Ad Free CAclubindia and Daily Updates on your Mobile. Subscribe Now!

NRE to NRO

arunvelani (Part Time Practice cum Full Time Job) (83 Points)

08 February 2011

Pl tell me that if NRI trsf. his fund from NRE a/c to NRO a/c and that fund invest in FD. Now Question is How can he claim refund of TDS deducted on FD interest by Bank?

Is he liable to aaply for PAN Card ? than What is the Residence Proof for that?

what is the rate of TDS on FD interest for NRI?

Reply
Follow
Share

6 Replies

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 08 February 2011

Mentioned below are the essential features of both the account types.

Account Type	NRE	NRO
Currency	INR	INR
Purpose Of Account	NRE Accounts are used to hold overseas savings remitted to India after converting to INR	NRO Accounts are used to hold Indian income like rent, dividend etc.
Repatriation	Fully repatriable	Only interest on NRO account balance (after deducting TDS)
Types Of Account	Savings Bank Account Fixed Deposit Account	Savings Bank Account Fixed Deposit Account
Tax	Fully exempt	30% tax deducted at source
Local rupee funds	Not allowed	Can be deposited
Advantages	Rupee account with full repatriation	Account for local Deposits
Joint Holding Facility	Only with NRIs	Both with Resident/Non-Resident

Upgrade to CAclubindia Pro. Subscribe Now!

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 08 February 2011

How to get a PAN Card from abroad

STEP BY STEP GUIDE FOR PAN CARD APPLICATION BY NRIs

For Frequently Asked Questions on Pan Cards Check here

Getting a ‘PAN CARD’ is a simple process that can be done online. Please note that PAN card mailing overseas is allowed to some countries. NRIs wanting to apply for a PAN card from abroad can check the list of countries given below.

How to apply for a PAN card from abroad.

What you need to get pan card online.

1. Document that has your overseas address on it. The best document to use is your bank statement showing your overseas address.

2. Copy of passport.

3. Photograph

4. Bank draft in the amount of Rupees 744 payable atMumbai to ‘N S D L PAN’

Note: NRIs cannot pay with a credit card from overseas.

NRI online applications for a ‘Permanent Account Number’ (PAN)

Step by step instructions for getting PAN CARD from abroad.

1. Log on to ONLINE PAN CARD Website

2. Scroll down to the bottom of the page where you see:
'Apply for a new PAN Card' and select Individual from the drop down menu bar.

3. Application for Pan Card Form49A will open.

4. Fill in the form. Read Guidelines on filling form and Instructions on filling form if you wish. When filling in the address make sure it is the same overseas address that is shown on your bank statement.

5. Do not fill an Indian address.

6. Once the form is filled, review it to ensure everything is correctly filled and click submit.

7. An acknowledgement will appear on the screen if form was submitted correctly.

8. Print out at least two copies of the acknowledgement. (One copy is for your record)

9. Paste your photo on one of the printouts of acknowledgement and sign in black ink.

10. Sign on all pagers of the photocopies of your passport and your bank statement.
(Black pages of passport are not required to be copied)

11. Mail all documents to NSDL, PAN unit at Mumbai.

12. You can track the status of your application by using your acknowledgement number.

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 08 February 2011

https://www.tin-nsdl.com/Foreigncitizen.asp

arunvelani (Part Time Practice cum Full Time Job) (83 Points)
Replied 10 February 2011

Thank u Mr. Sharma for sharing your knowledge with me

Pl tel me can NRI claim refund of TDS deducted on Int. of FD with NRO a/c?

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 10 February 2011

Filing Return of Income in India

Who Should file Return of Income?

You are liable to file Return of Income only if your taxable income* in India in the relevant Financial Year (April –March) exceeds the basic exemption limit (i.e. Rs.1,50,000/- for F.Y.2008-09)

*-Non Resident Indian (NRI) earning below mentioned income shall be liable to file returns in India, irrespective of their Total Income being less than the Basic Exemption limit.

• Income from Short Term Capital Gains on equity shares or units of equity oriented mutual fund.

• Income from Long Term Capital Gains, which are chargeable to tax.

Exception:

It shall not be necessary for a Non-Resident Indian to furnish a return of income if –

a)	his total income in respect of which he is assessable under this Act during the relevant financial year consisted only of investment income or income by way of long –term capital gains or both; and
b)	the tax deductible at source has been deducted from such income.

**	“investment income” means any income derived [other than dividends from Domestic Company] from a foreign exchange asset;
	“Long –term capital gains” means income chargeable under the head “Capital gains” relating to capital asset, being a foreign exchange asset which is not a short - term capital asset;
	“Foreign exchange asset” means any specified asset which the assessee has acquired or purchased with or subscribed to in, convertible foreign exchange;

Thus, if you don’t have any income which is chargeable to tax, you are not required to file return of income.

