Does an NRI should pay inheritance tax?

I’m an NRI (non-resident Indian) dwelling within the US for greater than a decade. My mom died just lately and I’ll inherit one of many immovable properties from her property. Can I obtain and maintain immovable property in India, and if that’s the case, what are the tax implications on this?

—Name withheld on request

Under Fema (Foreign Exchange Management Act) laws, an NRI can inherit immovable property located in India from an Indian resident with out the permission of the Reserve Bank of India. Further, the inheritance of such property just isn’t topic to any earnings tax in India. India doesn’t levy any inheritance taxes too.

I’m an Indian passport holder dwelling within the UAE since 2015. I just lately got here to know that there are some adjustments within the tax legislation which may deal with NRIs as Indian residents. Please clarify this transformation in tax legislation?

—Name withheld on request

With impact from FY2020-21, the tax legislation has been amended to offer that any Indian citizen who just isn’t ‘liable to tax’ in some other nation shall be deemed to be a tax resident in India. This change was launched to deal with the scenario of some Indian residents who travelled the world over however nonetheless remained stateless by way of tax residency throughout the specific FY and accordingly didn’t pay taxes wherever the world over. However, as an hostile fallout of this modification, all NRIs residing in UAE got here to be routinely coated beneath this new provision and had been handled as tax residents of India although solely a small a part of overseas earnings earned by them may develop into taxable in India. This was the scenario in the event that they weren’t eligible to take advantages of the DTAA (double tax avoidance Agreement) between India and the UAE

Interestingly, UAE has just lately launched its new tax legislation which applies to people too, the place they’re exempt on incomes earned aside from from enterprise actions. Thus, NRIs residing in UAE could now declare to be ‘liable to tax’ in UAE and accordingly, stay outdoors the scope of the amended provisions of the tax legislation of India.

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

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Updated: 07 Aug 2023, 10:50 PM IST