Jigar Quotes

The only thing i learnt & loved so far which i don want to change is CHANGE

Rahe dil hee mein teer achha, jigar ke paar ho behtar, Gharaz shiste-bute-naavak phigan ki aazmaaish hai. [shiste-bute-naavak phigan : arrow-throwing ability of the beloved] If the beloved’s arrow remains in the heart, it is good; if it goes past it is even better. It is the test of the arrow-throwing ability of the beloved.

Sakhun kyaa kah nahin saktey ke joyaa hon jawahir ke, Jigar kya hum hanin rakhte ke jaakey khoden maadan ko.

While the payment in foreign currency can be credited in an EEFC account, it should be converted into INR on or before the last day of the next month after adjusting for approved purposes and forward commitments.

An equity investor buys and holds the shares of stock in a company in anticipation of dividends and/or capital gains.

Portfolio Investment Scheme (PIS). Mutual fund investments do not need to go through PIS.

may invest in the equity shares of the company under the FDI scheme of the Government of India.

schemes without going through the FDI or PIS.

For any investor, income tax matters. The effect of tax on the return is very important and material, especially for the investors in the highest tax bracket due to tax drag

The tax free bonds are issued with the maturity of 10 or 15 years and the interest rates on

The tax-free bonds may get listed and traded on the stock exchange. However, the secondary market of debt is not liquid or effective in India. Thus, the investor may not be able to realize its true value.

Any gain on sale of a capital asset i.e. investment, is considered as a capital gain. The taxation of capital gains varies widely depending upon the type of capital asset, whether short term or long term and whether the Securities Transaction Tax (STT) has been paid.

Any buy or sell transaction in the shares of a company listed in a recognized stock exchange is subject to STT. The mutual funds with at least 65% allocation to investment in shares of companies (equity) are considered as an equity mutual fund and are also subject to STT. The

The taxation of capital gains on sale of equity or equity mutual fund is different and depends on whether STT has been paid or not.

Mr. Bharat Shah sold shares of MBK Private Limited for Rs. 1,500,000 on July 1, 2014. The shares were acquired for Rs. 1,000,000 on January 1, 2013. STT is not required to be paid on the sale of shares of a private limited company. As shares are unlisted, sale is made before July 10 and period of holding is more than 12 months, the capital gain would be considered as a LTCG. The indexed cost of acquiring shares would be Rs.1,201,878 (1,000,000*1027/852) and LTCG would be Rs. 298,122. Mr. Bharat would pay income tax @ 20% of Rs. 59,624.

Listed equity shares or equity MF (STT is paid) Not Taxable - Exempt 15% Listed equity shares (STT is not paid) Lower of 20% with indexation or 10% without indexation Taxable as per slab rate Unlisted equity shares (STT is not paid) 20% with indexation Taxable as per slab rate Equity MF sold until July 10, 2014 (STT is not paid) Lower of 20% with indexation or 10% without indexation Taxable as per slab rate Equity MF sold after July 10, 2014 (STT is not paid) 20% with indexation Taxable as per slab rate Let us calculate and understand the taxation with the examples given below.

Mr. Kunal from Uganda invested Rs. 3,000,000 in gold in February 2010. If he sold the gold for 4,000,000 in January 2013, the capital gain would be a STCG as he sold it within 36 months. The STCG of Rs. 1,000,000 will be added to the other income and taxed as a regular income based on the income tax slab.

investment in NHAI or RECL bonds have a lock in period of 3 years i.e. the investment cannot be sold, transferred or redeemed before 3 years. If investment is transferred before 3 years, the

Actually, if TDS is applicable, payment cannot be made to the income earner without deducting the TDS amount at the applicable rates. Further, TDS needs to be deposited within 7 days after the month in which it is deducted.

the TDS provisions are not complied with, interest @ 1% per month or part of the month for failure to deduct tax or short deduction and interest @ 1.5% per month or part of the month for TDS deducted but not paid until paid is levied. In

know certain cases where interest on the PPF account is not paid to NRIs for the very same reason.

Interest on the PPF account is exempt from income tax in India. Not only does an investment in a PPF account give the highest tax free income to residents, it is also allowed as a deduction u/s. 80C of the income tax act, thereby reducing the taxable income. Thus,

Thus, an investor in the highest tax bracket of 30.9% would be able to save Rs. 46,350 in taxes and earn 8% tax free return simultaneously

simultaneously by investing Rs. 150,000 in a PPF account, thereby significantly increasing the return on investment.

calculation of capital gains and taxation, please

The term insurance is the true insurance plan, wherein the amount is paid only on death. If the

Income Tax Act, the premium can be claimed as a deduction from the taxable income u/s. 80C.

