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Nri

CA ASPIRANTS (Article) (155 Points)

24 March 2012

sir,

as we understand an NRE (non residential external a/c) is absolutely tax free a/c (for proncipal and interest derived) for that financial year for which the person qualifies to be an NRI (as per the definition gazatted by Income Tax).

my question is - does his interest income (lets say he holds Resident FD, Resident Saving a/c etc) he derives also be taxable and if so at what rate. my associated point that i would want to ne answered through this great forum is - does the 180,000 Rs (in financial year) slab of Income Tax Dept not come in play for an NRI for his interest incomes.

kindly shed some light sirs...

thank you.

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6 Replies

CS RAJESH C.CHOUDHARY (ASSISTANT MANAGER) (14607 Points)
Replied 24 March 2012

Dear Ekta, your narration para 1 is intelligible to me but unfortunately question para 2 is quite unclear and confusing.

CA ASPIRANTS (Article) (155 Points)
Replied 24 March 2012

ok sir,

let me rephrase the 2nd para.

i meant to ask, for an NRI, does the interest derived by NRI in India (say through interests on Resident FD, Saving a/c, etc) will come under tax exemption of 180,000 Rs (for FY 2011-12) of Income Tax.

here 180,000 is the current exemption in Rs. that a male Indian citizen gets, meaning if his annual income is less than 180,000 Rs he is not rqeuited to pay any tax.

hope this will clear sir.

kindy advise.

CS RAJESH C.CHOUDHARY (ASSISTANT MANAGER) (14607 Points)
Replied 24 March 2012

DEAR Ekta!

The exemption180000 has to be counted for income from all sources of income earned in India.

So if there are several sources of income in India including the interest income then interest would be exempted up to 10k only for tax calculation otherwise if the entire source of income in India is only from interest,then general exemption of 180k would be available.As mentioned in Chapter-II, a person who is non-resident is liable to tax on that income only which is earned by him in India.Income is earned in India if:It is directly or indirectly received in India; orIt accrues in India or the law construes it as having accrued in India.

Which besides many others includes also Income by way of interest payable by the Government or by any other person in certain circumstances (refer Chapter VII).You are liable to file Return of Income only if your taxable income from all the sources in India in the relevant Financial Year (April –March) exceeds the basic exemption limit (i.e. 1,80,000/- for F.Y.2010-11)

CS RAJESH C.CHOUDHARY (ASSISTANT MANAGER) (14607 Points)
Replied 24 March 2012

The following income, even though appearing to be arising in India, are construed as not arising in lndia:If a non-resident running a news agency or publishing newspapers, magazines etc earns income from activities confined to the collection of news and views in India for transmission outside India, such income is not considered to have arisen in India.In the case of a non-resident, no income shall be considered to have arisen in India if it arises from operations which are confined to the shooting of any cinematography film. This applies to the following types of non-residents:Individual who is not a citizen of India; orFirm which does not have any partner who is a citizen of India or who is resident in India; orCompany which does not have any shareholder who is resident in India.

CA ASPIRANTS (Article) (155 Points)
Replied 24 March 2012

Rajesh Sir,

I am grateful to you for the elaborate reply and knowledge provided by you. And that is the reason this forum is a great platform when it comes to sharing the knowledge by the professionals/experts.

Many thanks again.

Ekta Shah.