Taxability to nri

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

19 November 2014
FACTS :

One of my client was abroad for a long time. He returned for good on 3 October, 2014. So, for F.Y.
2014-15, he is non-resident & only his Indian Income is taxable. He has NRE A/c in a Nationalized Bank. Before closing the NRE A/c, he wishes to:

A. Transfer Rs. 15 Lakhs to his son who resides in New Zealand (& is a NewZealand passport holder ) for purchasing a House abroad.
B. Transfer a sum to his son, who in turn, will open an NRI A/c in India, invest the same in F. D. & out of Interest earnings, transfer a monthly sum Rs. 50000/-to his father.
C. Out of Balance funds in NRE A/c, my client wishes to purchase Tax Free Bonds issued by Government of india.

QUERIES :

1. Will transfer of Rs.15 Lakhs to son need RBI permission ?
2. Will son’s Indian Income by way of Interest on F.D. out of NRI A/c be taxable in India?
If yes, even then the transfer is beneficial since it will create another assessee. Is this view tenable? (The son has no other Indian Income & is a permanent resident of New Zealand.)

Kindly let me have your opinion.

Thanks & regards.

R. V. Marathe
Chartered Accountant

Amol S Joglekar

Amol S Joglekar (Expert)
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19 November 2014 01. RBI permission not required.
02. Son being Non Resident....interest om NRE deposit is NOT taxable, however interest on Indian Deposits e.g. N.R.N.R. deposit is taxable in India, subject to the over all basic exemption limit.
03. Tax free bonds may be purchased.

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