Any pre-mature withdrawal or surrender of the ULIP policy may be taxable, subject to TDS and may attract penalty.

The investment objective of the scheme is the most important and determines the risk levels.

Citizenship and Residential Status are two different concepts and should not be mixed. While

which is now increased to 250,000 for the financial year 2014-15. The

The dividend received is exempt from income tax in India provided the Dividend Distribution Tax (DDT) has been paid by the company distributing dividend. If the DDT has not been paid, the dividend income would be taxable.

is illegal to have more than one PAN. A penalty of Rs. 10,000/- is liable to be imposed u/s 272B of the Income Tax Act, 1961 for having more than one PAN. Any additional PAN card(s) should be surrendered to the Assessing Officer.

FBAR requires filing of form TD 90-22.1 by June 30 of the next year with the Department of Treasury reporting all your foreign financial accounts and no extension is allowed. The penalty for non-submission of FBAR is severe - 50% of balance or $100,000, whichever is higher and criminal prosecution. However, it failed to increase awareness and/or compliance.

During the period between 2008-2010, many money laundering schemes/ scandals were exposed; two mostly publicized scandals being UBS (overall) and HSBC (for NRIs).  Both UBS and HSBC banks accepted that they were involved in practices of money laundering,

Both the banks paid huge fines, promised not to solicit US residents’ investments abroad AND declared information about the account holders to the IRS. The

The UBS banker received US$ 104 million reward, the highest in US History, under the whistleblower program.

US person is to disclose all the foreign financial accounts and related incomes, revise all previous years’ tax returns, pay tax, interest, penalty as well as pay the FBAR penalty based on the highest balance in the foreign financial accounts. While

repatriation means transferring money abroad which was originally transferred from abroad. In simple terms, repatriation means transferring money back to where it originally belongs.

For example, if Mr. Ashwin from Hong Kong transfers $100,000 to India and credits his NRE bank account in India, he has remitted the funds. Later, if he transfers the same funds back to Hong Kong, he is said to have repatriated the funds.

For example, if Mr. Dhinal, an NRI from Austria receives a gift from his father in India of Rs. 5,000,000 and transfers the funds to Austria, he has remitted the funds.

For transferring funds out of an NRE account, there is no limit, conditions or restrictions and the transfer can be completed very easily by submitting a request form.

Any investment in any country that increases the risk adjusted after tax return while providing security of principal and allowing transfer of funds in and out of that country is a great investment destination.

For example, Ms. Sweta from UK invests GBP 100,000 in an FCNR deposit on July 15, 2014 (1 GBP=100 INR) for 5 years at a rate so that the deposit has a maturity amount of GBP 120,000 on July 15, 2019 and simultaneously, enters a forward contract to convert the maturity amount (Sell GBP) at INR 125/GBP i.e. INR 15,000,000. Sweta’s investment of 10,000,000 INR becomes 15,000,000 INR giving her a simple average return of 10%. It will not matter whether the foreign exchange on July 15, 2019 is INR 110/GBP or INR 150/GBP; she would still get 15,000,000 on maturity.

Interest on NRE and FCNR deposits are exempt from income tax in India. However, while explanation 2 of section 10 (15)(iv) mentions that “interest” includes hedging transaction charges on account of currency fluctuation, taxation of gain due to entering into forward contract may not be straight forward.

The interest rate on RFC and FCNR deposits for corresponding currency and maturity are usually the same. While the minimum term of an FCNR deposit is 1 year, there is no such limitation for RFC deposits. An account holder can open an RFC deposit for one month or even less.

While RFC deposits can be withdrawn pre-maturely, banks are allowed to levy any penalty.

Before investing, an NRI needs to analyze the investment product, its features, expected return, terms of investment as well as his risk profile, objectives, time horizon, liquidity constraints, effect of investment on the total portfolio, taxation in India and in the resident country and any

Mr. Dipak from Qatar wants to invest indirectly in equity based mutual funds, he is allowed to invest directly in the respective mutual fund schemes

NRIs are not allowed to open a PPF account or renew an existing account after maturity. However,

However, if a PPF account was opened or extended while the investor was a resident, he may continue maintaining the account until maturity but no further. On maturity,

The maximum deposit (investment) a person can make in the PPF account is regulated and is recently increased from Rs.100,000 in 2013-14 to Rs. 150,000 from financial year 2014-15.

India is a country with comparatively higher inflation. If an investor invests in an asset, which gives a positive return but is not able to meet or beat inflation, there is no real return to the investor and if he has to also pay tax on the positive return, it would result in a double whammy – return not enough and pay tax on the not enough return.

