You can trans­fer funds from one NRO a/c to an­other

Mint Asia ST - - Views Otherviews - SONU IYER

My par­ents, who are no more, were NRIS and had a joint non res­i­dent (or­di­nary) or NRO ac­count in In­dia. I was the nom­i­nee in the ac­count. I too am a res­i­dent of New Zealand. Can I trans­fer the amount from their ac­count to my NRO ac­count, without any tax on it? If I close their ac­count and with­draw all the money, will there be any TDS?

—Su­rubhi Das Un­der the in­come tax law, tax is payable on any sum of money, spec­i­fied mov­able prop­erty (like shares, jew­ellery etc.) or immovable prop­erty re­ceived by an in­di­vid­ual without con­sid­er­a­tion, ex­cept if the same is re­ceived, in­ter alia, un­der a Will or by way of in­her­i­tance or from a spec­i­fied rel­a­tive. Fur­ther, un­der the ex­change con­trol law, it is per­mis­si­ble to trans­fer funds from one NRO ac­count to an­other NRO ac­count in In­dia.

Ac­cord­ingly, you may trans­fer funds from your par­ents’ NRO ac­count (as nom­i­nee) to your NRO ac­count in In­dia. As the trans­fer would be by way of in­her­i­tance, there will not be any tax im­pli­ca­tions in In­dia. Funds from NRO ac­count up to $1 mil­lion per fi­nan­cial year are per­mit­ted to be re­mit­ted out- side In­dia.

In­ter­est in­come from your par­ents’ NRO ac­count or your NRO ac­count is tax­able in In­dia at the ap­pli­ca­ble slab rate. How­ever, in­ter­est in­come from NRO sav­ings bank ac­count is el­i­gi­ble for de­duc­tion from to­tal in­come up to ` 10,000 (ef­fec­tive fi­nan­cial year 2018-19, it is ` 50,000 for se­nior cit­i­zens aged 60 years or more for both, in­ter­est in­come on sav­ings ac­count and fixed de­posits).

How­ever, with­hold­ing tax pro­vi­sions are ap­pli­ca­ble in case of NRO bank ac­count. In­come tax would be de­ducted by the bank as TDS on in­ter­est in­come from NRO ac­counts at 30% (plus ap­pli­ca­ble sur­charge and ed­u­ca­tion cess) if the in­di­vid­ual qual­i­fies as a non-res­i­dent in In­dia. While TDS will be at 30% (plus ap­pli­ca­ble sur­charge and cess), the in­ter­est in­come will be tax­able at slab rates (plus ap­pli­ca­ble sur­charge and cess).

How­ever, an in­di­vid­ual qual­i­fy­ing as a non-res­i­dent may avail re­lief un­der In­dia’s Dou­ble Tax Avoid­ance Agree­ment with the coun­try of which such in­di­vid­ual is a tax res­i­dent by fur­nish­ing a tax res­i­dency cer­tifi­cate and other spec­i­fied par­tic­u­lars. In such a case, TDS and fi­nal tax rate may be lower than 30% (plus ap­pli­ca­ble sur­charge and cess).

For full an­swers, go to­money

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