Browsed by
Tag: nri tax saving tips

tax
Is Agricultural Income from Abroad is Taxable in India?

Is Agricultural Income from Abroad is Taxable in India?

Comments 2 comments

India is an agro-based country since approximately 70% of its population earns bread and butter through farming. But farming is not the only composition of agricultural income. There are many associated works that generate income, like renting out the agro-land. This facility is available for the natives of India. But an NRI can’t invest in the purchase of agriculture land or farm house in India.

Let’s catch on details about the agricultural income sourced from India and abroad.

What is agricultural income in India? 

The revenue generated through farming or agricultural land, buildings or commercial produce from such land is considered as the agricultural income in India. Its details are mentioned in Section 2(1A) of the Income Tax Act.  Ownership, here, does not matter. Suppose a non-resident takes farming land on lease for earning through farming, it would be considered as income from agriculture.

If the revenue is by any means connected with agro-land, it would be counted as the revenue from cultivation. This revenue can be generated through sale of the processed crop. The sale of timber drawn from the trees of such land will also be a part of this income.

There is another situation when the same land or building, like storeroom, outhouse or residential place on/around it is rented out. That rent will be a source of agriculture income.

Taxability of agricultural income from India:

A clause under Section 10(1) of Income Tax Act declares that the income from cultivation shall be exempted from tax. It means that the central government can’t levy any tax on such kind of income.

Please underline that state government can levy tax on the same. But this possibility will arise when the income would exceed INR 5,000 in a financial year. The form ITR 1 or ITR 2 should be filled for income tax return. Conversely, the lesser money earned than the said income shall be exempted from the tax.

Taxability of agricultural income from abroad in India:

Although agricultural income is free from the payable tax under prescribed conditions, but if the same is sourced through the foreign agricultural land, the revenue would be ‘taxable in India’. On consulting this matter with any trustworthy outsourcer who deals in NRI services, the concept of tax will be clearer. This condition will be underlined as the ‘Income from Profits and Gains of Business or Profession’ or ‘Income from Other Sources’.     

How to calculate income tax over the foreign agricultural income?    

Be it the revenue from house property, business, salary or any other source, such income will be taxable. For the NRIs, the revenue generated from the cultivation abroad will fall under the head ‘Income from Other Sources’. Therefore, it would be taxable. The NRIs can consult any reliable entity deals in NRI investment services to dispel confusion over it.

Let’s check how tax is calculated in such condition.

  • When the income is derived from the agriculture land: Take an example. An NRI invested in farming in Canada and earns INR 200,000. Alongside, he is a salaried employee whose monthly income is, let’s say, INR 1 lakh. He generates revenue from dual sources. His salary will be known as base income whereas the former income will be agricultural income.

Now, the tax shall be computed by adding base salary with the agricultural revenue. Then, the output will be multiplied by the fixed tax, let’s say 20%, as per slab. The computation will be like this: 20% (INR 100,000 + INR 200,000) = 20%X INR 300,000 = INR 60,000.

  • When the tax slab changes: The tax slab undergoes revision every financial year. Therefore, it impacts the computation of tax. To cope up that amendment, the computation would be like this: Tax (Basic Tax Slab + Agriculture Income).
  • How much tax is payable?

When the foretold cases are computed carefully, the final computation of tax is to be done. It should be like this: T (Base Income + Agriculture Income) – T (Basic Tax Slab + Agriculture Income).

NRI Tax Tips
NRIs Need PAN No. for These Transactions besides Tax Payment

NRIs Need PAN No. for These Transactions besides Tax Payment

Comments 0 Comment

Do you think PAN card is required for tax payment only?  Indeed, it should be provided at the time of tax payment. But there are certain more arenas where this unique number is mandatory requirement for emigrants, like NRIs.

Let’s catch on the conditions/ transactions when Permanent Account Number, that is a 10-digit unique alphanumeric number, is asked to present.