To compensate for the gain due to inflation, CII was introduced. It means there is no capital gain if the asset has returned only to meet the inflation (CII). Any gain over and above the inflation is the real gain and tax is to be levied on only the real gain.

The indexation benefit is not available to either the sale of depreciable assets, sale of bonds and debentures (except capital indexed bonds) or sale of any asset resulting in a short term capital gain.

Mr. Gopal sold shares of NJPA Private Limited for Rs. 1,500,000 on August 1, 2014 without paying STT. The shares were acquired for Rs. 1,000,000 on January 1, 2013. As shares are unlisted, sale is made after July 10, 2014 and period of holding is less than 36 months, the capital gain would be considered as STCG. The capital gain of Rs. 500,000 would be added to Mr. Gopal’s income and he would have to pay income tax as per his tax slab rates.

Mr. Taral from Brazil sold shares of ABC Company, an unlisted public company without paying STT. The shares were purchased for Rs. 2,000,000 in January 2011 and were sold in October 2014 for Rs. 3,000,000. As shares are unlisted, sale was made after July 10, 2014 and period of holding is more than 36 months, the capital gain would be considered as LTCG. Mr. Taral would pay tax @ 20% of gain after indexation. The indexed cost would be Rs. 28,80,450 (2,000,000*1024/711) resulting in a LTCG of Rs. 119,550 and tax @ 20% on indexed gain would be 23,910.

Mr. Amit from France sold shares of TCS after 6 months of purchase for a gain of Rs. 100,000 after paying STT. As TCS is a listed security and as the period of holding is less than 12 months, it would be considered as a STCG. As Mr. Amit has paid STT, the STCG of Rs. 100,000 would be taxed @ 15% i.e. Rs. 15,000.

Ms. Hetal owned shares of Infosys in physical form. She had acquired the shares in February 1997 for Rs. 100,000. She sold the shares outside stock exchange without paying STT to her friend Ms. Dhwani for Rs. 10,000,000 in May 2014. As listed shares were sold after 12 months, the capital gain is a LTCG. However, as STT was not paid, the LTCG would be taxed at a lower of 20% after indexation of Rs. 9,664,242 (10,000,000-335738(100,000*1027/305) i.e. Rs. 1,932,852 or 10% of gain without indexation of Rs. 9,900,000 i.e. Rs. 990,000. Ms. Hetal would pay tax of Rs. 990,000.

Mr. Keyur from Australia sold an equity mutual fund subject to STT after 18 months of purchase for a gain of Rs. 1,000,000. As STT is paid and the holding period is more than 12 months, the gain would be a LTCG and would be exempt from income tax in India.

Mr. Ankur from USA invested in an equity mutual fund that is an overseas fund of funds. He sold the fund after 10 months of investment for a profit of Rs. 1,000,000 without paying STT. As equity mutual fund was sold before 12 months, the capital gain would be a STCG. However as STT was not paid, STCG would be included in the income and taxed as per the income tax slab rates.

Tax on income from investment in debt mutual fund, real estate and other assets

Mr. Kalpit from Oman invested Rs. 3,000,000 in a residential property in India in June 2012 and sold the property for Rs. 4,000,000 in July 2014. As the period of holding is less than 36 months, the gain of Rs. 1,000,000 would be a STCG and added to his other income and taxed as per the slab rates as regular income.

The investment needs to be made within a period of six months from the sale and is restricted to Rs. 50 lakhs. Also, the investment

It is an indirect way of tax collection from the tax payers. As the name suggests, tax is deducted at the very source of income generation by the payer itself and then deposited to the Income Tax department on behalf of the taxpayer.

Mr. Rajesh. While the payment is a part of Mr. Rajesh’s income, under the TDS provision, Mr. Hemant would deduct TDS of Rs. 10,000, pay only Rs. 90,000 to Mr. Rajesh and pay Rs. 10,000 to the income tax department on Mr. Rajesh’s behalf.

Tax Deduction, Reconciliation, Analysis and Correction Enabling System (TRACES)’ - its core engine. TRACES is a web-based application of the Income Tax Department that provides an interface to all stakeholders associated with the TDS administration. It

Deductors and Tax Payers are required to register on TRACES to create their account and view functionalities enabled for each user. TRACES

Also, the Tax Deduction Account Number (TAN) of the payer is required for deducting, depositing and paying TDS to the government.

an NRI invests in any PO schemes in violation to the provisions by misrepresenting or hiding his residential status, the funds will be returned without interest. It

NRIs are allowed to invest in non-convertible debentures (NCDs) of an Indian company.

