Financial Daily from THE HINDU group of publications
Sunday, May 04, 2003
Financial Daily from THE HINDU group of publications Sunday, May 04, 2003 |
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Investment World
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Income Tax Columns - Tax Talk NRI deposits and capital gains T. Banusekar
IS interest from NRE deposits and NRNR deposits exempt in the hands of a non-resident? An assessee has filed a return showing a refund due from the department. This refund has still not been granted. The refund relates to one of the earlier years for which returns have been filed several years back. What is the remedy? R.M. Subramanian Reply In the case of an individual who is a non-resident in accordance with the FERA, the income earned by way of interest from a Non-Resident (External) account in any bank in India is exempt under Section 10(4). Interest on NRNR deposits are also exempt under Section 10(15)(i). In every case where any tax or interest is found due or refund is found due, the assessing officer is required to send an intimation under Section 143(1)(a) before the expiry of one year from the end of the financial year in which the return was filed by the assessee. The assessing officer is also required along with the intimation to grant the refund if the same is found due on the basis of the return filed by the assessee. In the event of the assessing officer not granting the refund to the assessee, the remedy that will lie will be an administrative one. The assessee may approach the higher authorities and request their intervention in the matter, directing the assessing officer to grant the refund if the same is found due. Query My brother is a NRI and is presently working in the US. While he was working in India, he had invested in shares of companies. One of the companies has now made an offer for the buy back of shares. Will the buy back attract capital gains tax? If the answer is in the affirmative can he make investments in bonds of Nabard, National Housing Bank, etc., and get exemption? He has a housing loan in India used for purchase of a flat in India. If he repays this loan is there any exemption on capital gains on the buy back of shares? R. Kannan Reply There will arise capital gains on the buy back of shares by the company. This is provided for in Section 46A of the Act. The buy back price will be taken as the full value of consideration and from this the cost of acquisition if the asset is a short term capital asset or the indexed cost of acquisition if the asset is a long term capital asset can be reduced and the balance will be treated as the short term gain or long term gain as the case may be. If the gain is long term an exemption under Section 54EC can be claimed by investing in bonds redeemable after three years issued by the Nabard, National Highway Authority of India, Rural Electrification Corporation Ltd., National Housing Bank or SIDBI. The exemption available will be equal to the amount invested subject to the long-term capital gains earned. No exemption can be obtained by repayment of the housing loan taken earlier for acquiring the flat.
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