My problem is that most of my money is in NRNR accounts, and I want to know how to manage this as interest earned on the deposit is taxable. Is it possible to transfer some of NRNR account money into my wife's name without paying any tax (something as gift). What is the maximum amount that I can gift my wife? Is it possible that now I send money (through legal channel) in foreign currency (US$) so that she can open RFC account in her name. Or, will RBI ask for the source of income? My wife will come to my place twice this year for visa formalities. Should I remit the money in her name then? In my case when I do I need to transfer my FCNR into RFC account. Is it after the FCNR matures or when I arrive in India? As NRNR interest is can be repatriated, can I transfer the NRNR interest into RFC account. If yes, when do I have to do it-as soon as I arrive in India or after the NRNR matures? If I continue with my NRNR account (after arriving in India) until it matures, is the interest gained taxable? If yes, whatis the rate of tax?
-- Satish Bhat, satish@anet.net.sa
It appears that you are under wrong guidance and are taking wrong actions in a hurry (such as investing in NRNR) and regretting at leisure. Clear cut answers to all your queries will fill a book on NRIs. Nevertheless, I shall give short reactions but realise that I do not have your complete financial biodata and therefore I may give wrong answers.
The tax rate on your NRNR and NRE will depend upon the size of the Indian income you earn. Your foreign income will remain tax-free as long ayou are an RNOR.Finally, it has now become possible (since 1.4.92 onwards) for NRIs as well as Indian residents to earn 12 per cent + after-tax (= tax-free) interest on their investible funds without involving their wives with associated risks. I am afraid you have been financially hurting yourself and your wife by not taking the best advantage of your NRI status and may continue to do so even after you return to India permanently.
IT is by casual (mis)fortune that I happened to see your site. The opening sentence itself is wrong and conveys the depth of your greed (and also of millions of people out there who seek your advice). You have written: "The main purpose of Public Provident Fund is to enable the holder to save tax on his Indian income". No, the Provident Fund, as the name implies, is for the `providential' help an individual may require in meeting the unexpected happenings in his life (or when his/her children throw him/her out in old age). It is not devised to save you from tax, though there is a side-effect like that.
I am very shocked that 99.99 per cent of Indians who work in other countries and make loads of money are the ones who don't want to pay tax. I also noted your contempt about giving money for charity. We don't take to grave all the money we make through countless shrewd means. Charity isn't that bad. Giving to those unknown people out there isn't after all that bad than giving to our own children (I feel this, when I see certain families). You look as old as my father, if not more. At your ripe old age, you should be advising people how to serve the country rather than telling people how to evade tax.
It might come as a shock to you that `tax' is something income earners have to pay to the government for the benefit of the society in multifarious ways. Granted, politicians loot the country and our tax money, but by not paying tax we are stooping to their level.
And I do live up to my words. In sending this email to you, I spent more than 15 minutes. I consider this also as part of my duty to serve the nation. I have been working as an engineer for the past 10 years, and have not "saved" any tax at all, except the compulsory deposit made to CPF. I have been joyfully giving tax on my income. You may call me a `donkey' for doing this, but I guess our country then needs a lot of such donkeys for the long distance we need to walk in taking our nation to economic prosperity.-Santhosh Kumar Paraneswaran, santhosh@singtel.com OK. I appreciate every word of what you say. I hope there are many more like you who never buy air tickets at concessional rates since the airline needs the money, never buy items in a sale since the manufacturer needs the money and never accept increments since the employer needs the money. I am keen to meet you.
-- (The author may be contacted at anshanbhag@yahoo.com)
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