NRIs can invest in NCDs if The issue is available for NRIs by way of a public offer The company issuing NCD is not acting as a Nidhi or Chit fund company. The NCD has a maturity of 3 years or more. The interest rate on the NCD is not more than 3% over SBI’s prime lending rate. The borrowed funds are not to be used for agricultural/plantation or real estate business or for re-lending.

Deposits with firms and companies Proprietorship or partnership firms and Indian companies are allowed to accept deposits from NRIs on a non-repatriable basis. This means, while deposits can be made out of NRE,

NRE, FCNR, NRO or inward remittances, the amount can only be credited to the NRO account. The company may accept deposits under a private arrangement or public deposit scheme. A non-banking finance company (NBFC) is required to get registered with RBI and follow the RBI guidelines. Any firm or company accepting deposits are not allowed to use the funds for agricultural/plantation activities, real estate business or investing in other concerns engaged in these activities. Also, the funds cannot be used for re-lending (except NBFC) or repatriated outside India.

(except NBFC) or repatriated outside India. The maturity period of a deposit should not be more than 3 years. Also, there are certain restrictions on the interest rates as well. The borrowing organization is also required to comply with any other laws related to the acceptance of deposits. Income: The income from deposits made in a firm or a company is interest. Taxability: Interest on deposits with an organization is chargeable

chargeable to income tax.

Loans NRIs can give loans to resident Indians on a repatriable or non-repatriable basis. NRIs can also receive loans from residents. Loan from NRIs in foreign currency or on a repatriable basis A resident Indian can borrow up to US dollars 250,000 from NRI close relatives on a repatriation basis i.e. on repayment, the NRI can credit the funds in an NRE account and take this money back without any restrictions. The NRI should be a close relative of the borrower. Please check ‘Who is your relative’ for details. The amount of loan should be received by an inward remittance or by debit to the NRE/FCNR account. The loan should be a minimum of 1 year and without any interest. The funds cannot be used for agricultural/plantation/real estate business or for relending. Income: As the loan should be interest-free, no income can be generated. Taxability: As there is no income, there is no tax. Loan from NRIs in Indian rupees or on a non-repatriable basis A resident, not being a company incorporated in India, may borrow in rupees from an NRI on a non- repatriation basis. The period of loan should be 3 years or less and the rate of interest should not exceed 2% over the prevailing bank rate at the time of the loan. The loan has to be utilized for meeting the borrower’s personal requirement or for his business purposes. The funds cannot be used for agricultural/plantation/real estate business or for relending or for investment in shares, securities or immovable property. For example, Ms. Isumati has given an unsecured loan to her father’s firm earning 15% interest. If she goes to the UK for further studies and becomes an NRI, while she may continue with the loan, RBI rules would apply. The funds cannot be used for real estate business and if the bank rate is 10%, she cannot be paid more than 12% interest on her loan. Her father would also need to deduct TDS @ 30.9% on the interest. Income: Income from loans given to residents is interest. Taxability: The interest income on loans given is taxable for NRIs. Loans to NRIs NRIs are allowed to borrow from a bank/authorized

Ms. Neha has a commodity trading account in India. If she goes to Australia and becomes an NRI, she is not allowed to invest in commodities. She must stop trading in commodities and close the account.

India does not produce any gold and all the gold sold in India needs to be imported, thereby

The Indian Government has levied import duties on the gold import and investment in gold may also be subject to wealth tax. Thus,

NRIs are allowed to buy gold in India, it is always cheaper and better (in terms of quality) to buy gold abroad.

The investment through gold ETF or gold mutual funds is not subject to wealth tax or the Security Transaction Tax (STT).

If gold or gold ETF is sold after 3 years, it is a long term capital gain and if it is sold before 3 years, it is considered as a short term capital gain.

NRIs are allowed to buy life insurance in India and it may not be necessary for them to be physically present within the geographical location of India while purchasing a Life Insurance Policy. 

Income depends on the terms of the respective policy and may be in the nature of interest or capital gains.

Any amount received on death is exempt from income tax in India. Normally,

ULIPs still have high charges, such as policy administration charges,

ULIPs still have high charges, such as policy administration charges, premium allocation charges, fund management fees, surrender charges, mortality charges/premium and other miscellaneous charges for switch, withdrawal, revival, etc.

For example, Mr. Jiten from Dubai has Rs. 100,000 to invest but has no finance or investment experience and wishes to hire an investment manager to manage his investments fulltime. However, he may not be able to afford one due to either limited amount of money or the fact that  the investment manager may not be interested as he would not be employed full time. If he joins other 9999 investors having Rs. 100,000 each and all having the same investment objectives, with Rs.1,000,000,000, they would be in a position to hire the best investment manager. This is the concept of a mutual fund.

