Wanted to know about NRI taxation

Sorry to say, your query is not complete and some parts are vague. Therefore, we will try answering the parts which are clear and for the rest, if you want, you can provide further details to us through comment section of our query page.

1. We do not know if the SIP en-cashed in October 2016 was in equity fund or debt fund. If it was in an equity fund, then no tax is payable as the last SIP installment was in August 2015 (holding period of which was more than 365 days, when redeemed). This is due to long term capital gains tax for equity schemes are tax free!

However, if it was in a debt fund or debt oriented hybrid fund, then short term capital gain tax will be applicable and in that case the AMC must have deducted tax at source from the redemption amount. Please note that in case of debt funds, the gains can be treated as long term only if the holding period is more than 3 years.

2. Is the rental income of Rs. 110,000, received in current FY, is monthly or annual? Based on this, you need to calculate his total income and see if it is taxable or not? please note that while calculating total income you need to take into account interest & dividend income and income from other sources also.

3. Deposits made in PPF accounts are normally for availing tax benefit under Section 80C of the Income Tax Act 1961. It seem that he has opened the PPF account prior to becoming an NRI. In that case, he can continue to maintain this account till such time it matures. Please also note that PPF accounts can not be opened by NRIs.

However, you can continue to maintain it if your have opened the same prior to your becoming an NRI.

4. Depositing the rental amount into PPF account has no relation with his taxation or the rental becoming tax free. As we said earlier that rental income is taxable along with other incomes and if it is beyond the minimum prescribed tax limit then he has to file the tax return. Then the amount, deposited in the PPF account can be treated as investment under section 80C of the Income Tax Act 1961 and the rebates can be availed.

I think, you should contact a tax expert with complete details of his income from various sources etc. along with details of capital gains and take his advise.

Thanking you for writing to Advisorkhoj.