The government said it doesn’t intend to tax income that bona fide workers earn overseas, allaying concerns about a budget proposal relating to non-resident Indians (NRIs) that said those who weren’t taxed in another country were liable to pay tax in India. This had caused Indians working in the Middle East to panic as many countries in the region don’t levy income tax. The government said the provision was an “anti-abuse” one and will only apply to income that is generated locally. “It is clarified that in case of an Indian citizen who becomes deemed resident of India under this proposed provision, income earned outside India by him shall not be taxed in India unless it is derived from an Indian business or profession,” the Central Board of Direct Taxes (CBDT) said in a statement on Sunday. “The new provision is not intended to include in tax net those Indian citizens who are bona fide workers in other countries.” Read more 

Budget 2020: In areas of ease of compliance, one such amendment proposed by the Finance Minister is to extend exemption to non-residents from filing annual income-tax return in India in additional cases. Budget 2020 was presented by the Hon’ble Finance Minister on 1 February 2020. The Budget is woven around three prominent themes “Aspirational India, Economic Development for All and A Caring Society”. From the tax perspective, apart from the reform measures already taken so far, it is focused on crucial aspects such as ‘stimulate growth, simplify tax structure, bring ease of compliance, and reduce litigations’. The current government has put a lot of thrust on manufacturing in India, promoting start-ups, developing job opportunities, widening and deepening of tax base, tax certainty, reducing litigations and simplifying tax laws. In areas of ease of compliance, one such amendment proposed by the Hon’ble Finance Minister is to extend exemption to non-residents from filing annual income-tax return in India in additional cases. Under the provisions of the Income Tax Act, 1961 (the Act), specific tax rates have been prescribed for different categories of income. Further, a non-resident is currently not required to file his return of income, if his total income consists only of dividend or interest income and TDS on such income has been deducted according to the provisions of the Act. Non-residents earning royalty or fees for technical services (FTS) from India were, however, still required to file their return of income in India. Read More

The Finance Ministry has issued a clarification that clears the air over a contentious anti-tax abuse Budget proposal that had raised the hackles of many non-resident Indians. As per the proposal, “an Indian citizen who is not liable to tax in any other country or territory shall be deemed to be resident in India”. The implication was that such a person may become liable to pay tax in India. This key change could also have had the unintended consequence of bringing into the Indian tax net the incomes earned abroad by bonafide NRI workers in countries that don’t levy income tax. For instance, it could impact NRIs staying in countries such as UAE which do not impose income tax on individuals under local tax laws. This had raised worries among many NRIs who work in such jurisdictions. Thankfully, the Finance Ministry has now clarified that the new provision is not intended to include in the tax net those Indian citizens who are bonafide workers in other countries. It clarifies that in case of an Indian citizen who becomes deemed resident of India under this proposed provision, income earned outside India by him shall not be taxed in India unless it is derived from an Indian business or profession. Making its intent clear, the clarification says, “In some section of the media, the new provision is being interpreted to create an impression that those Indians who are bonafide workers in other countries, including in Middle East, and who are not liable to tax in these countries will be taxed in India on the income that they have earned there. This interpretation is not correct.” It adds that necessary clarification, if required, shall be incorporated in the relevant provision of the law. Read More

The budget has turned out to be taxing for the non-resident Indian. Firstly, to be categorised a non-resident, an Indian now has to stay abroad for 240 days a year, against 182 previously. In other words, an Indian national, to claim the non-resident status, can’t stay in India for 120 days or more in a year. “We’ve made changes in Income Tax Act where if an Indian citizen stays out of the country for more than 182 days, he becomes non-resident,” said revenue secretary Ajay Bhushan Pandey.  “Now in order to become non-resident, he has to stay out of the country for 240 days.” The second rule is more deadly: a non-resident Indian, who is not taxed in the foreign country, will become taxable in India. The government said it is introducing this provision to prevent tax abuse. Read more