Mutual fund Investments have Capital Protection Plans, Fixed Maturity Plans (FMP) or Liquid or Money market schemes that invest very conservatively to protect the capital.

Remittance means transferring money abroad, while repatriation means transferring money abroad which was originally transferred from abroad. In

If you still have NRO deposits, inquire why your advisor or the bank relationship manager did not tell you about the transfer to NRE account, seek proper guidance and immediately initiate the steps to transfer funds from NRO to NRE.

Why” before doing anything and before making any - personal, profession or investment decision. Unless you fully understand “Why”, you may

Key to be happy in life: Don't take it personally and don't except to any thing or anyone.

NRIs are advised to maintain detailed records for the source of investments. It is

also advisable to keep two separate accounts for the husband and wife, not to make internal transfers and invest in the name of the person whose funds are used for investments.

Income on assets transferred without consideration (gift) to or for benefit of spouse or son’s wife or minor son is included in the income of the transferor

For example, if Mr. Jaivin Patel expects to pay a total of Rs. 100,000 as tax (after TDS) for the year 2014-15, he is required to pay Rs. 30,000 by September 15, 2014, additional Rs. 30,000 by December 15, 2014 and another Rs. 40,000 by March 15, 2014. Otherwise, interest @ 1% will be charged.

For example, if Mr. Saiyam, a US resident, having an NRO FD with a bank in India, wants to claim the benefit under India-US DTAA (TDS @ 15%), he would need to Apply to the IRS (Internal Revenue Service) in Form 8802 – Application for United States Residency Certification Pay fees of $85 for an application IRS provides the certification in Form 6166 on the US Department of Treasury Stationery Submit the certificate to your bank in India Submit Form 10F, if required Bank will update its system with the correct DTAA country TDS will be deducted at the rate of 15% instead of 30.9% If any of the above steps are not completed, you may not get the DTAA

generated during 2013-14, the tax return is to be filed before July 31, 2014 to

Mr. Lovesh Vashist gave a gift of Rs. 5,000,000 to his minor son that generated Rs. 500,000 as income. The taxable income of Mr. Lovesh is Rs. 1,500,000 and his wife Ms. Deepti is Rs. 1,600,000. The income of Rs. 500,000 will be clubbed in the income of Ms. Deepti as her income is higher than Lovesh. If in the next year, Mr. Lovesh’s income is Rs. 1,750,000 and Ms. Deepti’s income is 1,250,000, the son’s income would still continue to be clubbed with Ms. Deepti.

Mr. Rajendra Mehta has a proprietorship business in India and employs his wife Ms. Raksha and pays her a salary. The salary income of Ms. Raksha may be clubbed in the income of Mr. Rajendra if she does not have any technical or professional knowledge or experience.

Double Taxation Avoidance Agreements (DTAA): Mr. Kaushik, a US citizen, living in UK having an income from investments in India should be taxed only once on his Indian income. If his income is taxed in all three jurisdictions, he may not be able to get anything after tax and would cause him undue hardship. Double taxation means taxing the same income more than once.

How NRIs can claim DTAA benefit: While it was very easy to obtain the DTAA benefit until 2012, Finance Act 2012 made it mandatory for non-residents to produce a Tax Residency Certificate (TRC) from their home country’s revenue authority for claiming relief under the DTAA. A

means that INR is expected to depreciate at the rate of 4% annually for next 5 years.

I strongly believe that India offers tremendous opportunity even after adjusting 4% INR depreciation, as explained in the section ‘Why Invest in India’.

The compounding effect of tax is always higher than the actual tax rate and is called “Tax Drag”. The

Taxes are very important for your investments. Understand the concept of tax drag and plan your investments accordingly.

Plan your taxes, DO NOT avoid any taxes. Tax authorities have evolved and are using information technology to collect and analyze the data and also issue notices. See AIR to SoFTRA to know more about how and what data is collected and used.

DDT is borne by the investors as it reduces the NAV but is not given to the investors. Please

Equity mutual funds, require regular income Dividend option

It is very important that investment decisions are made logically. People are less concerned with Rs. 100 coming less into their pocket and more concerned with even Rs. 1 going out.

Accept, Acknowledge and Act as if the Opportunity cost is a Real Cost.

Negotiate with the bank for a better exchange rate for ANY amount of transfer.

