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Is property bought in India through saving made from UAE income taxable?

Legal expert answers readers’ queries on NRI issues

Question: I have received a tax notice from the I.T. Department in India. This relates to my purchasing a flat in India worth Rs11 million, partly funded by my wife and myself. We paid for the flat from our salary and savings in the UAE. What should I do?

ANSWER: You need to reply to the tax notice and give full details of the source of funds from which the purchase of the flat has been financed. You have purchased the flat from your earnings in the UAE and therefore you must have remitted the funds through the bank or from your Non-Resident (External) Account. This notice is issued to most property purchasers in India as the tax authorities want to ascertain the source of the funds. As a non-resident Indian, the salary which you and your wife have earned in the UAE is exempt from tax in India. Therefore, there are no tax implications as you have not evaded any tax in India. Your reply to the tax department giving the relevant information will settle the issue and there is nothing to worry about.

Question: There are some items and commodities in India like wheat which cannot be exported due to restrictions imposed by the government. Is it possible for Indian trading houses to export these goods from another country? In the last few days, imports into India have been affected as a result of customs duty problems. Is this issue going to be sorted out?

ANSWER: According to the foreign trade policy, merchanting transactions can take place based on guidelines issued by the Directorate General of Foreign Trade. Rules have now been framed by the DGFT, which would make it possible for trading houses to export goods from one country to another. In other words, prohibited commodities like wheat or red sanders can be shipped from, say, Singapore or Dubai to any other country, so long as the origin of the commodity is not from India. Many trading houses are setting up their offices in Gujarat International Finance Tec-City (GIFT City) to take advantage of these guidelines, which have been put in place in the latest foreign trade policy. As far as imports are concerned, in the first week of this month, difficulties were faced in paying customs duty. This has happened due to glitches in the customs automated system, which was being updated. Technical issues have now been resolved and imported goods which were stuck at ports are now being cleared on payment of customs duty. A recently unveiled cash ledger module will enable importers to create a virtual account on the ICEGATE website. This will enable online payment of customs duty which can also be paid through internet banking and RTGS/NEFT.

Question: Pesky calls made by telemarketers are a big nuisance in India. Is the Indian government taking any steps to control this menace?

ANSWER: The Telecom Regulatory Authority of India (TRAI) has asked telecom companies to follow a series of new steps which would reduce the number of pesky calls. Telemarketers are at present dodging some of the existing safeguards imposed by the authority. TRAI has asked mobile service companies to control the inflow of spam messages. A new number series for genuine service calls is proposed to be introduced so that consumers are aware that they are getting genuine messages and not just promotional advertisements. At present, there is no distinction between service messaging and promotional advertisements, which are responsible for the large number of pesky calls. The cyber crime cell of the home ministry is currently sharing complaints received with telecom companies in a timely and coordinated manner, especially those pertaining to financial frauds and other potential criminal activities. Mobile service operators have informed TRAI that they are taking proactive steps to control the flow of unwanted commercial messages. Artificial intelligence and other technologies are being used for a more effective solution to tackle this problem.

H.P. Ranina is a practising lawyer, specialising in tax and exchange management laws of India.