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"Do I need to apply for a PAN account in India when I return?"

Readers' Note: Please keep your questions short.

Being a USA-based NRI, I am investing on NRNR/FCNR/NRE & MF units through the bank channels. I could be returning probably a year or two from now. During that time, my status would be as RONR (resident but not an ordinary resident) for tax purpose. I have not applied for PAN (Permanent Account Number) in India. Could you tell when is the right time to apply for a PAN? To get full tax exemption for 9 years under RONR status, should i keep my savings in US dollars or under the RFC account or as NRNR/NRE term deposits? Or what are the other measures available for tax exemption on my savings?
--Sivakumar Srinivasan

PAN is required to be applied for by an assessee if such a person satisfies any of the following conditions:
a) If his total income or the total income of any other person in respect of which he is assessable exceeds the maximum amount which is not chargeable to income tax (Rs 50,000 for the current year); or
b) Carrying on any business or profession whose total sales, turnover or gross receipts are or is likely to exceed Rs 5,00,000; or
c) Who is required to furnish a return of income for income derived from property held under trust or other legal obligation wholly for charitable or religious purposes.

Hence you would be required to file an application for PAN when you qualify under any of the above conditions.

Regarding on tax exemption on income generated from deposits in NRE/FCNR/NRNR and MF units from the savings from US earnings are as follows:

Particulars	During “RNOR” status	During “Resident” status
Interest on   NRNR/NRE/FCNR   deposit with banks	Exempted upto maturity of deposit	Taxable as normal resident with an option for flat rate @20% upto maturity
RFC a/c (NRE/FCNR a/c   converted)	Exempt even on deposits renewed during the above status	Taxable as normal resident

I am an NRI for the last two years and still in US. I don't have any income in India except from my Savings Bank interest opened 7 to 10 years ago. Interest is almost negligible--it may be around Rs 2000 per annum. I also own a house as well as a motor vehicle in India. There's no income from the house as my parents are living there.
1) Do I need to file my return every year as I was filing it before coming to US? If yes, I have not filed for 1998-99. Is there any penalty for late filing?
2) Do I need to apply for PAN account in India since I am planning to return?
3) I have a PPF account in PNB in India for last the four years. I want to maintain that account. Can I transfer money from my NRE (Saving) account in SBI to the PPF account in PNB? If yes, do I need RBI approval for this?
4) Can I buy Kisan Vikas/NSC from my NRE saving account ?
--Tripon Singh

The answers to your queries are given hereunder:

1. Section 115G of the I.T Act, 1961 lays down that a NRI need not furnish a return of income under section 139(1) of the Act, if
a) His total income in respect of which he is assessable to tax during the previous year consisted only of investment income or income by way of long term gains or both; and
b) The tax deductible as per the provisions of the Act, has been deducted from such income

2. PAN is required to be applied for by an assessee if such a person satisfies any of the following conditions:
d) If his total income or the total income of any other person in respect of which he is assessable exceeds the maximum amount which is not chargeable to income tax (Rs 50,000 for the current year); or
e) Carrying on any business or profession whose total sales, turnover or gross receipts are or is likely to exceed Rs 5,00,000; or
f) Who is required to furnish a return of income for income derived from property held under trust or other legal obligation wholly for charitable or religious purposes.
Hence you would be required to file an application for PAN when you qualify under any of the above conditions.

3. This question does not pertain to personal taxation and has not been answered.

4. This question does not pertain to personal taxation and has not been answered.

As I have some urgent needs, I would like to borrow some dollar amount from my friends who lives here on a H1 Work permit or B1(Business Visa).I would like to repay this amount through my NRE account in India in Indian rupees. Is the amount I am paying through my NRE account to the person in US(Resident(H1 visa) or non resident(B1)) taxable one to that person? If there is any rule please specify for my future reference.
-- Raghu Sundaram

As there is no income in question, no tax liability is attracted.

I am an NRI for over three years and have some shares back in India which I bought three years ago. Now I am planning to sell those shares in my next visit. Do I need to pay tax on that gain?
-- Abdul Khan

Yes you need to pay tax on the long term capital gains on sale of the shares. The rate of tax payable on long term capital gains for NRI is 20 per cent.

I am an NRI but I have investments in India. I get dividend and interest from such investments. Do I have to file my return and pay any tax on such income?
-- XXXXXXX

Section 115G of the I.T Act, 1961 lays down that a NRI need not furnish a return of income under section 139 (1) of the Act, if
1. His total income in respect of which he is assessable to tax during the previous year consisted only of investment income or income by way of long term gains or both; and
2. The tax deductible as per the provisions of the Act, has been deducted from such income

I am a NRI living in US since 1992. I am planning to acquire an apartment during March 1999 and then lease out the same. I have no other source of income in India since 1992 until now. Do I need to file taxes for the lease and/or acquiring the property? Also, do I need to file any tax papers mentioning that I am an NRI?
-- Mamdil

An NRI would need to pay Income Tax in India only if any income is received/deemed to be received in India or accrues/arises or is deemed to accrue/arise in India. Hence as you have no source of income in India presently, there would be no tax incidence on you till such time any income is derived by you. The procedural aspects of acquiring and/or leasing of property by an NRI is a question of FERA/FEMA and hence has not been answered here.

Earlier:

"Is the money that I saved on a business trip to the US taxable in India?"
"What are the tax implications for an NRI selling shares of Indian companies?"
"If an NRI gifts Rs 1 lakh to a relative from his NRO account in India does he have to pay any Gift Tax? (The NRO account is funded from abroad in US dollars.)"
"Do i need an income tax clearance certificate if i go abroad for a two-year contract?"
"Will my father be taxed if I send him money to buy a flat in my name?"
"What is the difference between personal taxation of an NRI and of a resident but not ordinarily resident?"
"We are software engineers investing in the form of NRNR deposits, FCNR deposits, etc. How will we be taxed?"
'I am an NRI getting salary from a US firm. Can I invest in Indian securities? What are the tax implications?'

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