Filing of a tax return in India depends on the taxability of income earned by the individual.

This in turn depends on his/her residential status as per domestic tax laws.

Who is a Non resident in India?

As per domestic tax laws (i.e. Income Tax Act, 1961), an individual is considered to be a tax resident of India, if he satisfies either of the following conditions:

1) is physically present in India for 182 days or more in that tax year (period beginning from 1 April through 31 March); or

2) is physically present in India for 60 days in that tax year and 365 days or more in the preceding four tax years. The period of 60 days is extended to 182 days, if the individual is:

- an Indian citizen who leaves India during the tax year for purpose of employment outside India or as a member of the crew of an Indian ship; or

- an Indian citizen or a person of Indian origin and comes to India for a visit. A person is deemed to be person of Indian origin if, he or either of his parents or any of his grandparents were born in undivided India.

If neither of the condition is satisfied, the individual is classified as a non resident.

The following income of a NRI is taxable in India:

” Income which is received/ is deemed to be received in India; or ” Income which accrues or arise/ is deemed to accrue or arise in India.

In most cases, the NRI would also be taxed in country of his residence.

Such a situation may entail additional tax outflow due to double taxation (i.e. income being taxed in India as well as in the country of residence).

The double taxation could be mitigated by appropriate planning considering provisions of the Double Taxation Avoidance Agreement (tax treaty) entered into by India with other countries and availing benefits of the same, if any.

Why NRIs are required to file income-tax returns in India?

A NRI is required to file income-tax return in India, under the following situations:

” India sourced income exceeds the basic exemption limit (Rs 1.5 lacs for tax year 2008-09) ; ” Taxes withheld exceed tax liability for the tax year thus resulting in a refund situation; ” To enable the NRI to claim tax treaty benefits in country of his residence (i.e. the country in which his global income is consolidated and taxed).

Where income of the NRI consists only of investment income or long term capital gains or both and appropriate taxes have been withheld on such income, the NRI is not required to file income-tax return.

Filing of income-tax return in India by NRIs – procedure

If the NRI is not registered with the Indian tax authorities, the first step towards filing the income-tax return would be to make an application for allotment of Permanent Account Number (PAN) in Form 49A. The PAN should be quoted in all correspondences with Indian tax authorities, including income-tax return. The application can be made either in physical form or electronically.

Based on the nature of income, appropriate income-tax return form needs to be filled. The relevant forms for NRI’s for tax year 2008-09 are as under:

ITR 1 Individuals having income from salary/ pension/ family pension & interest

ITR 2 Individuals not having income from business/ profession

ITR 3 Individuals who are partners in a partnership firm and do not carry out any other business/ profession

ITR 4 Individuals having income from business/ profession

The income-tax return can be filed either in physical form or electronically on website of the income-tax department (www.incometaxindiaefiling.gov.in)

Under physical filing option, the NRI must fill the relevant ITR form and submit the same alongwith the acknowledgment (ITR V) to the concerned income-tax office duly signed and verified. If the individual is not present in India, the income-tax return and the acknowledgement should be signed by a person duly authorised by him and holding a valid power of attorney.

Under the electronic filing option, the NRI is required to fill in the necessary details and validate the ITR form. Upon validation, a XML file is generated, which is uploaded on the website with a Digital Signature (NB: Digital signature is required to be separately obtained from specified Digital Signature Issuing Authorities). However, if the XML file is uploaded without a digital signature, the individual is required to print the acknowledgement and submit the same through ordinary post at the following address within thirty days from the date of uploading the income-tax return.

Income-tax Department – Centralized Processing Center (CPC) Post Box No 1, Electronic City Post Office, Bangalore – 560100, Karnataka

It is important to note that the acknowledgement generated upon uploading of return is a password protected file. The password to open the file is PAN number (in lower case) and date of birth (ddmmyyyy) of the individual. For eg, if the PAN of the individual is ABCDE9999X and his date of birth is 1 October 1975, the password to open the acknowledgment would be abcde9999x01101975.

Upon receipt of ITR V, the CPC would send a confirmation e-mail on the email address mentioned in the income-tax return. The due date for filing income-tax return for tax year 2008-09 is 31 July. Where the NRI is working partner in a firm or is engaged in business/ profession whose accounts are liable to be audited, the due date is 30 September.