Also, if you have only Investment Income or Income from Long Term capital gains or both (as explained above) and the tax has also been deducted at source from such income, then you are not required to file Return of income.

However if you have short term capital gains on equity shares or units of equity oriented mutual fund (even if less than Rs.1,50,000/-i.e. the basic exemption limit )yet you are liable to file ROI.

Income Taxable in India:

A person who is Non Resident under the Provisions of The Income Tax Act, 1961 is charged to tax on the following Incomes:

a. Income earned from any source in India e.g. Interest from investments in India, capital gains from investments and immovable property in India etc.

b. Any other Income earned or received in India.

c. Income other than the above is not taxable in India.

Due Dates for Filing Return of Income:


Before the Prescribed Date	After the Due Date, But before the Extended Date	After the Extended Date
Every person who is not carrying on business is required to submit return of income by 31st July every year for the income earned during the prior year ending 31st March provided his income exceeds the maximum amount not chargeable to tax i.e.1,50,000/-.	If a NRI do not file the ROI by the prescribed date, He can file the ROI within subsequent 20 months He is liable to pay interest at 1 % p.m. on the tax payable.	If the Tax is deducted at source from your Income in the Past years and you have not filed the Return of Income within the prescribed time, you may apply to Income Tax Department to condone the delay and accept delayed return and thus claim Refund of Tax.

For Example


Income for the year ending	Actual Income Earned	File the ROI by	File the ROI by Extended date
31^st March 2005	More than Rs 50,000	31^st July 2005	31^st March 2007
31^st March 2006	More than Rs 1,00,000	31^st July 2006	31^st March 2008
31^st March 2007	More than Rs 1,00,000	31^st July 2007	31^st March 2009
31^st March 2008	More than Rs 1,10,000	31^st July 2008	31^st March 2010
31^st March 2009	More than Rs 1,50,000	31^st July 2009	31^st March 2011

It may result in to penalty of Rs.5000 for each year.

Also, one may be subject to prosecution u/s 276CC.

Provided that a person shall not be preceded for penalty or prosecution for failure to furnish return of income, if-

a) The return is furnished by him before the expiry of the assessment year;
or

b) The tax payable by him on the total income determined on regular assessment, as reduced by the advance tax, if any, paid, and any tax deducted at source (TDS), does not exceed three thousand rupees.

i.e. his balance tax liability after considering TDS and Advance Tax does not exceed three thousand rupees.

	The tax deduction at source for NRI is prescribed at maximum rate in the Income –tax Act (11% to 34%). However, the actual liability to tax for the year computed in accordance with the provisions of the Act is generally lower for following reasons.

	i. Income up to the basic exemption limit of Rs.1,50,000/- (other than capital gains) earned by NRI is not liable to taxation. However, the tax is deducted at source at 33.99% from such income. ii. The income earned may not be liable to tax but the Payer in following cases deducts the tax.

		a) The Capital losses can be set off against Capital Gains but tax is deducted at source from capital gains without setting off the losses. b) The rate of TDS on NRO Account is 33.99 % (for Financial Year 2008-09) but tax chargeable on Income as per Double Taxation Avoidance Agreements (DTAA) with the country where NRI resides, may be lower. c) The reinvestments of capital gains, as prescribed may exempt it from tax but the tax may have been deducted from the capital gain received.

	In view of above, NRI should file Return of Income if his tax deducted at source is more than his actual tax liability. He is entitled to claim refund of Tax with interest at 6 %p.a.

	Sometimes, NRI may incur short-term or long term capital loss on sale of investments. He can setoff such loss against long term capital gain from sale of investments in subsequent year or years provided he has filed Return of Income within the prescribed time for the year in which he has incurred loss. Hence the NRI should file the return of Income declaring loss in such a situation.

3.	NRI may file Return of Income in some years and may not file in some years .But if he receives a notice from the Tax Department to file the Return of Income, he must respond by filing return of Income.

4.	The updated tax information / records helps NRI to comply with the procedural documentations for repatriation of Income and Assets held in India. It also helps him to have ready records as & when he returns to India.

Upgrade to CAclubindia Pro. Subscribe Now!

Satish (Senior Software Engineer) (21 Points)
Replied 27 May 2011

Great post by Mr. Sharma. I have one small query if you can help me with :-

1.) I am a NRI so I am having NRO account. I am selling my property in India and planning to deposit the proceeds of the transaction in my NRO account . As per my understanding Bank cannot deduct TDS on the checque deposited amount as I have to take Long term capital gain benefit by reinvesting the amount . Bank will only deduct TDS on the interest generated on this amount.

Please, suggest if my understanding is correct .

Thanks in Advance!!

Satish Sharma