Investments in India from overseas taxable


I’ve been residing within the UAE for the previous seven years and have non-resident exterior (NRE) accounts in India. Not too long ago, my household shifted again to India completely, whereas I’ll proceed to work within the UAE as an NRI. Given this case, is it authorized if I spend money on authorities funding choices akin to RBI floating charge bonds, sovereign gold bonds, Sukanya Samriddhi Yojana and Kisan Vikas Patra by way of my spouse’s Indian accounts by transferring funds from my NRE account to her Indian account? Are there limits on switch of funds from an NRE account to an account in India for funding functions? What would be the tax implications?

—Identify withheld on request


Underneath the change management regulation, the permissible debits to an NRE account are native disbursements, remittance exterior India, switch to different NRE/ Overseas Foreign money Non-Resident Account (B) [FCNR(B)] accounts and investments in India. Accordingly, you could switch funds to your spouse’s regular resident account. Your spouse can spend money on eligible investments in India from her account. Underneath earnings tax legal guidelines in India, earnings earned from eligible investments in India can be taxable in your arms in India if these are held in your title. Even when your spouse has made the investments from the funds you offered, it is going to be taxable in your arms owing to clubbing provisions.


My son, an Indian citizen aged 41, has been a member of the workers’ provident fund (EPF) and workers’ pension scheme (EPS) since January 2013 when he was posted to work in Bengaluru from the US. From January 2022, he can be posted in Singapore. Consequently, contributions to EPF and EPS will stop. Can your entire contribution (together with the employer’s portion) to EPF and EPS be claimed on this occasion?

—Identify withheld on request


As per Para 69 of the Staff’ Provident Fund Scheme, 1952, an worker (Indian nationwide) is eligible to withdraw from EPF underneath the next circumstances: On retirement from service after attaining the age of 55 years; on retirement on account of everlasting and complete incapacitation; on migration from India for everlasting settlement overseas; and on being unemployed in India for greater than two months. Equally, Para 14 of the Staff’ Pension Scheme, 1995, says an worker (Indian nationwide) is eligible to withdraw from EPS if he/she has not rendered service of 10 years or extra on the date of cessation of employment. However, the worker can be entitled to withdrawal profit as per Desk D of EPS or might decide to obtain scheme certificates. If an worker has rendered service of 10 years or extra, he/she can be eligible for month-to-month pension from EPS. In your son’s case, he might withdraw from EPF and EPS on termination of Indian employment after two months. As he has rendered steady service of 5 years or extra in India, the withdrawal of accrued stability updated of cessation of employment in India received’t be taxable in India.

Sonu Iyer is tax companion and other people advisory companies chief, EY India.

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