Consequence of not filing income-tax return by NRI

Non filing of income-tax return would result in levy of interest at 1 percent per month of delay.

Further, penalty of Rs 5,000 could be levied if the income-tax return is not furnished within a period of two years from end of the relevant tax year (i.e. 31 March 2011 for tax year 2008-09).

Issues faced by NRI’s in preparation & filing of income-tax return

The tax years of countries are usually different.

Country: Tax Year

United Kingdom : 6 April – 5 April

Australia: 1 July – 30 June

USA, Germany, Denmark, Singapore: 1 January – 31 December

It is imperative to determine the residential status of the NRI for a particular tax year as the residential status would determine eligibility to claim tax treaty benefits. There could be situation where an individual is a resident of two countries or a non-resident in both the countries (this is possible in case of highly mobile employees).

In such situation, a ‘tie-breaker’ test as per the relevant tax treaty is applied to determine residential status of the individual. This determination is imperative, since the country of residence relieves burden of double taxation by giving either credit for taxes paid in the source country or the country in which the individual is not a resident spares the income that has suffered tax in the country of residence.

On the other hand, where a NRI is considered to be a non resident of both countries, he is not entitled to the tax treaty benefits and thus would be governed by the respective domestic tax laws of those countries relating to residence and taxability. “Bank details – It is mandatory to provide bank account details in income-tax return in case of refund. Most of the NRI’s don’t have bank account in India and may be forced to open one to claim refund.

“Electronic filing of income-tax return without digital signature – A signed copy of the acknowledgment is required to be mailed to the CPC, Bangalore via regular post within a period of 30 days. Sending the acknowledgement by any other medium like courier or speed post is not permitted. Accordingly, there is no system to track the acknowledgment and confirm if it has reached the CPC within the prescribed time.

Further, in the absence of a stamped copy of the acknowledgment, it is not clear how the taxpayer would furnish proof of filing of income-tax return where required.

Visit NRIs [NON RESIDENT INDIANs] Community at http://www.linkedin.com/groups?gid=99549 and find the other information and Practical experience of people posted by other NRIs / Overseas Indians

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SCAM INFO, JUST TWO RECENT EXAMPLES OF MANY TARGETING THE INDIAN COMMUNITY

I expect to see many members of the Indian community adversely affected if not wiped out by poorly structured real estate deals in the next 12 months including many high net worth doctors and business owners that were talked into signing personal guarantees or collateralizing their homes for these speculative development deals. The two samples below are even worse:

This link contains the latest info on “RADICAL BUNNY LLC” one of the groups they targeted were Indian Gas Station Owners, a group considered to be “cash rich” and “advisor poor”, meaning they did not have the knowledge or advisors they needed to keep them safe. In this case, a member of the Indian community was the way in. We are a community that is oversold and underserved, and which is targeted because of the perception that we are rich but financially unsophisticated.

http://www.azcentral.com/news/articles/2009/07/29/20090729secbunny0729.html – see the story here.

Another recent scam involves a local bank that held a large amount of cash for an Indian family. The bank got a call requesting a large transfer from a man with a heavy Indian accent that “sounded just like the client”. The bank called the home to verify and a man with “an Indian accent” confirmed. Unfortunately the phone had been tapped and diverted to another number controlled buy the thieves. The result was a loss of over $400K.

SO WHAT DO WE DO?

As markets continue to fluctuate and rattle investor confidence a new series of alternative investment fraud schemes are emerging and being exposed faster than I can email you all the details. In times of crisis many people feel comfort doing business with a personal or social contact or a member of their own religious or ethnic community. Unfortunately that comfort level is replacing normal standards of due diligence and often intentionally sidesteps the professional advisor relationships that an investor may have in place, often with tragic results. Many of these schemes are dressed under broad terms such as private offerings, hedge funds or are related to purchasing intangibles, like deeds of trust.

Common excuses for this exclusion of the investor’s advisors include:

- They won’t know how this works;

- Your friends are all in the deal and they all had their people check it out;

- They will say no because we will compete with them;

- This is a special private deal for friends and family only;

- We have an NDA (non-disclosure agreement) you will need to sign and keep this offering confidential;

- We need you to make a decision and fund immediately because we have other investors waiting for this opportunity;

- We have our team and they have checked this out with our own high dollar lawyers;

- We have the “support” of such and such big bank and you they checked us out

Any one or even a few of these may be actually true and valid on any deal, but I have never seen a legitimate opportunity where the promoter used all the tricks on this list. If they have a deal that is worth being part of they will allow you to ask questions and do your homework. Will your CPA or other advisor have an issue with signing the NDA if he is reviewing an offering on your behalf? I doubt it.

