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'I am an NRI getting salary from a US firm. Can I invest in Indian securities? What are the tax implications?'

I came back to India after 5 years. I transferred my savings here and a part of that was kept in US dollars as an RFC fixed deposit. How long can I keep this deposit going since now I am a resident Indian? Do I have to pay tax on the interest earned, which is automatically added to the deposit? Is it legal to keep an account running in England?
-- Dr.Shreedhar Archik

I am an NRI planning to return to India. I have an NRE account and FCNR deposit opened in a bank in India. I heard that once I return to India, I could open RFC account and move all the money from FCNR and NRE account. This way even after loosing my NRI status, I can maintain the money in foreign currency (for 10 years) and this amount is not taxable. Is this true? Can you elaborate on the details?
-- Srinivas (Meher) Yeditha

I am an NRI living in USA. I have NRNR, FCNR (dollar account) and NRE accounts in a bank in India. I have been transferring all my savings here in these accounts. I am going back to India in December for good. My question is until when can I retain my NRNR, FCNR and NRE accounts there? Is money in this account and interest earned on this is taxable?
-- Satish Khade

The foreign exchange regulations (not forming a part of the Income Tax Act, 1961) deals with the issue of RFC. The regulations permit an NRI to maintain his NRE Account for a certain period of time even after he loses his NRI status. The exemption from tax to the NRI is granted till such time as the NRE Account is allowed to be maintained under the foreign exchange regulations. The interest earned on the balance lying to the credit of NRE Account with any bank is exempt from Income Tax under Section 10 (4) (ii) of the Income Tax Act, 1961. As far as the principal amount is concerned if the credits in the NRE Account are on account of income earned while enjoying the NRI status, such balance would not attract any tax liability.

I am an NRI & am intending of putting my NRE savings into buying an immovable property in India. Can I avail of some tax/stamp duty exemptions in this regard?
-- Anand

No, the Act does not provide for any such exemptions.

If you are a citizen of a country outside India and hold the passport of that country but you are born and brought up in India. Now if you go back to India and get a job there. What are tax implications in this case? Do you have to file a tax return in India or in the country you are the citizen.
-- Pankaj Gupta

Income accruing or arising in India to any person, irrespective of his citizenship, is taxable as per the provisions of Section 5 of the Income Tax Act, 1961. Hence, taking up a job in India and earning from it will make even a foreign citizen assessable to tax in respect of such income.

Filing of tax return: In India, Section 139 (1) of the Income Tax Act, 1961 requires every person, if his total income or the total income of any other person in respect of which he is assessable under the Act during the previous year, exceeds the maximum amount which is not chargeable to tax (Rs.50,000 for assessment year 2000-01), to furnish a return of his income or the return of such other person voluntarily.

A person (not being a NRI) not filing his return under the aforementioned section shall submit his return of income if he fulfills any one of the following conditions at any time during the previous year -
(a) Ownership/lease of a motor vehicle; or
(b) Occupation of certain specified categories of immovable properties whether by way of ownership or tenancy or otherwise; or
(c) Foreign travel to a country (excluding pilgrimage to holy places in Saudi Arabia and China) other than Bangladesh, Bhutan, Maldives, Nepal, Pakistan or Sri Lanka; or
(d) Subscription of a telephone; or
(e) Holder of a credit card (not being an "add-on" card) issued by a bank or an institution; or
(f) Member of a club where entrance fees charged is Rs.25,000 or more.

An individual who is at least 65 years of age and not engaged in any business or profession is not subject to condition (b) or (d).

The requirement of filing of return in the country, other than India, of which the individual is a citizen, would need to be examined in the light of that country's tax laws.

I am an NRI getting salary from a US firm. Can I invest in Indian securities? What are the tax implications?
-- Rajagopalan, Sridhar

As a NRI earning salary from a foreign firm, you are permitted to invest your money in Indian securities, with the approval of the Reserve Bank of India. Income arising out of such investments, unless specifically exempt under the Income Tax Act, 1961 (e.g. dividend on equity shares), will be subject to tax.

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