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NRIs don’t need tax clearance for new assignments abroad

A tax clearance certificate is currently required to be obtained only by a person domiciled in India

Q. What are the tax benefits available for non-resident non-repatriable (NRNR) deposit account holders?

Expert Comment: NRNR deposit scheme has been discontinued with effect from 1 April 2002. Hence, no fresh deposits will be accepted nor will existing deposits be renewed on or after 1 April 2002. The deposits under this scheme could be held for a period ranging from six months to three years. Consequently, this scheme is not in operation currently. Further, there are no specific tax benefits for income from NRNR deposits.

Q. I have been a non-resident Indian (NRI) since 1985 and at present, I am based in the UK. Do I have to still produce a tax clearance certificate while taking a new assignment in another country?

Expert Comment: A tax clearance certificate is currently required to be obtained only by a person domiciled in India and who is leaving the country in certain circumstances or by a person who is not domiciled in India but has come to India in connection with business, profession or employment and has income derived from any source in India. There is no need to obtain the certificate if the person is based outside India. Considering that you are not domiciled in India and are not departing after coming to India for business, profession or employment, you don’t need to obtain a tax clearance certificate.

Q. I have heard that income arising from gifted property in the hands of an NRI is taxed. What is the tax liability?

Expert Comment: If an individual receives a sum of money, immovable property, shares, securities, jewellery, drawings, paintings, archaeological collections, sculptures, any work of art or bullion as gift, the fair market value (stamp duty value in case of immovable property) of which exceeds Rs.50,000, then the value of such gifts would be taxable in the hands of the individual as income from other sources. This provision applies to residents as well as NRIs. If the gift is received from a relative, received on the occasion of the marriage of the individual, or under a Will or inheritance or in contemplation of death of the payer or donor, then such gifts would not be taxable. As per the income tax laws in India, income from other sources is taxed at 30% plus applicable surcharge and education cess. For an NRI, the applicable double taxation avoidance agreement will have to be examined for any benefits that may be available.

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