2 days ago
3
I americium a retired overseas national with an OCI paper and a taxation nonmigratory of India, and person been filing yearly returns, including overseas pensions credited to my Indian account, regularly. My wife, an Indian national and homemaker, has nary income and is not a taxpayer. Can I transportation funds from overseas to her arsenic a acquisition oregon by selling investments, security maturity funds, oregon pension payouts? If yes, what volition beryllium the taxation implications for her, and tin she put the funds successful slope FDs, equity funds, oregon property?
—Name withheld connected request
At the outset, specified a acquisition needs to beryllium successful compliance with the Foreign Exchange Management Act (FEMA), 1999. Under FEMA regulations, a nonmigratory Indian is permitted to clasp funds oregon investments made extracurricular India if specified funds were held oregon the investments made erstwhile the idiosyncratic was a non-resident. However, successful respect of immoderate different income received extracurricular India, the regulations necessitate the nonmigratory to repatriate the funds to India wrong 180 days.
In this case, your wife, who is simply a nonmigratory nether FEMA, would beryllium required to repatriate immoderate funds received by her (including arsenic a gift) backmost to India wrong 180 days of receiving the funds. Therefore, immoderate overseas investments to beryllium made by your woman would person to beryllium undertaken lone nether the Liberalised Remittance Scheme, by remitting the funds from India.
From an Indian income-tax perspective, amounts received by the woman from her husband, by mode of gift, are exempt arsenic they are received from a specified relative. However, immoderate income arising retired of investments made by the woman retired of the talented funds would beryllium clubbed on with the income of the husband.
The clubbing provisions use lone successful respect of the income earned retired of the transferred funds oregon assets, and not to the income arising from reinvestment of the clubbed income.
For example, if you acquisition ₹10 lakh to your woman and this magnitude is invested successful shares. which output a dividend of ₹1 lakh, the dividend income of ₹1 lakh received by your woman would beryllium clubbed arsenic income successful your hands. Any income arising retired of the reinvestment made by your woman of the ₹1 lakh dividend income received, would beryllium taxable successful her hands and not clubbed successful your hands.
In lawsuit of clubbed income, overseas taxation credit, if any, successful accordance with the taxation pact oregon Income Tax Rules has to beryllium claimed by the hubby who is offering specified income to tax, adjacent though taxation whitethorn person been withheld oregon paid successful the sanction of the woman successful the state of source.
Interestingly, adjacent though the income earned by the woman would beryllium taxed successful the hands of the husband, the woman would inactive beryllium required to record her instrumentality of income successful India, adjacent if it is simply a nil return, due to the fact that she owns a overseas plus extracurricular India during the year. She would beryllium required to disclose specified assets successful Schedule FA successful her taxation return.
—Mahesh Nayak, chartered accountant, CNK & Associates
English (US)