Easy is right. Begin right and you are easy. Continue easy and you are right. The right way to go easy is to forget the right way and forget that the going is easy” - Chuang Tzu Truly speaking, there are very few and basic investment concepts that can make you rich. They

Have reasonable realistic expectations,

Higher the risk, higher the expected return. In

Time is more important than timing

Time is more important than timing for any investment. No one can accurately say the best time to invest, EVER. Start early, have patience, no fear. Please understand the power of Time i.e. compounding.

Tax is a very important consideration.

Each and Every cost counts and is very important, whether direct,

Keep investment simple and invest in products that you understand.

India does not have gold mines and all the gold is imported. Gold outside India is cheaper and of better

In simple terms, FMPs are the MF industry’s version of fixed deposits. The

If you are in dire need of funds, you may have to sell the FMP at a discount as the liquidity and price efficiency of the FMP is an issue.

The MF also offers 3 unique investment and/or redemption options to investors given below: Systematic Investment Plan (SIP) Systematic Withdrawal Plan (SWP) Systematic Transfer Plan (STP)

The biggest benefit of SIP is that an investor buys more units when the market is low and fewer units when the market is high giving him a better average cost per unit. It

STP/SWP are considered as a sale and taxed as a short term or long term capital gain based on the period of holding determined

The investment in immovable property is also subject to the Wealth Tax.

Transfer of Immovable Property An NRI may transfer any immovable property in India to a person resident in India. Thus, an NRI is allowed to transfer (sell, give gift, inheritance or any other way of transfer) any property (residential, commercial, agricultural, plantation, farm house, etc.) to a person resident in India.

Interest rate differential: The exchange rate between currencies is directly affected by their interest rate differential. If the interest rate in one currency is higher, that currency will be available at a discount in future. If a 5 year FD in USD yields 2% p.a. and the FCNR FD in USD for 5 years with SBI in India yields 5% p.a., the difference is because of all risks (including credit and

Currency risk would always be there whether you invest directly in any movable or immovable properties in India or invest indirectly in India-focused mutual fund in your home country in your domestic currency.

Equity mutual funds, no income required Growth option

As a human being, we are more concerned of the real cost than the opportunity cost. Consider the following cases:

Ms. Khushbu from UAE has an equivalent to Rs. 10,000,000 with her bank in Dubai that she wants to invest in India. However, she may not pay Rs. 1,000 to a consultant, who can save her 5 days. Assuming a 9% return, Ms. Khusbu may not recognize that she is losing Rs. 2,466 EVERY DAY for late investments and that saving of 5 days for Rs. 1,000 is a no-brainer.

Conversion of foreign currency is a very lucrative business for banks.

This can also apply for an investment decision. Always ask how many years it would take to double your investments. To

Please research the history of the advisor, the

Bring a holistic approach as well as discipline to investments

It is not advisable to invest in an FMP if you may need the funds before its maturity. If

An investor would invest a specific amount of money in a particular MF scheme at a particular interval - daily, weekly or monthly.

it could result in a total loss of funds. It is very important to select the right withdrawal rate, keep

RBI has given a general permission for NRIs and PIOs to invest in immovable property in India other than agricultural land/plantation property or a farm house. As

Liaison Office

Acquisition of immovable property by entities incorporated in Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan would require prior approval of RBI. However,

However, any foreign person may lease an immovable property for a term not exceeding 5 years for the permitted activities.

There are several structures available to foreign investors to carry out business in India as follows: Investment in proprietorship or partnership firms Investment in Limited Liability Partnership (LLP) in India as a partner Project Office (PO) Liaison Office (LO) Branch Office (BO) Company

A foreign resident or a foreign company can invest in a company or LLP in India, subject to the Foreign Direct Investment (FDI) Policy of the Government of India.

The Finance Budget 2014 expects to earn Rs. 284,266 crores as tax on income for the financial year 2014-15.

After paying the amount owed, the income tax return can be filed.

The five major sources of income which are exempt for NRIs are: Proceeds from Life Insurance Policy - provided the policy complies with the exemption criteria/conditions Dividend from a domestic company or mutual fund scheme - provided the company or mutual fund scheme has paid the Dividend Distribution Tax (DDT), if applicable Interest on an NRE account – provided the NRE account is maintained as per the FEMA rules Interest on FCNR or RFC accounts – provided the account owner is a non-resident or RBNOR under the Income Tax Act Long Term Capital Gain on equity and equity based mutual fund – provided the Security Transaction Tax (STT) has been paid