  1. For getting rid of higher tax deduction at source: It’s a provision in the income tax law under Section 195 that PAN number should be essentially provided. Otherwise, any residents or non-residents have to encounter higher tax deduction at source. In case their payable interest exceeds INR 10,000 and the number is not provided, the bank is free to cut TDS @ 30 percent.
  2. For providing HRA benefit to the tenant: If the non-residents earn rental income more than INR 1 lakh a year, their unique account number must be provided to the tenant so that he/she can get HRA benefits.
  3. For mutual fund (MF) investments: If the invested MF amount is under INR 50,000, there is no need to provide the unique ID no.. But if the MF investment exceeds this limit, the emigrant has to hand over this number along with his photograph & address proof as a mandatory formality of Know Your Customer (KYC).
  4. For refund from Income Tax department: The aim of income tax return is to pay the income tax over the income that surpasses the threshold limit. Emigrants can get more refund against the tax paid through forwarding this card number. If their income does not fall under the cap of taxable income, they need not provide it.
  5. For demat account: To open a Dematerialized Account for buying stocks & shares, emigrants must quote their PAN number.  
  6. For FD investment: However, the natives of India must quote this number only when their investment in Fixed Deposit surpasses aggregate INR 5 lakh in a financial year. But emigrants have to do so compulsorily for taking benefits out of NRI services in abroad and indigenously.  
  7. For purchase of foreign currency: Immigration arises the need of currency exchange. Therefore, the emigrants have to mention their unique ID no. for converting INR into the foreign currency.
  8. For prodigal hotel/restaurant bill: The Income Tax rule 114B mandates mentioning of this number if the restaurant or hotel bill exceeds INR 50,000 but only a time.
  9. For investing in RBI bonds: As stated above, the investment by emigrants in stocks and bonds would be permissible if the unique ID number is provided.
  10. For cash/cheque deposit/pay order: If the cash/cheque deposit/pay order exceeds INR 50,000, the emigrants have to quote their Permanent Account Number in the form.   
  11. For premium payment: The emigrants investing aggregate amount over INR 50,000 as life insurance premium in a financial year would be worthy to quote PAN details mandatorily under Section 114B.
  12. For sale/purchase of unlisted company share: This card number is mandatory if the emigrant expends INR 1 lakh or more in the unlisted company shares.
  13. For the purchase of immovable property: NRIs are barred from buying any agricultural land in India. Except it, they can invest in any kind of immovable property provide that they forward their unique account number with other documents.
  14. For sale/purchase of goods & services: Section 114B mandates this number on the payment over INR 2 lakh for purchasing goods and services.
  15. However, NPS investment falls under tax-exempt bracket but if the amount exceeds INR 50,000, the applicant has to showcase PAN card for withdrawing it.

However, this card is mandatory but in case the emigrant does not have it, he/she can fill Form 60 alternatively.

taxes
PAN Card Not Mandatory to Pay Tax by NRIs, OCIs & PIOs

PAN Card Not Mandatory to Pay Tax by NRIs, OCIs & PIOs

Comments 0 Comment

NRIs, PIOs and OCIs are battling to swap junked currency after demonetization. Now, Reserve Bank of India (RBI) has given a new lease to them. The date to swap outdated currency has been extended upto 30th June, 2017. By showing their valid identity & source proofs along with the letter/form of authority, they can easily exchange the defunct notes at any branch of RBI.

Amid such stringent campaigning against black money, the possibility of fraud has also become prominent. Particularly with the PAN card, it’s a walkover to extract someone’s banking details. Let’s comprehend when NRIs or other emigrants from India require this card first.

When does an NRI, PIO or OCI require PAN card?

PAN card is recommended for tax payers. Banking bodies also ask for it while opening an account, applying for credit card, investing money in Indian stock exchange and spending cash on stocks worth or more INR 50,000.

However, it’s a licence that allows tax payment but it’s not at all mandatory. Check below the guidelines under which the emigrants’ income is counted as taxable:

  • The income, like rental income, salary, income from the sale of securities (Mutual funds) or assets (property) owned in India originating from India and hence, is received from India is taxable for emigrants.
  • Income earned abroad but received in India is taxable.

PAN card is not mandatory for tax payment in India:

Many emigrants, who can’t be physically present to exchange, can authorize any known one for doing so in India. Here arises the possibility of default. Yes, it’s the hacking of personal information! Out of all proofs, PAN card is what can be its source. I want to inform here clearly that this card is not essentially required.

Since the Indian government has provided Form 60 as an alternative of PAN card, the tax payers can enclose the same while filing for tax or tax returns.

Where do NRIs get Form 60- An alternative to PAN card?

Many outsourcers, like S2NRI, are available 24X7 to outsource this facility. The applicant can contact them for consultancy regarding the same instead of applying for PAN card. They happily offer their advice for:

  • Where they can discover the form in person.
  • Spotting the official online place of Indian government (the website of Income Tax Department) where it is available.

NRIs should avoid PAN card as an identity proof for demonetization-Why?

However, this card is essential for hassle free tax payment. But, as said above, it is not compulsory.  And don’t flow with the crowd or fall prey to the rumours that showcases this card is mandatory. There are some official online businesses that do charge for the issuance of this card. But they are not official government website.

This card can let the hacker access sensitive personal information. If so happens, the authentic card holder can be plundered. In order to stay away from such hacking or stealing, go to the shelter of the form 60. It’s the best & secure alternative.

 

whatsapp this is link