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The Rediff Money Channel presents everything you wanted to know about tax issues, but didn't know whom to ask. Chartered Accountants from Ganesh Jagadeesh & Co are here to remove all your doubts.

Readers' Note: Please keep your questions short.

I am a software engineer. I have gone to UK twice on behalf of my company. In UK I get a short-term daily allowance. My salary is paid in India. If I save money and bring it back to India, is it taxable?

— R J Raja

You have not mentioned your residential status, hence it is difficult for us to comment on the question posed by you.

But assuming that you are a Resident and Ordinarily Resident, we offer the following advice. According to the Income Tax Act, the total taxable income of a resident and ordinarily resident also includes income deemed to accrue or arise in India whether received in India or outside India. Hence the daily allowance received by you during your stay abroad is taxable. However any savings brought by you to India will not be taxable as the same is already subject to tax at the income stage.

Even if you are an NRI under the Act, the allowance is still taxable as you are receiving the salary from your employer who is based in India. You are eligible for a deduction under section 80RRA, of upto 75 per cent of the amount remitted by you into India within six months from the end of the financial year. This deduction is available only if you are a technician as defined under explanation (c) to sub-section (2) of section 80 RRA and further, the terms and conditions of your service outside India are approved in this behalf by the central government or the appropriate authority. The balance 25 per cent is taxable at the marginal rate of tax.

The manner in which the money is remitted into India is not relevant for the purpose of determining the liability of taxation.

I am an NRI working in the US. I wish to transfer dollar equivalent of Rs 50,000 to my uncle. How do I transfer the amount without any tax implications to him? Can I draw a gift cheque in dollars payable to his daughters aged ten and 16? If yes, would he have to pay tax on the interest accrued from such amount?

— Sanjay Acharya

You can transfer the amount by cheque, draft, gift cheque etc to either your uncle or his daughters. Since Gift Tax is abolished, there is no incidence of Gift Tax on you or your uncle. However the gifted money, when invested will attract income tax, irrespective of whether the gift has been given to your uncle or his daughter.

However under section 64(1A) of the Income Tax Act, all income that arises or accrues to the minor child shall be clubbed in the income of that parent whose total income is greater. Hence even if you make a gift to your uncle's daughter, the income earned from it will be clubbed with her parent, until she becomes a major.

I am an NRI living in the US for the past six years. I would like to send $ 10,000 to my cousin in India by way of a gift. Does he have to pay any tax on the gift? What is the limit on the amount of gift you can receive in foreign currency?

— Bhavesh Gosar

Gift given is not chargeable to any tax as the Gift Tax Act has been abolished with effect from October 1, 1998 and there is no Income Tax chargeable on the recipient of the gift. However, the income arising from the gifted amount will be treated as income in the hands of the person receiving the gift. There is no maximum limit for receiving the gift in foreign currency.

I am an NRI, living in the US for the past three years. I have been sending money to my father every month. I don't have any account in India. So he's keeping that money in his account in rupees. Now he's planning to buy a house in his name. If he buy a house does he need to pay any tax on that?

— Gupta K

The Income Tax Act, 1961, provides for charging of tax on the income and not on any remittance or transfer of money. As you are an NRI, the income earned by you outside India is not chargeable to tax. The amount sent by you is not taxable irrespective of whether it is sent to your parents or to your bank account.

The act of buying a house does not by itself attract any tax liability. However, in the hands of the legal owner of the property, income from House Property is taxable under section 22 of the Act. If the person, in whose name the property is acquired, is already an owner of another property, then it is advisable not to purchase the property in his name. This would increase the tax liability. However annual value from one self-occupied property is exempt from Income Tax.

I am living in US for the last three years. I am buying a property (an apartment) worth Rs 15 lakh in India on my name. Is there is any tax implication? Do I need to file or pay any tax under Indian IT rules and regulations?

— Sridhar R

This answer has been given assuming your Residential Status to be an NRI. There is no need to file any return or pay any tax solely because you will be purchasing a house property in India.

However, in the hands of the legal owner of the property, income from House Property is taxable under section 22 of the Act. If the person in whose name the property is acquired is already an owner of another property, then it is advisable not to purchase the property in his name. This would increase the tax liability. However annual value from one self-occupied property is exempt from Income Tax.

I am an NRI working in the UK for the past three years. I have a Public Provident Fund (PPF) account in India. Can I continue investing in the account? Since I am not working in India, will I have to pay any tax on the interest received on the amount?

— Yashodhan Bhatawadekar

Yes you can continue investing in your PPF account. The interest received from PPF is totally exempt from tax under section 10 of the Income Tax Act, 1961 and hence you will not have to pay any tax on the interest received from your PPF account.

Earlier:

"Do I need to apply for a PAN account in India when I return?"
"Is the money that I saved on a business trip to the US taxable in India?"
"What are the tax implications for an NRI selling shares of Indian companies?"
"If an NRI gifts Rs 1 lakh to a relative from his NRO account in India does he have to pay any Gift Tax? (The NRO account is funded from abroad in US dollars.)"
"Do I need an income tax clearance certificate if i go abroad for a two-year contract?"
"Will my father be taxed if I send him money to buy a flat in my name?"
"What is the difference between personal taxation of an NRI and of a resident but not ordinarily resident?"
"We are software engineers investing in the form of NRNR deposits, FCNR deposits, etc. How will we be taxed?"
'I am an NRI getting salary from a US firm. Can I invest in Indian securities? What are the tax implications?'

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