Sec. Particulars Amount 80C Tax saving investments1 Maximum up to Rs. 1,50,000 (from FY 2014-15) 80D Medical insurance premium-self, family Individual: Rs. 15,000 Senior Citizen: Rs. 20,000 Preventive Health Check-up Rs. 5,000 80E Interest on Loan for Higher Education Interest amount (8 years) 80EE Deduction of Interest of Housing Loan2 Up to Rs.1,00,000 total 80G Charitable Donation 100%/ 50% of donation or 10% of adjusted total income, whichever is less 80GGC Donation to political parties Any sum contributed (Other than Cash) 80TTA Interest on savings account Rs. 10,000 1              Tax saving investments includes life insurance premium including ULIPs, PPF, 5 year tax saving FD, tuition fees, repayment of housing loan, mutual fund (ELSS) (Sec. 80CCB), NSC, employee provident fund, pension fund (Sec. 80CCC) or pension scheme (Sec. 80CCD), etc. NRIs are not allowed to invest in certain investments, such as PPF, NSC, 5 year bank FD, etc. 2              Only to the first time buyer of a self-occupied residential flat costing less than Rs. 40 lakhs and loan amount of less than 25 lakhs sanctioned in financial year 2013-14 Clubbing of other’s income Generally, the taxpayer is taxed on his own income. However, in certain cases, he may have to pay tax on another person’s income.  Taxpayers in the higher tax bracket (e.g. 30%) may divert some portion

Income Tax Table for NRIs The net total income for the Financial Year (FY) 2014-15 will be taxed as per the following rates for NRIs:                                                                        Up to Rs. 250,000               :  0%                                                                        250,001 – 500,000              : 10%                                                                        500,001 – 1,000,000              : 20%                                                                        More than 1,000,000              : 30%

For example, if the income of Mr. Navnit Gohel, an NRI from Australia of 82 years is Rs. 1,250,000, his tax would be Rs. 206,000 (income tax of Rs. 200,000 + education cess of Rs. 6,000). If Mr. Ashok Bhatt from Switzerland has a net total income of Rs.11,250,000, he would pay tax of Rs. 3,625,600 (income tax of Rs. 3,200,000 + surcharge of Rs. 320,000 + education cess of Rs. 105,600).

tax payable exceeds TDS by more than 10,000, advance tax is to be paid on or before 15th September (30% of tax payable), 15th December (60% of tax payable) and 15th March (100% of tax payable). The due date and % limit is for all persons except a company. A company needs to pay advance tax on or before June 15, September 15, December 15 and March 15 for 15%, 45% 75% and 100% of tax payable respectively. If the advance tax is not paid by the due dates, interest @ 1% per month or part of a month will apply.

due date for filing an income tax return is July 31 for non-corporate not-audit taxpayers. Only

for an individual/HUF having income as a proprietor or a working partner from a business or profession whose accounts are required to be audited, the due date of filing the return is September 30.

most of the NRIs are not a working partner or a proprietor of an audited business, the due date would be July 31 of the assessment year. Thus, for

Special reliefs, exemptions and incentives have been provided in the Income Tax Act to NRIs/PIOs.

An investor can invest directly in a mutual fund by filling and submitting the application form and cheque to the respective mutual fund or invest indirectly, through an intermediary called an agent, broker, distributor or advisor, any

NRIs are allowed to invest in equity shares or convertible debentures of companies under the Foreign Direct Investment (FDI) scheme

Ms. Kalgi from Italy sold shares of Reliance Industries after 18 months of purchase for a gain of Rs. 1,000,000 and paid STT. As Reliance Industries is a listed company and the holding period is more than 12 months, it is considered as a LTCG. As STT was paid on sale of shares, the LTCG on sale of shares would be exempt from tax for Ms. Kalgi.

An investor can reduce the LTCG by investing up to Rs. 5,000,000 per financial year in certain bonds. Currently, investment in two bonds – Rural Electrification Corporation Limited (RECL) and National Highways Authority of India (NHAI) are eligible for claiming an exemption.

Mr. Al Gul from Indonesia sold a residential property for 30,000,000 resulting in a LTGC after indexation of 10,000,000. He invested Rs. 5,000,000 in NHAI capital gain tax bonds and invested 5,000,000 in a residential property. He will be allowed to claim both exemptions – NHAI bonds and residential property. Thus, he would not pay any tax on Rs.10,000,000.

Can you buy more than one residential house and claim an exemption? When the exemption was introduced, it mentioned “a residential house”. It was held by various courts that “a residential house” also means more than one. Thus, if a joint family of a father and two sons living together sells the residential property owned by the father, they were allowed to buy 3 residential properties in the same building to claim the exemption as “a residential house”. However, it was not easy to prove as the taxpayer should have the patience to present his case at every level – Income Tax Officer, Commissioner of Income Tax, Tribunal and sometimes the High court. This has created a lot of controversies as well. The Finance Act (No 2) 2014 amended the provisions to allow exemption for investment in one residential house. Now, the taxpayer cannot invest in multiple residential properties for claiming exemption.

