Your Queries
I have been showing interest on my minor son’s bank deposit as my income in the tax return. This year my son becomes a major. How will the clubbing provision apply?
—Gopal P Krishnan
As per the provisions of Section 64(1A) of the Income Tax Act, income of minor child is clubbed except where the income is earned through the application of his/her own talent and skills. In this case, your son will become a major during FY 2016-17.
INCOME TAX
Therefore, the income will be split into two categories, i.e., income up to the period of being minor to be clubbed in your hands and interest income after becoming a major to be taxed in the hands of your son.
As an NRI, how should I go about to avail the Double Tax Avoidance Agreement (DTAA) benefit?
—Rupak Ghosh
Before claiming DTAA benefit, first check if the income is taxable as per Indian domestic tax law. If it is, follow these steps to avail the DTAA benefit. Check whether India has signed a comprehensive DTAA with your country of residence (India has signed around 90 such DTAAs). If you are a tax resident of such a country, you must furnish a Tax Residency Certificate (TRC) issued by the tax authorities of that country and in certain cases, also furnish a self-declaration in Form 10F. Depending on the type of income, examine the kind of relief the DTAA provides (income may be entirely exempt, or may be taxable at a lower rate). If the income is taxable under the DTAA, you have to pay tax in India and claim the credit of such taxes paid against the tax liability in your home country subject to certain conditions.
DTAA also has certain anti-avoidance provisions such as the concept of Beneficial Ownership, Limitation of Benefits (LOB) clause which also needs to be satisfied for availing the DTAA benefits.
The writer is founder of RSM Astute
Consulting Group
Send your queries at fepersonalfinance@expressindia.com
