Suppose a person has/will be staying abroad from Jan 2005 to Oct 2007. Is he NRI? The person do not have any NRI/NRE account and sends his/her savings to his/her parents. Finally the person will return back to India in Oct 2007, which is the best way to Save his/her tax in India.
A. Before comming to India Send all your savings to Parents. Gift is not taxable. B. Since the person has stayed long and is NRI(not sure) so no tax even he/she carry his/her own money.
RE:Amitabh please clarify this
by Amitabh on Apr 27, 2007 12:50 PM Permalink
Being resident or non resident is a question that has to be answered in relation to each financial year separately.In simple words,if a person stays for 182 days in a year in India,he is a resident.For furthur details,you may check the provisions of Sec 6 of the Income Tax Act 1961.If he is resident in India,he has to pay tax in India for income accruing or received anywhere in the world.So any gift can be given out of this income only after paying all taxes pertaining to such income,whether in India or abroad.For the period he is non resident,he will not have to pay tax on such income which accrues or is received by him outside India.It makes no difference whether he gifts the income to parents or brings it in India and keeps that money with himself.
RE:Amitabh please clarify this
by Sourav Ganguly on Apr 29, 2007 01:54 PM Permalink
Thanks for clarification, just to double check Taking the above case from Jan 2005 to Oct 2007 1. Jan 2005 to Mar 2005, need to pay tax in India since stayed more than 182 days in India from Apr 2004 to Mar 2005. Even the giftedincome is taxable to him, right?? 2. Apr 2005 to Mar 2006, no tax in India since he stayed outside India for the whole financial year right?? 3. Apr 2006 to Mar 2007 no tax, same reason as in point 2. right?? 4. Apr 2007 to end Oct 2007, assuming he will be staying in India from Nov 2007 to Mar 2008 (only 150 - 160 days) so no tax in India right?? Correct me if I am wrong anywhere.
RE:Amitabh please clarify this
by Amitabh on Apr 29, 2007 06:45 PM Permalink
Your points are valid.In the first case (point no 1),tax is required to be paid in India for even foreign income.Any gift can be made out of this income after the taxes are paid.The gift will not be taxable in the hands of recepient in case the donor and recepient are relatives as defined in the Income tax Act.In any case,there is no gift income to the donor in your case.It is to the donee (parents of the donor).Parents will not be taxed for the same whether the gift is made out of taxable or non taxable income of the donor.In case,donor's income is taxable,he has to make payment of the taxes or at least make provision for the same before he makes any gift to his parents.
