By Chirag Nangia
*My daughter has been working abroad from January 2021. She has some interest income in India, but well below the taxable limit. Will her foreign income be taxable in India and will she have to file a return?
Non-resident Indians (NRIs) are liable to pay tax in India on income that is received or is deemed to be received in India during the previous year or income that has accrued or arisen to such NRI in India during the previous year. Income earned abroad by NRI is not liable to be taxed in India and the same shall be taxed abroad. The obligation to furnish ITR shall arise where the total income (earned in India) exceeds the maximum amount not chargeable to tax (Rs 2.5 lakh) .Hence, furnishing of ITR in respect of interest income, being below taxable limit, is not required.
* I have joined a startup. Half of my remuneration will come from an Indian company and the rest from overseas. What will be the income tax liability?
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Assuming that you are a resident individual, deriving income in the nature of salary, you have to pay tax on your global income in India, being income received by you from an Indian company as well as income derived from overseas sources and same shall be taxable at the applicable slab rates. Salaried individuals can claim certain deductions/ exemptions from salary income while furnishing ITR.
You can also claim certain deductions prescribed under chapter VI-A from the gross total income under Section 80C and Section 80D.
* Are losses due to futures and options trading short-term capital loss or long-term capital loss? How can we set off such loss? Which ITR form will be filled for a salaried person?
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If the transactions are of regular frequency, then such gains/ losses are classified as ‘business income’. If these are one-off transactions, then such income/ loss is ‘income from other sources’. If classified as business income and transacted on a recognised stock exchange, the income derived from trading of derivatives are taxable as non-speculative business income for income tax purposes (i.e. normal business income). You have to file ITR 3 to report the income so derived.
The writer is director, Nangia Andersen Consulting. Send your queries to email@example.com