Many Non-Resident Indians commonly known as NRI’s want to invest in Indian Mutual Funds and why not. After all the Indian financial market is one of the most stable markets. As per SEBI Overseas investment has been on an average of Rs. 100 Million + per working day from March 2009 onwards.
If an NRI wants to invest in Mutual funds in India, the Reserve Bank of India has set certain guidelines. The guidelines are simple whether on a repartiable or non-repartiable basis, the remittance for investment has to come through normal banking channels or out of funds held in his / her NRE / FCNR account. All investments have to be in Indian Rupees only.
Repartiable means the sale proceeds can be taken out of India.
On sale in case of repartiable basis the net sale proceeds (after payment of taxes) of such units sold, can be remitted abroad or at the NRI's option, credited to his / its NRE / FCNR / NRO / NRSR / NRNR account. Note that tax is deducted at source on the sale of units. Though there is no long term capital gains, tax is still deducted to have an audit trail.
If the investment was on non-repartiable basis then the net sale proceeds (after payment of taxes) of such units sold, can be remitted can only be credited at the NRI’s option to his to his / her NRO or NRSR account.
These were only the guidelines of the Reserve bank of India. It is also mandatory that for all investments being made in mutual funds in India you need a PAN card.
What is a PAN card?
PAN stands for Permanent Account Number. This is similar to the Social Security Number (SSN) in USA. It is a document of identity for all financial transactions in India. It is a 10 character code with first 5 being characters, followed by 4 digits and then a character. PAN card has become a very important document, it is also required for filing your income tax returns, opening a demat account, purchase or sale of property etc.
Monday, July 27, 2009
Wednesday, July 22, 2009
Budget 2009
Budget came and with it as usual some changes. These changes have an impact on our net take home. Let us see the impact of the budget on us.
The tax exemption limit has been increase by Rs.10000/- that means a minimum tax saving of Rs.1030/-
Big savings is for those whose income is more that Rs. 10 lakhs. No surcharge i.e. a saving of 10% of the tax.
In one of my earlier articles I had given details of Fringe Benefit Tax (FBT), now with the abolition of Fringe Benefit Tax (FBT), employees will now be liable to pay income tax on a lot of benefits on which FBT was paid by the employer. Under the FBT regime, the employer paid FBT on benefits such as contribution to approved superannuation fund, motor car provided by the employer, gift vouchers, meals, travel, club memberships and so on. Not only the employer was paying FBT, such expenses were subject to FBT at much lower rates because of specific valuation percentages, which resulted in a lesser effective rate of FBT. However, with the removal of FBT and assuming that the old valuation rules of perquisite taxation would be followed, employees would be liable to pay tax on the normal slab rates, resulting in a substantial increase in their taxes. Ultimately, the tax saved due to abolition of surcharge may get compensated by the taxation of perquisites in the hands of individual employees. In one of my earlier articles Money saved from short term business trips I had mentioned that allowance received would be tax free, since the employer was paying FBT, but with this being removed it would become taxable.
The scope of the annual deduction under Section 80E in respect of interest on loans taken for pursuing higher education has been expanded to include all fields of study including vocational studies. Students, who have taken an education loan to pursue a course, which was not covered till now, would be able to claim this deduction.
In the article Gifts and Taxability, I had mentioned that non cash gifts/gifts in kind were not taxable. With effect from October 1, 2009, individuals who receive shares, jewellery, valuable artifacts or even property valued at over Rs 50,000 as gifts from non-relatives, will have to pay tax. However, such gifts will be exempt, if received on the occasion of marriage, or by will/inheritance.
For those who pay wealth tax the limit has been increased from Rs.15 lakhs to Rs.30 lakhs.
Earlier Advance tax was payable if the tax payable was more than Rs.5000/- this has been increased to Rs.10000/-
The tax exemption limit has been increase by Rs.10000/- that means a minimum tax saving of Rs.1030/-
Big savings is for those whose income is more that Rs. 10 lakhs. No surcharge i.e. a saving of 10% of the tax.
In one of my earlier articles I had given details of Fringe Benefit Tax (FBT), now with the abolition of Fringe Benefit Tax (FBT), employees will now be liable to pay income tax on a lot of benefits on which FBT was paid by the employer. Under the FBT regime, the employer paid FBT on benefits such as contribution to approved superannuation fund, motor car provided by the employer, gift vouchers, meals, travel, club memberships and so on. Not only the employer was paying FBT, such expenses were subject to FBT at much lower rates because of specific valuation percentages, which resulted in a lesser effective rate of FBT. However, with the removal of FBT and assuming that the old valuation rules of perquisite taxation would be followed, employees would be liable to pay tax on the normal slab rates, resulting in a substantial increase in their taxes. Ultimately, the tax saved due to abolition of surcharge may get compensated by the taxation of perquisites in the hands of individual employees. In one of my earlier articles Money saved from short term business trips I had mentioned that allowance received would be tax free, since the employer was paying FBT, but with this being removed it would become taxable.
The scope of the annual deduction under Section 80E in respect of interest on loans taken for pursuing higher education has been expanded to include all fields of study including vocational studies. Students, who have taken an education loan to pursue a course, which was not covered till now, would be able to claim this deduction.
In the article Gifts and Taxability, I had mentioned that non cash gifts/gifts in kind were not taxable. With effect from October 1, 2009, individuals who receive shares, jewellery, valuable artifacts or even property valued at over Rs 50,000 as gifts from non-relatives, will have to pay tax. However, such gifts will be exempt, if received on the occasion of marriage, or by will/inheritance.
For those who pay wealth tax the limit has been increased from Rs.15 lakhs to Rs.30 lakhs.
Earlier Advance tax was payable if the tax payable was more than Rs.5000/- this has been increased to Rs.10000/-
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