NRIs CORNER – CONTRAVENTIONS

Important Features...

1.  NON-FILING OF INCOME TAX RETURN ON ALL CAPITAL GAINS ARISING OUT OF SUCH GOLD / SILVER
.01  The capital gains arising on sale of such gold / silver is liable to tax.

.02  In case of NRIs, Long term capital gains are liable to tax from the first rupee as threshold exemption limit is not available for in case of Long term capital gains to NRIs.
 a.)  Hence, capital gains arising on sale of gold / silver are subject to tax and such NRIs are also required to file tax return.

.03  If return is not filed, penalty of Rs. 5,000/- is leviable.

2.RETURNEE NRI - NON-RESIDENT EXTERNAL (NRE) INTEREST

.01  In case of NRI returning to India balance to the credit of Non-Resident External (NRE) is to be transferred to Resident Foreign Currency (RFC) account or redesignate the same as Resident account at the option of NRI immediately.   

.02  Quite often NRIs continue the NRE account.  In such cases, NRIs do not often pay tax on interest earned.

3. Sale of immovable property presumptive tax

.01  In case of immovable property, the sale price is to be substituted by stamp duty valuation/circle rate adopted provided the consideration received exceeds 110% of the consideration received in  case of the buyer subject to.
 a.)  Hence if the circle rate is more than 110% of value mentioned in sale deed,   the NRI seller is to pay capital  gains tax on deemed / substituted sale price on such stamp duty valuation/circle rate .

 .02 Quite often, NRI not been aware about these provisions, file tax return on the basis of sale price mentioned on the Sale Deed and not the higher stamp duty valuation/circle rate.

 .03 Such under payment of tax is subject to interest and penalty of concealment in addition to tax, if any, payable by him, a sum which shall range from the tax sought to be evaded up to three time the amount of tax sought to be evaded, for concealment of income.

4. DEEMED GIFT FOR BUYER

.01  Since 01/10/2009, if an NRI purchases a property at a price which is less than the price determined as per circle rate for stamp duty purposes and the difference between circle rate and price at which it is purchased/mentioned in deed  is more than Rs. 50,000/- or 110% of consideration whichever is higher then such difference is taxable in the hands of the buyer as a deemed gift.

.02  If the NRI buyer does not pay income tax on such deemed income, is liable to penalty on outstanding amount of tax for concealment of income as mentioned hereinabove.