I’m an NRI seeking your guidance on tax obligations for my in-laws. They live in India and are aged 79 and 70. We plan to bring them permanently to the US. They have cash assets of ₹25 lakh and a home with market value of ₹1.5 crore.
Can you please advice on how to deal with this cash inflow from a tax perspective, once they move out of India? How we can transfer this money overseas?
Your in-laws will continue to be taxed in India on the interest income from cash assets and income from property (rental income or capital gains) since these accrue in India. The total income earned during the year will be subject to taxation at the slab rates applicable to senior citizens/very senior citizens as the case may be.
They would have to file their return of income in India as long as they have taxable income.
With respect to transfer of money overseas, a non-resident Indian can remit an amount of $1 million per financial year out of the balance in the NRO account or sale proceeds of immovable property acquired out of rupee funds, subject to payment of due taxes in India. For this purpose, a person would qualify as a ‘non-resident’ if he/she moves out of India with an intention of staying abroad for an uncertain period.
From the facts, we understand that your in-laws would be moving to the US permanently. Hence, they would qualify as non-residents under the foreign exchange regulations. Accordingly, they could remit the sale proceeds/cash assets subject to payment of due taxes in India.
I have received a letter from the I-T department regarding non-filing of I-T return. But I have no income of my own. My husband works in the public sector as a manager and he pays income tax regularly. Since he has a neurological problem, it is difficult for him to sign.
Hence, his total salary is transferred to my account and I am issuing cheques as per his request. The funds with which we have purchased shares also entirely relates to my husband.
Kindly let me know if I have to file returns.
B Vijayalaxmi As per the Income tax Act, 1961, salary is taxable in the hands of the person who has earned it. Further, mere transfer of such salary for medical reasons would not trigger a tax liability in your hands.
Hence, both the salary income and interest income from the savings bank account would be taxable only in the hands of your husband.
Accordingly, you would not be required to file a tax return at this point of time. However, if the shares have been purchased in your name, any taxable income arising therefrom (such as capital gains) would have to be offered for taxes by you.
The writer is Partner, Deloitte Haskins & Sells LLP