Tax FAQs for NRIs: Schedule AL, India-Germany DTAA decoded

2 days ago 5

As a non-resident Indian (NRI) with superior gains of astir ₹1 crore, bash I request to record Schedule AL (assets and liabilities)? Also, should I disclose each the assets oregon lone those successful India?

—Name withheld connected request

Schedule AL is mandatory successful lawsuit your full income exceeds ₹50 lakh during a fiscal year. All assets, including immovable assets, fiscal assets and movable assets, are required to beryllium disclosed on with the liabilities incurred successful narration to specified assets. The disclosure relates to the assets and liabilities astatine the extremity of the year. Since you are a non-resident, lone the details of assets located successful India (along with corresponding liabilities) are to beryllium mentioned.

As a taxation nonmigratory of Germany. I americium readying to merchantability shares of a listed Indian company, which I purchased successful 2018 arsenic a nonmigratory Indian. Could delight decode the India- Germany DTAA (Double Taxation Avoidance Agreement) successful respect to superior gains taxation (who betwixt India and Germany has the sole close for taxation and exemption, oregon whether determination is immoderate enactment for taxation credit)?

—Sanjeev Sharma

Since you bought listed shares successful 2018, nether the Indian taxation law, they volition suffice to go semipermanent superior assets, and the gains oregon nonaccomplishment that you volition marque connected their merchantability would go semipermanent superior gain/loss (LTCG/LTCL). LTCG exceeding ₹1 lakh earned from the merchantability of listed shares are taxed astatine 10% (plus applicable surcharge and cess). Indexation payment is not available. Also, payment of overseas currency conversion accommodation is not available.

The outgo of acquisition would beryllium connected whether you had purchased the shares earlier 1 February 2018, oregon later, since LTCG earned connected listed shares were exempt from taxation earlier the Finance Act 2018 amendments were passed. If you had acquired the shares earlier, the outgo of acquisition would beryllium higher of (a) existent acquisition terms oregon (b) just marketplace worth arsenic connected 31 January 2018 (not exceeding existent merchantability price). If you had acquired connected oregon aft 1 February 2018, past it would beryllium existent acquisition price.

Under the India-Germany DTAA, India has the root taxation rights for taxing superior gains derived from merchantability of Indian shares. Therefore, successful your case, you volition archetypal beryllium liable to wage taxation nether the Indian taxation law. Relief from treble taxation nonfiction nether India-Germany DTAA contains a premix of income exemption method and taxation recognition method (depending connected the benignant of income) arsenic the methods for relieving treble taxation successful Germany. For relieving treble taxation connected superior gains derived from the merchantability of Indian listed shares, taxation recognition method applies nether DTAA and, thus, you whitethorn assertion overseas taxation recognition successful Germany against the taxes paid connected LTCG successful India.

Harshal Bhuta is simply a spouse astatine chartered accountancy steadfast P.R. Bhuta & Co.

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