Latest news with #P.R.Bhuta&Co
Mint
5 days ago
- Business
- Mint
Does an NRI providing consultancy to Indian firms need to file income tax return?
-Name withheld on request As a non-resident providing consultancy services related to China market entry to Indian companies, if your only source of income from India is consultancy fees and the full tax liability has been met through the appropriate TDS in India, then you are not obligated to file an income tax return in India. This applies only if Indian companies deduct TDS at the applicable domestic tax rate of 20% (plus any surcharge and cess), without considering the provisions of the DTAA. However, if you intend to claim the benefits under the India-Hong Kong DTAA, whereunder such consultancy income may not be taxable in India due to the absence of a fixed base or physical presence in India for providing the services, then you will need to file an income tax return in India if your income exceeds the basic exemption limit. To avail the DTAA benefits, you must obtain a Tax Residency Certificate (TRC) from the Hong Kong tax authorities and submit Form 10F along with other necessary documents. -Name withheld on request Under the Indian income tax provisions, self-occupied property is a concept which refers to house properties that are typically occupied by the owners for residential purpose and therefore, the annual value of such property is considered as 'nil' and not chargeable to tax. This benefit is available on two such house properties. Prior to the Finance Act, 2025, this benefit was available only if the property was actually used by the owner as their residence or if the owner was unable to occupy it due to employment, business, or profession being carried out at another location, and the owner resided at the other location. However, following the 2025 amendment, the requirement to justify the non-occupation due to employment, business, or profession has been removed. Now, a taxpayer, including an NRI residing abroad, can claim the annual value as 'Nil' for up to two properties, regardless of the reason for non-occupation. Accordingly, in your case, you may treat both the houses, where your parents reside, and the second vacant property as self-occupied in your Indian income tax return. Therefore, the annual value of both properties will be considered 'Nil', resulting in no taxable income under the head 'Income from House Property'. However, if you acquire a third property, one of the three will be deemed to be let out, and a notional rental income (based on expected rent) will become taxable in India. Harshal Bhuta, partner, P. R. Bhuta & Co. CAs
Mint
12-05-2025
- Business
- Mint
Will cross-border crypto gifts trigger Indian taxes?
I have been residing in the UAE for the past 25 years and carry on my business here. On the occasion of my 50th birthday, a couple of my Indian cousins have gifted me USTD into my private wallet here from theirs in India, after I shared my private key with them. Do I have to pay any tax in India on these gifts? - Name withheld on request Can a non-resident Indian receive cryptocurrency as a gift from cousins in India without attracting Indian tax? The answer lies in a mix of tax law interpretation and cross-border regulatory gaps. India's foreign exchange laws currently do not specifically regulate the cross-border transfer of cryptocurrencies, making it unclear whether such transfers are legally permitted. Under Indian tax law, receiving cryptocurrency as a gift or for less than its fair market value (where the difference exceeds ₹ 50,000) is treated as income under section 56(2)(x). Importantly, cousins are not classified as 'relatives' under this section, so gifts from them typically don't qualify for the exemption available for gifts received from close family members. However, this tax rule only applies if the income is received in India, accrues or arises in India, or is deemed to do so. Since you've been living in the UAE for over 25 years, you're treated as a non-resident under Indian tax laws. To assess whether income accrues in India, it's important to understand what 'accrue' or 'arise' means under tax law. Typically, 'accrue' implies a legal right to receive income—usually based on an obligation from another party. But in the case of a gift, no such obligation exists, since it's voluntary. However, section 56(2)(x) of the Income Tax Act is a deeming provision. This means it can treat the mere receipt of property—without or below fair market value—as taxable income, even if there's no underlying legal right to receive it. The term 'arise' refers to the point when income actually comes into existence. Under this section, income is considered to arise the moment the asset (in this case, cryptocurrency) is received. As you received the USDT outside India, both the arising and receipt occur outside India. Moreover, the deeming provision under section 9(1)(viii), which relates to gifts of money by a resident to a non-resident, would not apply in your case. Therefore, the receipt of USDT from your cousins will not give rise to income taxable in India. Moreover, under Article 22 of the India–UAE Double Taxation Avoidance Agreement (DTAA), any 'other income' (like gifts) is taxable only in the UAE. As a UAE tax resident, you wouldn't owe tax in India on this gift. Harshal Bhuta is partner at P. R. Bhuta & Co. CAs
Mint
05-05-2025
- Business
- Mint
Will a cross-border share swap trigger tax in India?
