Deduction for investments U/s. 80C maximum of Rs. 1,50,000.
- Life Insurance Premium
- Equity Linked Savings Scheme of Mutual Fund (ELSS)
- Repayment of Housing Loan
- 5 Year Bank FD
- PPF (In existing A/c)
Deduction for Health Insurance U/s. 80 D.
- Maximum of Rs. 25,000 for age below 60 Years and Rs. 50,000 for age above 60 Years PLUS additional Rs. 50,000 for Senior Citizen Parents.
- Deduction for donation U/s. 80G – 50%/100% of sum donated, maximum upto 10% of Gross Total Income.
- Deduction U/s. 80TTA on interest earned on Savings Bank Account (NRO A/c) maximum of Rs. 10,000.
- Increased taxable limit is not available to Senior Citizen (above 60 years) or Super Senior Citizen (above 80 years).
- Rebate U/s. 87A of Rs. 12,500 is not available for Non-residents.
- Deduction U/s. 24 is available on interest paid on Housing Loan against Income from House Property. Loss under this head can be claimed, maximum of Rs. 2,00,000 against other incomes in the year of income.
- If a NRI intends to stay for a long period in India, in order to ensure that he does not become a resident, he can split stay in two financial years.
- NRI can invest in Capital Gain Bonds U/s 54-EC to get exemption from Capital Gain.
- NRI can invest U/s 54 or 54-F in residential house to get exemption from capital gain.
- Section 10(6)(vi), 10(6)(viii), 10(6)(xi), 10(7), 10(8), 10(8A), 10(8B), 10(9) provide for relief to NR’s drawing salaries and remuneration in special cases.
- In case of refund, NRI can quote Foreign Bank Account in return of income, if Indian bank account is not available.
- Non Resident should receive his incomes abroad, and then remit such incomes credited in the foreign accounts, to India. If the incomes are received in India, they become taxable in India.
- All incomes exempt under Income Tax in India such as proceeds of insurance policy u/s 10(10D), interest on NRE account u/s 10(4), capital gain exemptions u/s 54/54EC/54F, etc. shall be taxable in the respective country of tax residence.
- Interest on NRO A/c (Savings of Fixed Deposits) is taxable. A NRI can transfer his NRO A/c balances, within the limit of 1 Million US$, per person per year to NRE A/c / FCNR deposits and make the interest income tax free.
- HUF (Hindu Undivided Family) are recognized as a separate legal entity under Indian Tax laws. Income of HUF is not the income of and individual.
- Utility of HUF as an entity for investments can be looked into for planning the tax liability abroad. NRO Bank A/c of HUF can be opened, if all the members are NRI to take advantage of separate income tax head.
TAX PLANNING FOR H.U.F. IN CONTEXT OF U.S.A tax laws
- As per U.S. tax laws, HUF may be recognized as foreign non-grantor trust since the property is not contributed solely by the Karta or any coparcener who is the ‘owner’ of such trust.
- Therefore, it shall be assessed as a separate person under the taxation law in U.S.A. However, if the corpus of the H.U.F. is built through incomes derived out of loans granted by the Karta or any other coparcener, it may be recognized as the property contribution such person to the trust.
- In such cases, the tax authorities may regard the trust as a foreign grantor trust and tax the incomes in the hands of respective individual.
- When the Karta is a U.S. tax-resident, he should make appropriate declarations under FBAR since he is a signing authority to Indian bank accounts/financial assets if the aggregate value of all foreign financial accounts exceeded US $ 10000.