Invest, make money – take calculated risks and allow your team to help guide you! As always – walk with awareness and call for help if you need it.

Visit NRIs [NON RESIDENT INDIANs] Community at http://www.linkedin.com/groups?gid=99549 and find the other information and Practical experience of people posted by other NRIs / Overseas Indians

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However, if the money is received from a relative (including son/ daughter-in-law), the amount received is not taxable in the hands of the recipient. Besides gift, the son and daughter-in-law can also give loan to the karta of the HUF.

As the son would be giving the loan from his NRE account, the same would be subject to prescribed conditions under exchange control regulations. The status of HUF is severed through its partition (total or partial), subject to the provision of Hindu law and the I-T Act. Upon partition, the property of HUF should be divided in equal proportion among its co-partners, subject to prescribed conditions.

Visit NRIs [NON RESIDENT INDIANs] Community at http://www.linkedin.com/groups?gid=99549 and find the other information and Practical experience of people posted by other NRIs / Overseas Indians

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• They can take an insurance policy during a visit to India. All the formalities of proposal completion, medical examination reports, special reports and moral hazard reports are required to be completed during their stay.

• Alternatively, NRIs can take an insurance policy from their country of residence through mail order. All the formalities mentioned above, medical and special reports have to be completed from the country of residence.

Once the papers are in place, Relatives of NRIs can propose a policy in NRIs name

Visit NRIs [NON RESIDENT INDIANs] COMMUNITY at http://www.linkedin.com/groups?gid=99549 to know more about practical experience, people’s perceptions, clarification from experts etc.

The Government has announced the launching of a People of Indian Origin Card, which will allow visa free entry to Indian origin people living abroad and give them all the rights enjoyed by Non-Resident Indians (NRIs) including purchase of non-agricultural land. 15 million people of Indian origin living abroad will benefit from the Card. Fee for PIO Card is US $ 310.00 for adult and for children below the age of 18 years is US $ 155.00 (effective from September 15, 2002). Validity of new PIO card will be 15 years from the date of issue. However, it would not be issued to people of Indian origin living in Pakistan and Bangladesh. It does not give voting rights to the holders of the Card. It is eligible for the Indians who hold a foreign passport living abroad till the fourth generation. The PIO Card holder would be exempt from registration if his stay in India does not exceed 180 days. However, if the stay exceeds 180 days, the PIO Card holder will have to register within 30 days of the expiry of 180 days with the concerned Foreigners Registration Officer at district headquarters. The right to buy property would not be valid to Jammu & Kashmir. The PIO Card holder would be able to admit their children to educational institution in India under the NRI category. These include the IITs and Indian institutes of Management. They can also benefit from housing schemes of the Life Insurance Corporation, State Governments and other Government agencies.

THE PRESS RELEASE AND GAZETTE NOTIFICATION ON PIO CARD FOLLOWS: -

Understanding the sentiments of persons of Indian origin to be closer to their original country and to reinforce their emotional bonds, as well as respecting their desire to participate in the development of the resolve to frame a special scheme. This resolve was translated in the first Budget Speech of FM: -

“Government have decided to draw up a scheme for issuance of a Persons of Indian Origin (PIO) Card for those living abroad and having foreign passports. The PIO Card, which would be extended to Persons of Indian Origin settled in countries to be specified by Government would besides introducing a visa free regime, also confer some special economic, educational, financial and cultural benefits. The details are being worked out”.

The Government has today launched a comprehensive Scheme for the Persons of Indian Origin – called the “PIO Card Scheme”. Under this scheme, Persons of Indian Origin up to the fourth generation (great grand parents) settled throughout the world, except for a few specified countries, would be eligible. The Card would be issued to eligible applicants through the concerned Indian Embassies/ High Commissions/ Consulates and for those staying in India on long term visa, the concerned Foreigners Regional Registration Officer (Delhi, Mumbai, Calcutta, and Chennai) would be the same.

The fee for the card, which will have a validity of 15 years, would be US $ 310.00 for adult and US $ 155.00 for children below the age of 18 years.

