Your Taxes

I have been filing returns in India for the past 15 years. But since May, 2015, I moved to Dubai and I’m earning there. I was studying in the UK for one year before that. I opened an NRO (my savings account was changed to NRO) and a NRE account in December, 2015. My salary is received in a bank in Dubai. I have not remitted any money into my NRE Account as yet. Should I file returns in India for 2015-16?

Adarsh Mittal

Every person is required to file return of income if the taxable income exceeds the maximum amount not chargeable to tax (₹2,50,000 for FY 15-16).

Based on the limited facts available, it is not possible for me to comment on your residential status in India for FY 15-16. In case you qualify as non-resident (NR) in India, you shall be required to file a return of income if your taxable income exceeds ₹2,50,000. In such a scenario, you shall be required to offer to tax incomes received/earned in India and report details of your bank accounts in India.

However, if you qualify as resident and ordinarily resident (ROR) in India (based on the physical stay in relevant financial year and previous few financial years) and given you have bank accounts outside India, you shall be required to file a return of income in India offering worldwide income to tax in India (subject to relief available under the Act or double taxation avoidance agreements, as may be applicable) and reporting all bank accounts (including any other asset located outside India).

I bought 100 shares of Mindtree at 1,650 on March 15, 2016 (cum bonus). These were sold at ₹650 on March 29, 2016 (ex-bonus). I was allotted 100 bonus shares in April 2016. Kindly advice on the capital gains tax payable.

Joy John

Listed shares held for 12 months or less, immediately before the date of transfer/sale are considered as short-term capital asset. Further, any dividend income from equity shares on which the company has paid dividend distribution tax (DDT), is exempt from tax in hands of the individual.

I understand that the aforesaid shares are listed equity shares on which dividend income (if any) is exempt from tax in your hands. Accordingly, as you held 100 shares of Mindtree for less than 12 months before their sale on March 29, 2016, the loss arising on sale of such shares (₹1,000 per share, that is, ₹1,650 less ₹650) shall be treated as short-term capital loss, which can be set-off against any other capital gain earned during the FY 2015-16 or carried forward.

If such shares are purchased within a period of three months prior to the record date of declaring dividend and are sold within three months after such date, the loss on sale of shares shall be reduced by the amount of dividend income (if any) received/ receivable on such shares.

The bonus shares allotted to you in April 2016 shall be taxable at the time of sale. At the time of computing the gain from sale , the purchase cost shall be considered as nil.

The writer is a practising Chartered Accountant. Send your queries to taxtalk@thehindu.co.in

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