NRI Corner

ANS. Yes, Non Resident Indians (NRI) can invest in Mutual funds in India.

Ans: “A non Resident Indian ( NRI) means a person residing outside india but is a citizen of India or is a person of Indian Origin (PIO).”

Ans: A PIO refers to a citizen of any country if:

1. He/She holds an Indian passport
   OR
2. He/She or either of his/her parents or any of his grandparents was a citizen of India
   OR
3. The person is a spouse of an India citizen or a person referred to in (A) or (B)

Ans: No, only a citizen of India or a person of Indian Origin can invest in Mutual Funds in India.

Ans: In order to determine whether an individual is a non resident in india or not, his/her residential status is to be determined as per section 6 of the Income Tax Act. As per section 6 of the income tax act, an individual is said to be non-resident in India if he/she is not a resident in India.

An individual who is a citizen of India or is a person of Indian origin is deemed to be resident in India in any previous year if he/she satisfies following conditions else he/she will be treated as non-resident.

If the Income from India is below 15 Lakhs

• He/she must stay in India for at least 282 days in the financial year.

If the Income from India is more than 15 lakhs

• He/she must stay in india for at least 182 days in the financial year
  OR
• He or she is in India for at least 120 days in the financial year and 365 days in preceding 4 years.

Only applicable to India Citizen

If Income from india is more than 15 lakhs and not liable to pay tax in any other countries

• In the above case he/she would be treated as Resident Indian irrespective of his/her number of days stay in India.

Ans: Yes, It is mandatory to have a PAN to invest in Mutual Funds in india.

Ans: Yes, It is mandatory to have a PAN to invest in Mutual Funds in india.

Ans: NRI is required to submit the copy of passport (alongwith PAN application Form) as proof of identity. He/She is also required to submit any of the following documents as proof of address:

1. Copy of passport;
   OR
2. Copy of the bank account statement in country of residence; OR
3. Copy of NRE bank account statement (showing at least two transactions in last six months period and duly attested by Indian Embassy/Consular office/high commission or Apostille or by the manager of the bank in which the account is held. The applicant may be a joint holder).

Ans: 31st July is the last date to file Income tax return in India for NRIs.

Ans: NRI, like any other individual taxpayer, needs to file his return of income in India if his Gross Total Income received in India exceeds Rs 2,50,000 (Irrespective of his/her age) for any given financial year.

Ans: If the tax liability exceeds Rs 10,000 in a financial year, then it is required to pay advance tax. Interest under Section 234B and Section 234C is applicable when the advance tax is not paid on time

Ans: A capital gain can be set-off (netted) against a capital loss made during the year.

• A short-term capital loss can be set-off against both LTCG and STCG.
• A long-term capital loss can be set-off only against LTCG.

Also, you can carry forward unadjusted losses after separating them into short-term and long-term capital losses for up to eight subsequent years.

Ans: From April 1, 2020, Income Tax Department has abolished Dividend Distribution Tax (DDT) that was levied on the dividends paid by the mutual fund. The dividends are now taxable in the hands of the unitholders. TDS rate for NRI is 20% plus surcharge and cess.

Ans: A TDS certificate (Form 16 A) is issued in the name of the investor mentioning the details of the transaction and the tax deducted. Once in a quarter, these digitally-signed TDS certificates are dispatched to you by the mutual fund. An Investor can also view his tax credits in form 26AS.

Ans: No, there is no wealth Tax in India.

Ans: Short term/ long term capital gain tax (along with applicable Surcharge and Health and Education Cess) will be deducted at the time of redemption of units in case of NRI investors.

Ans: As per the current practice AMCs deduct the TDS at the time of redemption of the MF units. The details are furnished below:

Ans: NRIs can avail specific tax deductions under Section 80C. Currently, a maximum deduction of up to Rs 1.5 lakh is permissible.

Following assets/securities to claim benefit under this section:

• Principal repayment of housing loan.
• Tuition Fees of maximum two children.
• Premium on Life Insurance Policies.
• Investment in ELSS.
• Term deposit of not less than five years.

Ans: If you reside & work abroad, the NRI income tax you pay will depend on your residential status for the financial year. If you fit the Resident Indian criteria, your total global income is taxable under Indian tax laws Subject to DTAA/Tax Treaties. But if your status for the year is ‘NRI’, only the income earned or accrued or received in India is taxable

Ans: Even after change in status from RI to NRI the client can continue to hold the securities which he/she had purchased as a resident Indian, on a non-repatriable(NRO)basis.

Ans: Please find below process to change the tax status from individual to NRI or vice versa in E-Wealth account,

following assets/securities to claim benefit under this section:

1. Client needs to first change the tax status in KYC records. (Refer KYC change form for document checklist)
2. Clients should have a new Bank account. (E.g NRE / NRO / Saving bank account)
3. Partner needs to submit a physical form or E-form for E-Wealth account opening with new tax status with all the required documents to the nearest NJ branch.
4. Also, the client needs to submit the Account Closure form of the previous E-Wealth account for which securities in holding should be NIL. If units live in an old E-Wealth account, the client needs to submit DIS (Delivery Instruction Slip) to transfer the units in the new E-Wealth account.

The request shall be processed in T+7 working days from the date received at HO. So old E-Wealth will be closed and a new E-Wealth account with the new tax status will be activated as per investor’s request.

Ans: Yes, tax status can be modified to NRI from RI or vice versa, subject to fulfillment of Income Tax Act ,1961 explained in chapter :Definitions & Basic Information, question number 5.

Ans: OCI is actually a card that the government of India gives to certain foreigners who can prove their eligibility as per the criteria given below.

1. An OCI refers to a Person of Indian Origin who was a citizen of India on January 26, 1950 or thereafter or was eligible to become a citizen of India on January 26, 1950 or who belonged to a territory that became part of India after 15.08.1947.
2. A person who is a child or grandchild or a great grandchild of such a citizen mentioned above.
3. Spouse of a foregin origin of a citizen of india or spouse of foregin origin of an overseas citizen of india cardholder registered under section 7A of the Citizenship act 1955 and whose marriage has been registered and subsisted for a continues period of not less than 2 years immediately preceding the the presentation if application.

Ans: An NRI in receipt of income from in India, is taxable in India on such income i.e. India as a source state has the right to tax such income. However, the country of which such NRI resides, will also have a right to tax such income as it is the residence state. This situation leads to Double Taxation. In the process, the NRI will end up getting taxed twice on the same income. To overcome this, India has entered into DTAAs with various countries** which provide exemption or credit of foreign taxes paid while filing their return of income in the home country to avoid double taxation.

Ans: No, there is no capital gain in case of gifting the mutual fund units or any securities.