Besides making their journey back to their roots simpler, easier and smoother, this Scheme entitles the PIOs to a wide range of economic, financial, educational and cultural benefits. The benefits envisaged under the Scheme include: -

(i) No requirement of visa to visit India:

(ii) No requirement to register with the Foreigners Registration Officer if continuous stay does not exceed 180 days. If continuos stay exceeds 180 days, then registration is required to be done within a period of 30 days of the expiry of 180 days:

(iii) Parity with Non-Resident Indians in respect of facilities available to the latter in economic, financial, educational fields, etc. These facilities will include:-

(a) Acquisition, holding, transfer and disposal of immovable properties in India except of agricultural/plantation properties;

(b) admission of children in educational institutions in India under the general category quota for NRIs – including medical / engineering college, IITs, IIMs etc.

(c) various housing schemes of Life Insurance Corporation of India, State Governments and other Government agencies;

(iv) All future benefits that would be extended to NRIs would also be available to the PIO Card holders;

(v) However, they shall not enjoy political rights in India.

The above steps would go a long way in renewing and strengthening the emotional bond amongst PIOs with the land of their origin. The attractive features of the Scheme will further exhort them to play an increasingly constructive role in the socio-economic and cultural development of the country of their origin.

MINISTRY OF HOME AFFAIRS NOTIFICATION

(i) This scheme may be called PIO Card Scheme, 2002;
(ii) It shall come into force with effect from 15th September, 2002.
2. Definition – In this scheme, unless the context otherwise requires.

(a) “Indian Mission” means the Embassy of Indian/ High Commission of India/ Indian Consulate in a foreign country.

(b) “Person of Indian origin” means a foreign citizen not being a citizen of Pakistan, Bangladesh and other countries as may be specified by the Central Government from time to time if.

(i) he/she at any time held a Indian passport; or

(ii) he/she or either of his/her parents or grand parents or great grand parents was born in and permanently resident in India as defined in the Government of India Act, 1935 and other territories that became part of India thereafter provided neither was at any time a citizens of any of the aforesaid countries (as referred to in 2(b)above; or

(iii) he/she is a spouse of a citizen of India or a person of Indian origin covered under (i) or (ii) above.

(c) “PIO Card” means a card issued under this scheme.

3. Form of application for issue/ renewal of a PIO Card:-

An application for issue/renewal of a PIO Card shall be made in the prescribed form and shall be accompanied by documentary evidence to show that the application is a person of Indian origin as defined.

4. Authority to which application is to be made:-

(i) An application for issue of a PIO Card shall be made to an Indian Mission in the country where the applicant is ordinarily resident.

(ii) Applicants already in India on Long Term Visa (more than one year) shall make the application for issue of a PIO Card to the following authorities:-

(A) Those residing in:-
(a) Delhi
Foreigners Regional Registration Officer, Level –II, East Block VIII, R.K. Puram, Sector – I, New Delhi.

(b) Mumbai
Foreigners Regional Registration Officer, Annex II, Commissioner of Police, Craw Ford Market, Mumbai – 400001.

(c) Calcutta
Foreigners Regional Registration Officer, 237, Acharya Jagdish Calcutta – 700020

(d) Chennai
Chief Immigration Officer, Bureau of Immigration, Shastri Bhavan Annex, No.26, Haddows Road, Chennai- 600006.

(B) Those residing in areas other than (A) above:-

Joint Secretary (Foreigners). Ministry of Home Affairs, 1st floor, Lok Nayak Bhavan, Khan Market New Delhi-110003.

5. Authority to grant a PIO Card:-

The authority to grant a PIO Card shall be an officer in an Indian Mission notified for the purpose or the Joint Secretary Ministry of Home Affairs, Government of India or the Foreigners Regional Registration Officer, New Delhi, Mumbai, Calcutta of the Chief Immigration Officer, Chennai.

6. Validity of PIO Card:-

A PIO Card shall be valid for a period of Fifteen years.

7. Fee:-

Fee for new PIO Card for adult – US $ 310.00

Fee for new PIO Card for children Below the age of 18 years – US $ 155.00

Status of PIO Cards issued earlier as per PIO Card Scheme (1999)

PIO Card issued earlier for US $ 1000/- will continue to remain valid and no refund shall be admissible. However, the validity of the such cards shall be extended by 10 more years without charging any fee.

