Money presents from non-relatives not taxable as much as Rs50,000 in a yr

Hemant Mishra/Mint

I wish to know if I’ve to pay tax on the cash obtained from a non-resident Indian (NRI) for private presents and donations?

—Niharika Nag

There isn’t a reward tax in India. Nevertheless, any sum of cash, movable property or immovable property obtained by a person with out consideration shall be thought of taxable, besides presents obtained from a relative. The time period “relative” consists of:

(i) Partner

(ii) Brother or sister

(iii) Brother or sister of the partner

(iv) Brother or sister of both of the mother and father

(v) Any lineal ascendant or descendant

(vi) Any lineal ascendant or descendant of the partner

(vii) Partner of the particular person referred to in clauses (ii) to (vi)

Additionally, money or presents in variety (presents) from non-relatives aren’t taxable as much as a worth of Rs50,000 in a monetary yr.

In your case, presents from a non-resident Indian shall be exempt from tax if they’re obtained from a relative or the worth of the presents obtained is lower than Rs50,000 in a monetary yr.

What’s the taxability of curiosity on international foreign money non-resident (FCNR) deposits when an NRI turns into a resident and ordinarily resident (ROR) in the course of the tenor of the deposit?
—Rohit Singh

Curiosity revenue from FCNR account is exempt from tax in India so long as the person qualifies as non-resident or resident however not ordinarily resident (RONR) in India beneath the income-tax legal guidelines.

Please notice that dedication of residential standing is completely different beneath the change management regulation and the income-tax regulation.

As soon as the person qualifies as resident and ordinarily resident in India beneath the income-tax regulation, curiosity revenue from FCNR deposits will turn into taxable in India.

Will tax be deducted at supply (TDS) from the curiosity on a non-resident abnormal (NRO) account? Are there any limits at which TDS deductions begin?
—Jay Okay.

Curiosity revenue non-resident abnormal (NRO) account is taxable in India and there are not any particular exemptions out there for tax deduction at supply for mentioned curiosity. As such, tax is deducted by the financial institution at supply on curiosity credited on NRO accounts on the price of 30% (plus surcharge on the price of 15% on tax if revenue is above Rs1 crore) plus schooling cess on the price of three% on tax.

In computing the full revenue, you may take into account a deduction of Rs10,000 beneath Part 80 TTA of the Revenue-tax Act, 1961, on curiosity earned on a financial savings NRO account.

Nevertheless, a person dwelling exterior India and qualifying as a resident of one other nation can avail the advantage of a decrease tax deduction on curiosity on NRO account beneath a Double Taxation Avoidance Settlement (DTAA).

Any particular person meaning to avail this feature must inform the financial institution and submit a replica of the tax residency certificates from the nation the place she qualifies as a resident, together with different paperwork prescribed by the financial institution.

Sonu Iyer is tax accomplice & individuals advisory providers chief, EY India.

Queries and views at mintmoney@livemint.com

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