While staying and working abroad, some people having Indian origin decide to return to India for the purpose of reuniting with their family. At times this joy is found to be coupled with anxiety relating to tax and legal issues that follow after their arrival in their home land. During their stay in abroad, the assets purchased by them like residential property, gold, silver, etc. or cash money in their bank accounts need to be transferred in the country.
Returning to India by selling their property held acquired while staying there would affect many perspectives like taxation, money transfer, etc. which significantly affect the decision of their returning to India.
Implications relating to Income Tax:
Income Tax is an important issue after returning to India and it depends upon the number of days the NRI has been staying in the current and the past few years.
These numbers of days will determine the taxability on the income accrued in India or the global income of the NRI.
Calculation of quantum of income tax:
After analyzing the tax residential status and those incomes which are liable to taxes, one has to compute taxes payable on that income which is taxable in accordance with the prevalent rates after claiming deductions and exemptions. After calculating the tax liability, the assessee has to deposit appropriate taxes. After payment of taxes, the NRI has to file the income tax return before the due date.
If the person happens to be a resident and ordinarily resident (ROR) in India, then he should disclose his assets located outside India in his filed tax return.
The NRIs returning to India have to ensure that they determine their residential status after returning and declare the correct income in India.
Implications relating to Wealth tax:
The Wealth Tax Act, 1957 in India imposes an obligation upon every person to pay taxes on their accumulated wealth at the end of each financial year in case their net assets are worth Rs. 30 lakh or more than that. The Wealth Tax Act also gives a few benefits to Indians coming back for permanent settlement.
Under the Act, if a person who is a citizen of India or a person having Indian origin, residing in another country and has come back to India for the purpose of permanently residing in the country, then the person shall be exempt from paying wealth tax for the following for seven years:
- Money and assets brought by those persons to India;
- Value of assets acquired by money which is sent from a foreign country within one year preceding the date of the return of such persons to India;
Value of assets purchased by those persons after they come back to India with the help of the money sent from a foreign country.