'A NRI cannot hold resident bank accounts'

My husband gets his form 16 with tax deductions from his company. We attach the same with the Saral form and hand it over to the IT department through such a service provider.

Since 2/3 years, we have built our bank FD portfolio. We have TDS certificates and have attached the same for the year 2004-2005.

For 2005-2006 we were unable to locate the TDS certificates as my husband shifted from Pune. We want to be clear on our books. Please guide us on how to we proceed as we have TDS certificates for '06-'07 and the '07-'08 will be received in May '08, which we want to attach with the Saral form.

Topics

1. Vanita Jhamb
2. Kumar
3. Rashmi
4. Pitambaran

Vanita Jhamb

Notification no. S.O. 752 (Ee) dt 28-3-08 has introduced 8 different ITR Forms, which have to be used by assessees. The change is effective for and from FY '07-'08. These do not require any attachments, including TDS certificates. Only the relevant information is to be filled at appropriate places. Saral stands deleted.

For individuals having an Income from Salary and Interest, ITR-1 is required to be used. The returns that have been filed late do not elicit a TDS refund. Note that the last date for filing returns for FY '08-'09 is 31.7.09.

I am bringing my wife, who so far is a resident Indian, back to the US along with me. I would like to take a few investment decisions before we leave.

A couple of questions:

(1) Am I required change the status of my FDs once I become a NRI? Actually, I am already an NRI but my wife is still a resident. So, if we book an FD in her name for say 5 years, will she be required to change the status of that next year?

(2) What about Post Office investments? If we have MIS/recurring deposits, as residents, are we required to change status/pay tax once we become NRIs?

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Kumar

A NRI cannot hold resident bank accounts, whether savings or FDs. Therefore, the status of your wife's FDs will need to be changed to NRO. Post office investments may be continued only till their maturity. Post maturity, fresh investments in any post office instrument is not available to NRIs.

My mother-in-law was the sole owner of the accommodation and ours is a joint family. This property was purchased by her approximately 30 years ago.

My husband passed away a few years ago and this is my marital home. She (my mother-in-law) has decided to sell these premises and provide me with funds to purchase a house for myself and my children.

In order to save on the resultant capital gains tax applicable on sale of the premises, she has gifted the premises as below: 34% she retains 33% to my brother-in-law 14% to me (daughter-in-law) 14% to my son 5% to HUF Account of my late husband.

The gift deed has been registered and tax paid, as well as a copy given to the society office for notations on the share certificate.

Since I am not a blood relative, what are the gift tax implications, if any?

Is there any gift tax payable by me/them on the sale proceeds proportionate to my share? My sons' and my individual share is more that Rs 50,000.

Would it be possible to have your views on this issue?

Rashmi

1. At the outset, please note that your mother-in-law is your relative since you are the spouse of her son who is her lineal descendant

"Relative" means

i) Spouse

ii) Brother or sister

iii) Brother or sister of spouse

iv) Brother or sister of either parents

v) Any lineal ascendant or descendant

vi) Any lineal ascendant or descendant of the spouse.

vii) Spouse of the persons referred in clauses (ii) to (vi)."

2. The phrase any sum of money suggests that the new provisions are applicable to cash gifts only and not other assets such as immovable property or jewellery, etc. In other words, such other assets gifted even by a stranger will be free from tax.

3. Notwithstanding what is stated above, if your share of the capital gains (not the sale value), including your other taxable income if any, is over Rs 1.80 lakh, then and only then are you liable to pay tax.

4. Same is the case of your son, provided he is a major (his limit is Rs 1.50 lakh). Otherwise, his income is clubbable in your hands.

My daughter was married in 2007. I work in Bombay and own a flat. At the time of marriage of my daughter, our family decided among ourselves that the flat in Bombay will be given to my daughter. Since nobody is likely to stay in Bombay after my retirement I intend to sell the flat. The same was bought in 1990 (for Rs 1.75 lakh) and currently the property is likely to fetch me Rs 12 to 13 Lakh. What I understand is unless I reinvest the whole thing in a similar manner, the proceedings will invite tax.

What I want to know is whether I can gift the entire proceedings to my daughter, who is not earning, without incurring a tax liability.

Pitambaran

Your query is not clear. In the initial part of the question, you mention that it was decided to gift the flat to your daughter. Later on, you mention that your propose is to sell the flat. In this regard, note that if you were to gift the flat to your daughter, there would be no tax payable either by you or by her.

However, if you were to sell the flat and gift her the proceeds instead, you would be liable to capital gains tax on the sale proceeds and only the balance after tax money may be gifted to her. To save tax on the capital gain, you may either buy a new property or alternatively, invest the capital gain amount in bonds issued by NHAI or REC for saving capital gains.

The authors may be contacted at wonderlandconsultants@yahoo.com