Though the Indian real estate environment has become very conducive for NRI investors yet again, there is often still hesitation to take the plunge because of uncertainty about the legal implications. The doubts that many first-time NRI property investors have are often very pertinent, and finding answers to them is far from easy. It is time to tackle some of the questions that NRIs often ask in Gulf countries which have, by far, the strongest complement of Indian expatriates anywhere in the world. Often, these investors do not have access to a lawyer well-versed in Indian property laws and related fields of expertise, which is why many of their questions are legal in nature. Here are the answers to the recurring doubts that individual NRI property investors face: Can an NRI use a Will to bequeath property in India to someone else — either another NRI or a resident Indian? NRIs can certainly bequeath property to their legal heir/s or any one of their choice via a Will. An NRI can inherit any immovable property in India, whether it is residential or commercial — and even agricultural land or a farmhouse (which they are otherwise not entitled to purchase). An NRI is also free to inherit property from another NRI or resident of India. However, the RBI’s permission is necessary if the property is inherited by a citizen of a foreign state and is a resident outside India. Can a property be gifted, and what are the statutory charges levied on a gifted property? An NRI can gift residential and commercial property to a person residing in India, or another NRI. However, if the property is agricultural land, plantation property or a farmhouse, it can only be gifted to a citizen of India residing in India. Gifts received from relatives (as defined under the Income Tax Act) are not taxed — but at the time of registration, one has to pay the prevalent stamp duty and registration charges. Relatives include a spouse, brother or sister, brother or sister of the spouse, brother or sister of either of the parents and any lineal ascendant or descendant of self or spouse. If the gift is received on the occasion of marriage or from a registered trust, it is exempt from tax. Some NRIs are more interested in investing in Indian real estate via companies they have formed on foreign soil, or they may work for a foreign company that is interested in establishing a footprint in India. Can an overseas company or a subsidiary company outside India invest in Indian real estate? The Indian realty sector is eligible for 100% FDI (Foreign Direct Investment) under the automatic route in the construction development segment, which includes townships, housing, built-up infrastructure. An overseas company or a subsidiary company outside India can invest in Indian real estate via this route, but not in finished buildings. How to repatriate funds from real estate investment, both for rental income and proceeds on sale? The laws are quite lenient but have some provisos. There is no restriction on NRIs for repatriating rental income or even property sale proceeds (other than […]

According to the World Bank’s latest Migration and Development Brief, India has been recognised as the top recipient of remittances, with the country receiving a whopping $79 billion as remittances in 2018! However, a large chunk of this amount is often kept in savings accounts, which inevitably translates to low returns. Here’s where fixed deposits come into play. Bank FDs are low-risk investment instruments that allow you to grow your wealth substantially over a fixed period of time. And similar to how an Indian citizen can opt for domestic FDs, NRIs (Non-resident Indians) too have dedicated FD accounts through which they can earn higher than a savings account. NRE and NRO fixed deposits: The basic differences For Non-resident Indians, there are two types of accounts they can open with Indian banks—Non-resident External accounts (NRE) and Non-resident Ordinary accounts (NRO). NRE FDs are beneficial for those earning in a foreign currency and who would like to get the amount converted to the value of Indian currency. Some of the major highlights of an NRE FD account are that the interest earned is tax-free and both the principal and the interest amount are completely repatriable. Do consider that the money deposited is subject to currency rate fluctuations, and also that NRE joint accounts can only be opened with another NRI. Read more