8. Facilities to be extended to a PIO Card holder:-

(i) A PIO Card holder shall not require a visa to visit India.

(ii) A PIO Card holder will be exempted from the requirement of registration if his stay in India does not exceed 180 days.

(iii) In the event of continuous stay in India of the PIO Card holder exceeding 180 days, he / she shall have to get himself/ herself registered within 30 days of the expiry of 180 days with the concerned Foreigners Registration Officer at District Headquarter.

(iv) A PIO Card holder shall enjoy parity with NRIs in respect of all facilities available to the latter in the economic, financial and educational fields except in matters relating to the acquisition of agricultural/plantation properties. No parity shall be allowed in the sphere of political rights.

9. Cancellation of PIO Card:-

The Central Government may by order, cancel the PIO Card, if it is satisfied that:

(a) the PIO Card was obtained by means of fraud, false representation or the concealment of any material fact; or

(b) the PIO Card holder has shown himself by act or speech to be disaffected towards the Constitution of India and other laws of India; or

(c) the PIO Card holder is a citizen or subject of any country at war with, or committing external aggression against India; or of any other country assisting the country at war with, or committing such aggression against India;or

(d) the PIO Card holder has been sentenced in India for indulging in acts of terrorism, smuggling of narcotics, arms, ammunitions etc, or has been sentenced for committing an offence punishable with imprisonment up to one year or fine up to rupees ten thousand;or

(e) it is not conducive to the public interest that the person should continue to hold a a PIO Card.

No reasons shall be assigned for withdrawal of the Card.

Visit NRIs [NON RESIDENT INDIANs] Community at http://www.linkedin.com/groups?gid=99549 and find the other information and Practical experience of people posted by other NRIs / Overseas Indians

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However, if the money is received from a relative (including son/ daughter-in-law), the amount received is not taxable in the hands of the recipient. Besides gift, the son and daughter-in-law can also give loan to the karta of the HUF.

As the son would be giving the loan from his NRE account, the same would be subject to prescribed conditions under exchange control regulations. The status of HUF is severed through its partition (total or partial), subject to the provision of Hindu law and the I-T Act. Upon partition, the property of HUF should be divided in equal proportion among its co-partners, subject to prescribed conditions.

Visit  NRIs [NON RESIDENT INDIANs] Community at http://www.linkedin.com/groups?gid=99549

Today Professionals from India are in demand in any and every corner of this planet known as earth. This makes NRIs a community of over 25 Millions. The hardwork and talent of Indian professionals is being recognized everywhere both in India and overseas but Do we know what is the investment NRIs has made to create this goodwill?

Working at overseas is really tough task. Some fo the challenges may be
1. Different social as well as work culture.
2. Dual treatment
3. Isolation from community, friends, family and relatives.
4. Difficulty to inculcalate the indian culture in kids
5. Boredom in the life of NRI house wives.
6. Difference in the rights of residents and citizens of alien country.
7. Unsettled life due to the fact that they need to manage there in india affairs as well as overseas.
Above are a few challenges, the list could go up to a great length.

Though disadvantages of NRI life cannot be totally removed but some of the disadvantages can be either removed or minimized by active networking. Now it it the time to reunite entire overseas Indian community.

The professional networking websites are helping a lot in. A “NRI (Non Resident Indians)” community is started by Anil Kumar Gupta an NRI from Saudi Arabia. This is largest community of NRIS at Linked in with a total strength of over 5 thousands. this community is only for Overseas Indians and one can join by visiting http://www.linkedin.com/e/gis/99549

The objectives of this group are based on the principle of Helping NRIs by NRIs. A few objectives include
1. Generate career opportunities for NRIs by NRIs.
2. Share career opportunities available with NRI recruiters, NRI HR Professionals.
3. Share well researched opinion about Financial / Investments prospectus in India.
4. Discussion threads for changes in Legal framework affecting NRIs.
5. Recruitment of Local Scouts at prime cities where we have more than 1000 NRIs in the group and volunteers are available.
6. Updates about local events and happenings through local scouts
7. Helping needful and in – crisis NRIs and Indians.

You can click (or copy and paste in browser) following link to visit this group

http://www.linkedin.com/e/gis/99549

Looking forwards to see all NRIs as Networked, Reunited Indians.