The Finance Act (No 2) 2014 amended the provisions to allow exemption for investment in one residential house. Now, the taxpayer cannot invest in multiple residential properties for claiming exemption.

The Finance Act (No 2) 2014 amended the provisions to allow exemption for investment in one residential house in India. Now, the taxpayer will not be able to claim any exemption for investing in a residential property abroad.

Tax Deduction at Source (TDS) is the most effective means of collection of direct taxes and constitutes nearly 40% of direct tax collections.

TDS helps the government collect the tax on income in advance. The

TDS CPC to enable easy filing of TDS / TCS correction statements by deductors /

TRACES enables deductors to view the challan status, TDS credit, verify the PAN of taxpayers linked to the deductor and download various reports and

A PPF account generates interest as income. The

The users/ stakeholders can interact with the CPC (TDS) system and with each other through multiple channels of communication including the Call Centre, e-mail, website, etc.

NRIs are allowed to invest in exchange traded derivatives out of rupee funds held in India on a non-repatriation basis in all exchange trade derivative contracts subject to the limit given by SEBI. However, an NRI is required to notify to the exchange the names of the Clearing Member/s through whom he would clear his derivative trades. NRIs are not allowed to invest in any derivative instrument that is not traded on exchanges.

Income from gold is in the nature of a capital gain and arises when it is sold. If

If the person is alive and did not die during the policy term, nothing is paid on maturity. Unit

The traditional or endowment plans gives a return (fixed or as bonus) on the premium paid in case of death or maturity of the policy, whichever is earlier. However, the premium on a traditional plan is very high compared to the term plan.

The insurance policy purchased in India will cover death that occurs anywhere in the world. Maturity

As premium is invested in various funds, the income has the character of a capital gain.

I have personally advised and made my clients pre-maturely withdraw NRO deposits, transfer

Transfer of any asset without consideration or with inadequate consideration is called a gift. 

Currently, there is no tax for the gift giver (donor) but any gift of over Rs. 50,000 is treated as income under the head ‘Income from Other sources’ and charged to income tax as regular income for the gift receiver (donee).

India has a lot of intelligent people with unique ideas and entrepreneurial spirit to transform these opportunities into reality. Young

Out of 195 countries, about 40 countries are tax haven countries. There

India is also a tax haven country for NRIs, PIOs and foreign investors. Let us see how this is true.

For FPI, any profit/gain in the financial securities is considered as a capital gain and not business income. For

For any equity investment, long term capital gain (>12 months) is exempt from tax whereas short term gain is taxed at 15% flat. For

For debt or real estate investment, an investor gets the indexation benefit of about 10% p.a. from

from long term gain (>36 month) and is taxed @ 20% flat after indexation. Dividend

minimum government maximum governance”, the

Now, if the same SBI bank’s 5 year FD in INR in NRE account yields 9% p.a., it is due to the currency risk only. It

Inflation differential: Higher inflation in one county results in discount of that country’s currency in future. If the rate of inflation in India and USA are 8% and 4%, respectively, INR would depreciate and USD would appreciate by 4% per year. For

FMP cannot be withdrawn prematurely and open ended liquid or debt funds can be redeemed at any time

Recommendations: If investment horizon < 1 year and funds in NRE; invest in liquid fund. If investment horizon > 1 year and funds in NRE; invest in NRE FD. If investment horizon > 3 years and funds in NRO; invest in FMP or Liquid Funds. If investment horizon < 1 year and funds in NRO; invest in liquid fund (higher return, same tax). If investment horizon 1 - 3 years and funds in NRO; invest in NRO FD or liquid fund based on NRO FD rates, interest rate environment and other factors. If you are not sure about the investment horizon; invest in liquid fund.

you are up for the challenge and ready to invest directly into a mutual fund, you could save between 0.10% to 1.00% p.a. on the expense ratio depending on the mutual fund schemes. The

The average saving for equity, debt, and liquid funds would be about 0.50%, 0.25% and 0.10%, respectively.

In India, dividend income is exempt from income tax for investors, provided the dividend distribution tax (DDT) is paid by the company or the mutual fund schemes declaring the dividend. While

Compounding is the eighth wonder of the world. He who understands it, earns it; he who doesn't, pays it.” – Albert Einstein.

To know the number of years, divide 72 by your return percentage (Rule of 72). For

Financial and Investment Planning is THE MOST IMPORTANT. If