B) i) Person who has come to or stays in India, in either case, otherwise than
a) for or on taking up employment in India, or
b) for carrying on in India a business or vocation in India, or
c) for any purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period;
ii) any person or body corporate registered or incorporated in India,
iii) an office, branch or agency in India owned or controlled by a person resident outside India,
iv) an office, branch or agency outside India owned or controlled by a person resident in India;
2. A Person Resident Outside India means a person who is not a Resident in India.
3. This definition is identical to one in FERA and has tried to delete the precepts of citizenship and 'Persons of Indian Origin'..
4. ITA defines the period as 182 days or more whereas FEMA defines it as more than 182 days.
4. What are the tax benefits available to an NRI?
Ans. Tax benefits available to NRI are as follows.
1. Bank Deposits are free from wealth tax in India.
2. Interest earned on NRE and FCNR accounts is exempt from Indian income tax upto 31st March 2005.
3. Gifts made out of NRE and FCNR accounts are free from gift tax in India. (Gift tax has been abolished for all types of gifts from the 1st October 1998.)
However, Any gifts received, either in cash or in cheque or any other mode, on or after 1st September 2004, in excess of Rs.25, 000/- would be taxed in the hands of the recipient. However, gifts received on marriage or from relative or under will or inheritance or from employer in recognition of the services rendered would not be subject to tax.
5. Is NRI liable to Wealth-tax in India?
Ans. Wealth tax, in India, is levied under Wealth-tax Act, 1957. NRIs are taxed for their wealth in India alone. (Foreign wealth being entirely exempt from tax).
6. Can NRIs purchase RBI Relief Bonds?
Ans. NRIs could previously purchase RBI Relief Bonds. However, NRIs are presently not entitled to purchase these bonds.
7. Are indexation benefits available to NRIs?
Ans. Rates chargeable under Income Tax Act, 1961 is 20% with Indexation and 10% without indexation. NRIs are allowed 10% tax on LT gains arising out of only listed shares and securities. The same privilege is also applicable to units of UTI/MFs. On all the rest of the assets, such as residential flats, land, the rate is 20% with the protection against inflation through cost inflation index.
The Union Budget 2004-05 has provisions to exempt the long-term capital gains arising on sale of shares and units of equity-oriented fund through Recognized Stock Exchange after the date to be specified by the Central Government.
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