA certi (form 15CB) to effect the credit of Current Income. Further, as per prevailing Banking practice/RBI office manual, the Tax clearance certificate is to be obtained and it is to be reported to ITD which is now to be done in Form 15CA.
My view is further supported with a pratical example;
Say Mr. Chinnappan's Son is sucessful in depositing the amount of rent Income in NRE A/c. without obtaining Form 15CA/CB. Now, as NRE is freely repatriable Account his son can repatriate the amount any time with any restriction/formalities. So, the requirement of TDS/Tax paid also form 15CA/CB is to be satisfied at the time of depositing such Income/amount.
I request Rajesh Sir/other experts to correct me if I am wrong.
Thanks
work is worship
(Service)
(2728 Points)
Replied 20 October 2009
what if the house property is purchased from the foreign income earned by the individual.
Rajeev
(www.rkmco.com)
(985 Points)
Replied 20 October 2009
Subra,
Whatever the income subra , foreign or local , if the house property is in india , the income so earned from rental income will be deemed to arise in india
CAclubindia
