What are the tax implications when kids who’re working overseas switch cash to their mother and father’ financial savings accounts in India?
— Name withheld on request
Under the Indian Income-tax (I-T) Act, tax is levied on any sum of cash, specified movable or immovable property obtained in extra of ₹50,000 by a person with out consideration (i.e., with no quid professional quo) or for insufficient consideration, besides presents obtained from a “relative” or on marriage or by means of inheritance or different specified exclusions. The time period ‘relative’ additionally contains any lineal ascendant or descendant. Thus, funds remitted from outdoors India to the financial savings accounts of fogeys right here is not going to have any tax implications in India.
Can an NRI get a tax refund if a financial institution deducts greater than the ultimate tax legal responsibility on non-resident bizarre (NRO) account fastened deposits.
— Name withheld on request
Interest revenue from a resident checking account and NRO checking account is liable to be taxed on the identical charges as bizarre revenue. Interest revenue from any financial savings checking account is eligible for deduction from taxable curiosity revenue as much as ₹10,000 ( ₹50,000 for senior residents aged 60 years or extra for each, curiosity revenue on financial savings account and glued deposits).
However, beneath the Double Taxation Avoidance Agreement (DTAA) between India and the related nation, such curiosity could also be taxable at a particular/useful charge of tax. To apply for the useful charge beneath DTAA, you have to to qualify as a “Resident” of the opposite nation beneath the DTAA and procure a Tax Residency Certificate from the opposite nation’s tax authorities and different specified paperwork.
If the person qualifies as a “Non-resident” of India, the financial institution would deduct TDS on the curiosity revenue from the NRO checking account at 30% (plus relevant surcharge and cess). If the TDS deducted by the financial institution is larger than the ultimate tax legal responsibility, such extra TDS could also be claimed as a refund within the income-tax return.
Sonu Iyer is tax accomplice and other people advisory providers chief, EY India.
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