No tax on NRI remittances

Q

If capital gains arising from sale of a property are invested in buying a new flat in compliance with Section 54EC, I am told that there won’t be any long term capital gain tax liability. In such a case, is it necessary to attach a separate enclosure showing details of the sale transaction? VISHAL BHARADWAJ Via mail

A) It appears to me that the reference to section 54EC in the query is not appropriate since the said section refers to investment of capital gains in specified capital gains bonds.

Exemption from long term capital gains ( LTCG) can be claimed under Section 54 if the assessee purchases a residential house within a period of one year before or two years after the date on which the transfer took place or within a period of three years after that date builds a house.

The exemption is available to the extent the LTCG is invested in purchase/ construction of residential property within the time frame prescribed in the said section. The relevant details of the sale and investment needs to be mentioned in the schedule CG in the return of income.

Q

My sister is an NRI, who sends her income to our father’s account in India. So is she liable to pay tax in India? If yes, at what rate? RAJIV Via mail

A) As per the Indian income- tax law, an NRI is liable to pay income tax only on income earned by that individual in India. So, your sister need not pay tax on the money sent to your father. Your father will also not be liable to pay any tax on that amount.

Even if your sisters sends money to your father as a gift, he need not pay any tax on such income as he is covered under the definition of relative, which includes an individual’s spouse, brother or sister, or brother or sister of the spouse, brother of sister of either of the parents of the individual, any lineal ascendant or descendent of the individual or his or her spouse.

( The writer is a Hyderabad- based CA. He can

be reached at info@ rathiandmalani. com)