NRIs can claim tax sop

An NRI can claim credit in the US of taxes paid in India on capital gains which has arisen in India

QAn NRI residing in the United States wants to sell his property in India, and repatriate the money after paying the long term capital gains tax in India. It seems he needs to declare the source of this money to the US tax authorities as per the 2008 tax rule.

So please tell me if this money will be taxed again in the United States. If yes, will it be for the full sale value received or only after deducting the capital gains? How do they calculate tax liability in the United States? An early response is greatly appreciated.

Mysuru

A) All assesses — whether resident or not — are chargeable to tax in respect of their income accrued, arisen, received or deemed to accrue, arise or to be received in India whereas residents alone are chargeable to tax in respect of income which accrues or arises outside India.

Conversely, a non-resident, being resident of another country is liable to tax in respect of income which accrues or arises outside that country i.e., India in this case.

Being a resident of the United States, you will be liable to income-tax on the capital gains based on the rules of income-tax in the country.

However, you can claim credit of taxes paid in India on the long term capital gains which has arisen in India as per the double taxation treaty with the United States to the extent allowable as per the taxation rules of the US.

QI am a retired railway pensioner and senior citizen. I am drawing pension every month with DA and `600 as fixed medical allowance. My pension disbursing banker is recovering TDS on the amount of FMA also. On my representation that FMA as pre-facto medical reimbursement should not be taxed, the branch advised me that the bank’s headquarters has clarified that “FMA is part of gross pension and cannot be covered for exemption up to `15,000”. If that is the case, the amount of FMA should also be given the periodical raise of DA/ Dearness Pay along with basic pension which is not so. I understand that allowances for personal expenses like travelling allowance in respect of serving employees are exempt from income tax. Kindly enlighten me on the exact incometax rule.

Hyderabad

Reimbursement by employer of actual expenditure incurred by an employee for medical treatment in respect of the employee, or any member of the family of such employee, not exceeding `15,000 in the financial year is not treated as a perquisite and therefore not taxable. However, fixed medical allowance (FMA) will not be covered under the above exemption and will be taxable. Travelling allowance (other than allowance granted to employees working in any transport system) granted to an employee to meet his/her expenditure for the purpose of commuting between the place of their residence and the place of his duty is exempt to the extent of `1,600 per month.