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NRI Problems Answered by Money times adviser : Mr.H.P.Ranina ( If you have any questions related to NRI problems please write to Money Times, P.O.Box-11243, Dubai, UAE) Question: I am holding
some shares of a software firm purchased by paying Rs45,000 in foreign
exchange. Please advise, if I sell these shares, whether the entire proceeds of
the sale can be credited to my NRE account or is it only the initial investment
of Rs45,000 which can be converted to foreign exchange? If the amount is
repatriable, what happens when the individual or purchasing company is not in a
position to pay in foreign exchange? Answer: What can be
credited to the Non-Resident (External) (NRE) account is the net sale proceeds
after paying the capital gains tax. If the shares have been held for more than
one year, the rate of tax would be 10 per cent on the capital gains. If the
shares have been held for less than one year, the short-term capital gains tax
would be at the normal rates applicable to resident individuals. Your Chartered
Accountant would issue a certificate to the bank that the appropriate amount has
been paid by way of tax and, on receiving this certificate, the balance amount
of sale proceeds would be credited by your bank to your NRE account. Please understand that the
foreign exchange is to be provided by the bank and not by any individual or the
purchasing company. In other words, since you had originally invested in foreign
exchange, the net sale proceeds after tax can be repatriated in foreign
exchange.
I inherited 50 per cent share
in a flat in Bombay from my mother in June 1992 along with my brother (50 per
cent) who continued to live in the same flat. In August 1998, 1 purchased his
share of 50 per cent by a sale deed for a consideration and since then he
vacated the flat. The society registered the flat in my name in January 1999. Since I own two flats (both
vacant) do I attract wealth tax liabilily? If yes, I wish to sell the flat in
Pune to my wife who will pay me the money by selling the shares jointly held by
us (her name being first). Please advise the steps to be taken to minimize the
tax liability. Answer: One
residential property is exempt from wealth tax. If you sell your flat in Pune to
your wife, the capital gains made by you would be taxable. However, if you
invest the capital gains in bonds issued under Section 54-EC of the Income-tax
Act within six months from the date of sale of the Pune property, you will save
the capital gains tax. The bonds will have to be retained by you for a period of
five years. Question: I have been
a nonresident Indian for the past 20 years. My wife and children are also non
resident Indians. We hold FCNR, NRE, and NRNR bank accounts in India. My FCNR
dollar deposit will be maturing in November 2001. 1 have some NRE deposits in
Indian rupee in joint names of my minor children, maturing on 2002, 2003, etc.
We are planning to go down to India during end of April 2001. If I want to
convert my FCNR dollar account to Resident Foreign Currency (RFC) account, when
should I do that? Can I wait till the maturity, that is November 2001? Will
there be any tax on the RFC account? Can I break and convert these NRE accounts
into RFC accounts? Answer: I assume that
you are returning to India for good by the end of April 2001. In that case,
you would be free to convert your FCNR/NRE deposits into RFC account. There is
no penal interest charged for such conversion. However, your NRNR funds can not
be placed in RFC deposits because such funds are nonrepatriable. The interest
on the RFC account will be tax-free for nine years beginning with the financial
year 2001-02 because you will enjoy the status of being resident but not
ordinarily resident. ( Courtsy: Khaleej
Times ) |
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