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A Smart Gateway to India…You’ll love it!
Money sent to parents by NRIs is not taxed in India

Gift of shares or debentures is not treated as a transfer for the purpose of computing capital gains

Q. Can a non-resident Indian (NRI) gift shares or debentures to relatives? Is there any taxation involved, if it is allowed?

Expert Comment: An NRI is permitted to transfer shares or debentures to a person resident in India by way of gift. Gift of shares or debentures is not treated as a transfer for the purpose of computing capital gains. Consequently, there should be no tax implications on the NRI. Further, receipt of shares by way of gift by a relative is not taxable. Relative for this purpose has been defined to mean spouse, brother, sister, brother or sister of the spouse, brother or sister of either of the parents, any lineal ascendant or descendant of yourself or your spouse.

Q. What tax benefits does a non-resident non-repatriable (NRNR) deposit account holder gets?

Expert Comment: Interest on NRNR deposits were exempt from tax under section 10(15)(i) of the Income-tax Act read with notification No. 643(E), dated 31 August 1992. However, you may note that as per the exchange control regulations, an NRNR account could be opened and maintained by any person resident outside India with an authorized dealer only until 31 March 2002. An NRNR deposit account is not permitted to be opened on and from 1 April 2002, whether by renewal of existing deposit or otherwise.

Q. What are the tax liabilities of an NRI leaving India for good?

Expert Comment: If a person resident in India is permanently leaving India, the total income of such a person up to the probable date of his departure from India is taxable in that year in India. Consequently, the person leaving India will have to discharge the requisite taxes before departing from India. Further, such a person (assuming Indian domiciliary) will have to furnish to the tax authorities in Form no. 30C details such as Permanent Account Number, the purpose of visit outside India and the estimated period of stay abroad. In certain circumstances, the person leaving India may be required to obtain a tax clearance certificate as well from the income-tax authorities. This may be required if a person is involved in serious financial irregularities and her presence is necessary in investigation. It is likely that tax demand will be raised against her. It may also be that the person has direct tax arrears exceeding Rs.10 lakh outstanding against her, which have not been stayed by any authority.

A Smart Gateway to India…You’ll love it!

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