Property gifted to folks is exempt from tax in India

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I’ve been working with an airline firm in Dubai for just a few years now. I’ve just a few mounted deposits in India. Will the curiosity earned on these deposits be taxed?

—Manas Gupta

Any earnings earned or obtained in India is taxable in India. Due to this fact, curiosity earned on the mounted deposits in India is taxable in India.

Nevertheless, there are particular exemptions out there beneath the Revenue-tax Act, 1961. Any curiosity earned on the deposit in an non-resident exterior (NRE) account (financial savings or mounted deposit) is exempt beneath part 10(4)(ii) of the Act for a person who’s an individual resident exterior India as per the Overseas Alternate Administration Act,1999 (Fema) or an individual who has been permitted by the Reserve Financial institution of India (RBI) to take care of the aforesaid account.

Curiosity on a non-resident unusual (NRO) account or different resident accounts is absolutely taxable (particular exemptions apply for NRE and international foreign money non-resident, FCNR, accounts solely). Curiosity is taxable at progressive charges of 10-30% (excluding surcharge and schooling cess).

We might advocate that you simply verify the kind of account you maintain in India and your residential standing in India beneath Fema guidelines to find out the taxability of the curiosity earnings.

I’m a non-resident Indian (NRI) based mostly out of Sweden. I’ve been dwelling right here for the previous 25 years. I need to purchase a home in my father’s identify in India. Will both of us be taxed for it if I accomplish that? I additionally wished to know the tax facet of the identical.

—Gurpreet Singh

In case you purchase a home in your father’s identify, will probably be termed as reward. Present of any immovable property, the place the stamp responsibility worth of the property exceeds 50,000, is taxable as “Revenue from different sources” within the arms of the recipient of the reward. Nevertheless, sure presents will not be topic to tax.

In case the property is presented to a relative, then there could be no tax implications, on the recipient or on the giver. The time period ‘relative’ is outlined beneath the earnings tax legal guidelines. This definition contains one’s dad and mom.

Due to this fact, immovable property gifted by you to your father will fall beneath the exception and won’t be topic to tax in India on the time of buy.

Nevertheless, any earnings from the property (for instance, rental earnings) or subsequent acquire from sale of the property shall be taxable in India.

Queries and views at mintmoney@livemint.com

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