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As an NRI, does a senior citizen must pay advance tax?

3 min read

I’m a senior citizen dwelling within the UK for some years now and earn curiosity revenue from NRO (non-resident odd) and NRE (non-resident exterior) deposits in India, rental revenue from property at Bengaluru, in addition to capital features on sale of some previous shares in August. Is it true {that a} senior citizen will not be required to pay advance tax?

—Name withheld on request

Under Indian tax regulation, a taxpayer is required to pay advance tax when the overall tax legal responsibility exceeds ₹10,000 in a monetary yr. However, there may be exemption from advance tax provisions for a resident senior citizen particular person who doesn’t have any revenue from enterprise or any skilled revenue.

In your case, because you do not need any enterprise or skilled revenue, you’d have been exempted from advance tax obligation but when solely you had been a resident. Since you’re a non-resident, this exemption doesn’t apply to you. Accordingly, in case your whole tax legal responsibility for respective monetary yr is greater than ₹10,000, then you’re liable to pay advance tax on or earlier than the fifteenth day of the final month of every quarter.

I gained US citizenship via the naturalization course of after working there for greater than 20 years. After covid-19, I returned to India with my household and do not need any plans to return. I’ve been staying in my ancestral property until now however need to purchase a brand new residential property in Mumbai. Am I allowed to purchase a home in Mumbai and what are the tax obligations upon buy and maintaining possession?

—Name withheld on request

Foreign residents usually are not permitted to buy any residential lodging in India until they maintain an Overseas Citizen of India (OCI) card or change into an individual resident in India underneath FEMA (Foreign Exchange Management Act) and don’t belong to the detrimental listing of nations which might in any other case require prior approval from the Reserve Bank of India.

In your case, topic to demonstrating your intention to reside in India for good and finishing 182 days within the previous monetary yr, you’d be allowed to buy a residential property at anyplace in India relying upon the state legal guidelines.

If you’re buying the residential property from an Indian tax resident, then you definitely could be obliged to deduct TDS (tax deducted at supply) @ 1% of property worth underneath Section 194IA of the Income Tax Act. However, if you’re buying the property from a non-resident Indian, then you’re obliged to deduct tax at applicable charge that will be talked about within the tax deduction certificates obtained from the tax workplace by the vendor.

If you come clean with two properties in India, you could declare them as self-occupied properties and there wouldn’t be any taxable revenue attributed to both of them. However, you should still declare housing mortgage curiosity funds as a deduction which will end in a loss underneath the pinnacle – ‘income from house property’.

Harshal Bhuta is companion at P.R. Bhuta & Co. Chartered Accountants

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Updated: 05 Oct 2023, 10:18 PM IST