Unclaimed dividends are the dividends that have been paid by the company but have not been taken or claimed by the shareholder. The Ministry of Corporate Affairs (MCA) proactively introduced Section 125 of the Companies Act, 2017, deals with declaration and payment of dividends. There are several reasons for shareholders not being able to claim their  dividend ➢          Lost track of funds owned to you ➢          The Company might have failed to locate the shareholder ➢          you were not aware of the investments ➢          Change of address ➢          Close of bank account ➢          Mismatch of signature Shareholders or now NRIs need to claim their dividends, not only to receive the payment but also to accurately disclose that additional income on their tax return. If the dividends are not claimed within 30 days of the declaration date, the company puts them in a special unpaid dividend account with it being liable to additionally pay interest at the rate of 12% p.a. If the dividend is not claimed till the next seven years, the company is supposed to transfer the money to an “investor education and protection fund”. NRIs can claim their dividend by making an application in online Form IEPF 5. A request letter should be made to the company’s register and transfer agent (RTA). The request letter should mention the folio number in case of physical shares, or depository participant ID and client ID, and the period for which dividend has not been received. The NRI or claimant shall after making an application online Form IEPF-5 under rule (1) send the same duly signed with below mentioned documents: ➢          Copy of Acknowledgement ➢          Indemnity Bond ➢          Advance Stamped Receipt ➢          Copy of Aadhar ➢          Canceled Cheque ➢          Original Certificate ➢          Proof of entitlement ➢          Copy of Passport Company will send a verification report to IEPF Authority within 15 days of the receipt of the claim form and after verification; ➢          to the amount claimed: The authority shall present a bill to the Pay and Accounts Office for e-payment as per the guidelines. ➢          To the shares claimed: Authority shall issue a refund sanction order with the approval of the Competent Authority and shall either credit the shares which are lying with depository participant in IEPF suspense account Application received for the Authority shall dispose of refund of any claim duly verified by the concerned company within 60 days. If the claimant is a legal heir or successor or administrator or nominee of the registered security holder, he has to ensure that the company completes the transmission process before filing any claim with the Authority. The claimant shall file only one consolidated claim in respect of a company in a financial year. If by any chance the company fails to comply with any of the requirements of the claimant’s request for their divined, the company shall be punishable with fine which is not less than five lakh rupees; may extended to 25 lakh rupees. It should be noted that every officer of the company who is a part of this negligence should be punished with fine up to one lakh rupees […]

Owning a property in India is everyone’s wish or dream. NRIs also have started to invest their money into the properties in India as the Indian sector has a massive scope of growth in the future. The number of expatriates putting their money in the country’s real estate sector has gone up. However, in the absence of a well-designed regulator at present, NRIs have to face a lot of trouble while investing their cash. They are also not aware of the rules & regulations of the Indian banks when applying for home loans. So here we have a list of things you should keep in mind when applying for home loans in India. Eligibility: If applying for home loans in India; NRIs, PIOs & OCIs are only eligible. Whereas citizens of Pakistan, Bangladesh, Sri Lanka, China, Nepal, Iran, Afghanistan or Bhutan are not eligible for home loans in India. Age requirement: The minimum age of the applicant should be 24 years and the maximum should be 60 years if applying for home loans in India. Work experience: Applicant should have a minimum overseas work experience of 6 months with total work experience of 2 years if applying for home loans in India. Property eligible: NRIs can apply for home loans for the purpose of construction of new home/flat, purchase of an already built home/flat, extension to a home/flat, purchase of a built-up plot. The property can be residential or commercial but not farm or agricultural land. If the property is well maintained and the residual age of the property is at least 12 years, then the bank will definitely fund it. NRIs have to submit below-mentioned documents while applying for home loans in India: Passport & visa forms as part of KYC exercise Details of permanent address in India Deputation or appointment letter, work experience, certificate, work permit and contract of employment Salary certificates and statements of NRE and NRO accounts Foreign land address proof, verified by your employer, along with the tax returns statements from the foreign land Qualification certificate along with General Power of Authority It is desirable to appoint any of your relatives as a Power of Attorney holder in India. The POA holder would be entitled to act on behalf f you as per the authority provided under the POA agreement and your physical presence need not be required at all times for processing your home loan. Banks usually allow an advance of 80-85% of the value of the property, subject to the GMI of an individual. An NRI usually has to pay a higher rate of interest than resident Indians. The tenure for a home loan to an NRI usually ranges between 5 to 20 years but only it can it go up to 30 years for salaried professionals. The repayment of these loans can only be through NRE or NRO account. There is no penalty for pre-payment of the partial or full value of the outstanding loan amount paid from your own sources. You are eligible for a tax deduction on interest paid and loan repayment on your home loan if you’re an NRI […]

The government has approved NRIs (Non-resident Indian) to get their own Aadhaar number after coming to India. Finance Minister Nirmala Sitharaman proposed this in Union Budget 2019, to issue Aadhaar cards to NRIs having Indian passports after they arrive in India. It may be noted that earlier it used to take 180 days for NRI to get the Aadhaar card. Read More