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For NRIs, duration of stay in India determines tax liability

Your period of stay during the financial year is the determining factor

I am a citizen of Singapore but I am originally from India. All my investments are in Singapore and I do not have any income arising in India. Next year, I plan to come to India for six months to be with my children. Will my status change to that of a resident? Will I have to declare my global income to Indian tax authorities?

Since you will be coming to India for a limited period of six months and not with an intention to permanently settle, under Foreign Exchange Management Act, you will continue to be a non-resident. However, for the purpose of determining your residential status under the income tax laws, it is your period of stay during the FINANCIAL year commencing from 1 April and ending on the following 31 March which is the determining factor. If your stay in India exceeds 182 days during the financial year, you will be considered as a resident. However, if either you have been a non-resident in India in nine out of ten preceding years or your stay in India for the preceding seven years is less than 739 days, you will be considered to be a resident but not ordinarily resident. In such a case, it is only your income earned, received or income which accrues or arises in India which will be taxable in India. In your case, since you do not have any such income, there will be no income tax liability.

I want to send around $20,000 to my parents in India this year. Please let me know, what is maximum tax-free amount I can send?

There is no gift tax in India under the present tax laws. However, under the Indian income tax laws, gift comprising sums of MONEY exceeding Rs.50,000 are considered as income in the hands of the recipient and are liable to tax as income from other sources. Such gifts, if received from relatives, are exempt from tax. Relatives for this purpose include lineal ascendants and descendants and hence the gift received from you by your parents will not be considered as taxable; there would be no tax liability in India on the amount of $20,000. There is no maximum tax-free limit to the amount that you can remit as gift. However, your parents would need to prove the source of the gift to income tax officer. Further the income tax officer could also seek evidence of capacity of the donor of the gift and could call for your tax returns and/or other documents to assess the genuineness of the gift. It would be advisable to have in place gift confirmation and remittance documents.

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