My mother whose annual income from pension is less than ₹2 lakh is not filing returns now.
This year, her long-term capital gain from equity mutual funds will be more than ₹1 lakh. So, her income will be more than ₹3 lakh. Does she need to file return?
According to the Income Tax Act, an individual would be required to file a tax return when he/she has taxable income in excess of the threshold limit laid down.
The current limit for an individual less than 60 is ₹2.5 lakh and for senior citizens between 60 and 80 years, it is ₹3 lakh.
The return filing requirement would also get triggered when an individual wishes to carry forward loss to be set off in the subsequent years or has to claim refund of taxes paid.
In your mother’s instance, the long-term capital gains arising from equity-oriented mutual funds will be exempt from taxation as per Section 10(38), provided it has suffered Securities Transaction Tax.
Further, since her taxable income (pension) is below the threshold limit, she would not be required to file a tax return. The requirement to file a return would not arise if an individual has only income that is not chargeable to tax.
I went to England in mid-September 2014. I visited India for 10 days only before I moved toDubai in August 2015 on work. My salary, in dirhams, is being deposited in a bank in Dubai.
Since April 1, 2015, I have been in India for six days only, and will continue staying in Dubai for most of the remaining financial year. Do I have to pay any tax on my Dubai earnings in India?
I believe I will have to convert my savings account into an NRO account. When can I open an NRO account?
If I sell shares held in India for more than a year, will I be taxed because of my changed status?
Adarsh Mittal
Based on your stay pattern, we understand that you would qualify to be a non-resident Indian during the financial year 2015-16.
As a non-resident Indian, you will be taxable only for the income you would receive or that would be deemed to be received or that would accrue or arise or be deemed to accrue or arise in India. In layman terms, salary earned in India alone will be taxable.
With regard to conversion of your savings account, you could convert the same to either a Non-Resident (External) Rupee Account (NRE account), Non-Resident Ordinary Rupee Account (NRO account) or a Foreign Currency Non Resident (Bank account) once you qualify as a person resident outside India under the Foreign Exchange Management Act, 1999 (FEMA). Based on your stay pattern, we understand that you may get this status in 2016-17.
The long-term capital gains arising from sale of equity shares will be exempt from taxation as per Section 10(38) of the Income-Tax Act, 1961, provided it has suffered Security Transaction Tax.
Further, the credit of the proceeds to an NOR account would not change the taxability or otherwise of this transaction.
The writer is Partner, Deloitte Haskins and Sells LLP. Send you queries to taxtalk@thehindu.co.in