I am a non-resident Indian (NRI) and hold shares in a US-based company whose parent is in India. I've been informed that, as part of a restructuring, the Indian parent is offering existing shareholders of its US subsidiary the option to either exit or exchange their US shares for shares in the Indian company. If I opt for the share swap, will this trigger any tax liability in India? Will I be required to file a tax return in India for this transaction? As a non-resident under Indian tax law, capital gains from the sale of foreign company shares are generally not taxable in India, unless those shares derive substantial value from assets located in India. This is typically the case if: Indian assets exceed ₹ 10 crore in value, and 10 crore in value, and These assets constitute at least 50% of the total asset base of the US company. Read this | For some NRIs, capital gains from Indian mutual funds are tax-free If both thresholds are met, the US company's shares are deemed to be situated in India, and any gains from their transfer may be taxable in India. However, most foreign subsidiaries don't hold substantial Indian assets, so this provision usually doesn't apply. You should review the asset structure of the US company to confirm. If you opt for the share swap and receive shares of the Indian parent in exchange, this typically does not trigger tax in India, unless the swap is structured in a way that gives you Indian shares at a discount to their fair market value (FMV). Under Indian tax rules, if the FMV of the Indian shares exceeds what you effectively pay (through your US shares) by more than ₹ 50,000, the entire difference could be taxable as income. From a regulatory standpoint, cross-border share swaps like this are now permitted under India's foreign exchange laws (post-August 2024 reforms). As a non-resident, you won't have to comply with these regulations. The onus is on the Indian company to follow the required procedures and obtain valuations from authorized valuers to determine the swap ratio. Harshal Bhuta, Partner, P. R. Bhuta & Co. CAs First Published: 5 May 2025, 06:17 PM IST
Mint
28-04-2025
- Business
- Mint
What is the eligibility for becoming an RNOR?
I am originally from Abu Dhabi, and I came to India in April 2025 after my company transferred me to its Indian subsidiary. I will earn my salary from the Indian unit. At the same time, I have requested that the parent company pay me part of my salary in Abu Dhabi since it is tax-free there. Do I have to show the salary I will receive in Abu Dhabi in the Indian tax return? Are there any other compliances that I have to take care of? -Name withheld on request Assuming that you will reside in India for work for more than 182 days in the current fiscal year (i.e. April 2025 to March 2026), you will become a resident under the Indian tax laws. Further, if you have been a non-resident in India in nine out of the 10 preceding fiscal years or have been in India for 729 days or less during the seven preceding fiscal years, then you will qualify for specific category of resident but not ordinarily resident (RNOR) within the concept of residence. Assuming you haven't stayed in India anytime before, you will be able to satisfy both these conditions in your case, and accordingly you will become RNOR for the 2025-26. As an RNOR, all incomes earned outside India are not taxable in the country except those derived from any business controlled in India or any profession set up in India. In your case, you will be earning the salary income from the Indian company as well as from the UAE parent company for the services you will render in India on account of your employment with the Indian company. Since you will be exercising your employment in India, the salary income will be considered to have accrued or arisen in India and will not be treated as income earned outside India. Therefore, the salary income received from the parent company will also be taxable in India, and you will have to offer it to tax in India in your income tax return corresponding to 2025-26. The Indian subsidiary would also be under an obligation to deduct tax at source (TDS) on the foreign portion of the salary that you will receive in the UAE. You will retain your RNOR status until you complete 730 days of stay in India in any of the seven preceding fiscal years. If you are likely to travel outside India during holidays, you may qualify as RNOR even for the subsequent two fiscal years, i.e. 2026-27 and 2027-28, since your cumulative stay in India would not exceed 729 days until 31 March 2027. Till the time you remain an RNOR, you are not required to disclose any of your foreign assets (such as overseas bank accounts, overseas financial interests, etc.) in your Indian income tax return under Schedule FA. Harshal Bhuta is a partner at P. R. Bhuta & Co. Chartered Accountants. First Published: 28 Apr 2025, 02:05 PM IST
Mint
21-04-2025
- Business
- Mint
The tax obligations for a UAE resident donating to NGO in India
Foreign Contribution (Regulation) Act, 2010 (FCRA) is the legislation dealing with foreign contributions received by an Indian NGO. There are two key conditions to trigger the applicability of FCRA provisions: (a) the donor must be classified as a 'foreign source' and (b) the nature of the funds received must qualify as a 'foreign contribution'. While the term 'foreign source' includes individuals, only those holding foreign citizenship are considered 'foreign sources' under FCRA. Since the UAE does not grant citizenship by birth to children of foreign nationals, and you are an NRI (i.e. an Indian citizen living abroad), you are not covered under the definition of 'foreign source'. Therefore, any donation made by you to the Indian NGO will not trigger FCRA compliance or reporting requirements. You may donate to the NGO through normal banking channels. If the NGO is registered under section 80G of the Income Tax Act, you will also be eligible to claim a tax deduction. The NGO will provide you with a valid donation receipt and a certificate of donation in Form 10BE for this purpose. Under the Indian income tax provisions, residential status is determined, inter alia, based on the period of stay in India and not on the basis of the citizenship. Though you have obtained Portuguese citizenship and continue to reside in India, you will still be classified as a resident and ordinarily resident (ROR). Your change in citizenship does not impact your tax liability in India. Your global income continues to remain taxable, and you may claim foreign tax credits for any income that you earn outside India. Additionally, you must report the foreign income and disclose the details of any foreign assets in 'Schedule FA' when filing your Indian income tax return. Under FEMA, a person is considered a resident in India if they stayed in India for more than 182 days during the preceding financial year, apart from the intention to stay in India. Since you continue to stay in India with no intention to settle abroad in the current financial year, you remain a 'person resident in India' under FEMA, despite acquiring foreign citizenship. Further, there is no requirement to convert your existing Indian bank accounts into NRO or open new NRE accounts. It is advisable to obtain an OCI card immediately since you have already given up your Indian citizenship and you wish to continue to stay in India. Other FEMA obligations as a resident will continue to remain the same for you. Harshal Bhuta is partner at P. R. Bhuta & Co. CAs First Published: 21 Apr 2025, 04:42 PM IST
