Non Resident Indian as per Income Tax Act of India

July 24, 2013

Income Tax

 

Many  a times, people remain confused about the residency rules to decide the Residence in India & the taxability of the income thereon. Below is the official version of the residency rules as described in Section 6 of Income Tax of India, 1961.

6. For the purposes of this Act,—

(1)  An individual is said to be resident in India in any previous year, if he—

(a)  is in India in that year for a period or periods amounting in all to one hundred and eighty-two days or more ; or

(b) [* * *]

(c)  having within the four years preceding that year been in India for a period or periods amounting in all to three hundred and sixty-five days or more, is in India for a period or periods amounting in all to sixty days or more in that year.

[Explanation.—In the case of an individual,—

(a)  being a citizen of India, who leaves India in any previous year [as a member of the crew of an Indian ship as defined in clause (18) of section 3 of the Merchant Shipping Act, 1958 (44 of 1958), or] for the purposes of employment outside India, the provisions of sub-clause (c) shall apply in relation to that year as if for the words “sixty days”, occurring therein, the words “one hundred and eighty-two days” had been substituted ;

(b)  being a citizen of India, or a person of Indian origin within the meaning of Explanation to clause (e) of section 115C, who, being outside India, comes on a visit to India in any previous year, the provisions of sub-clause (c) shall apply in relation to that year as if for the words “sixty days”, occurring therein, the words “one hundred and [eighty-two] days” had been substituted.]

(2)  A Hindu undivided family, firm or other association of persons is said to be resident in India in any previous year in every case except where during that year the control and management of its affairs is situated wholly outside India.

(3)  A company is said to be resident in India in any previous year, if—

(i)  it is an Indian company ; or

(ii)  during that year, the control and management of its affairs is situated wholly in India.

(4)  Every other person is said to be resident in India in any previous year in every case, except where during that year the control and management of his affairs is situated wholly outside India.

(5)  If a person is resident in India in a previous year relevant to an assessment year in respect of any source of income, he shall be deemed to be resident in India in the previous year relevant to the assessment year in respect of each of his other sources of income.

[(6)  A person is said to be “not ordinarily resident” in India in any previous year if such person is—

(a)  an individual who has been a non-resident in India in nine out of the ten previous years preceding that year, or has during the seven previous years preceding that year been in India for a period of, or periods amounting in all to, seven hundred and twenty-nine days or less; or

(b)  a Hindu undivided family whose manager has been a non-resident in India in nine out of the ten previous years preceding that year, or has during the seven previous years preceding that year been in India for a period of, or periods amounting in all to, seven hundred and twenty-nine days or less.]

Source

 

Please feel free to post your queries if any on this subject.


Financial Planning for WHOM? The Myths and Realities – 5

July 20, 2013

Regarding the Financial Planning, there are many myths in the minds of the common investor public. I’m trying to discuss some of these here. This is the Fifth & Final Article in this series.

Myth no. 5:-

Compounding is useless. It’s for poor or old fashioned not for us the younger generations. We can turn the things our way as & when we want to.

Reality:-

There is no substitute of compounding. Yes compounding is very dull & boring. Let’s try to understand it with this example. Just imagine if I ask you to put 1 Rs. in an square of a chess board & there after asking you to put, simply double the money in next square. Do you know what ‘ll be the result, at the end of all the 64 squares? Please look at this table to know the answer.

Square no.

Amount in Rs.

Square no.

Amount in Rs.

1

1

2

2

3

4

4

8

5

16

6

32

7

64

8

128

9

256

10

512

11

1024

12

2048

13

4096

14

8192

15

16384

16

32768

17

65563

18

131072

19

262144

20

524288

21

1048576

22

2097152

23

4194304

24

8388608

25

16777216

26

33554432

27

67108864

28

134217728

29

268435456

30

536870912

31

1073741824

32

2147483648

33

4294967296

34

8589934592

35

17179869184

36

34359738368

37

68719476736

38

137438953472

39

274877906944

40

549755813888

41

1099511627776

42

2199022255552

43

4398044511104

44

8796089022208

45

17592178044416

46

35184356088832

Now, I stopped here intentionally at the 46th Square. Do you know why? The reason is – the amount in 46th Square is 3518436 Crore. Why it’s important? My dear friend, do you know the size of Budget of Govt. of India in FY 2013-2014? It’s 2220619 Crore only. (source)

Now what this boring table indicates? This is the power of compounding that by the time, you reach the 46th Square, you have already surpassed the Budget amount for whole of India to be spent by Govt. of India.

You are still 18 more squares to calculate. Should I or you calculate any more? No it’s not required, I think. I hope, the very basic concept of Compounding is clear to you. If you give time, the money ‘ll grow on the basis of compounding.

OK, It’s about me. Agreed. Then what?:-

Please do not jump the gun. Take small steps, baby steps. Life is all about starting small. I know you are agree & now want to start your financial planning now. A word of caution here. “Over enthusiasm can actually do more harm than your inertia to take any action.” Let me explain a bit. Before planning anything, should you not check that there is water with you or not? Now as you have checked with yourself, that you are having the water & want to conserve it for your own betterment as well as for your family, your near & dear ones. The intention is not to make you a professional but an informed person who can make informed choices regarding his/her financial life.

This is the last article in this series. So what’s your take on this article? Can you face your own Myth for ‘Compounding is Nothing’ now? Can you now face some or all your Myths related to Financial Planning or Personal Finance?


Financial Planning for WHOM? The Myths and Realities – 4

July 14, 2013

Regarding the Financial Planning, there are many myths in the minds of the common investor public. I’m trying to discuss some of these here. This is the Fourth Article in this series.

Myth no. 4:-

My friend/uncle/neighbour/broker…… know some tricks/tips/shortcuts & on acting these I can mint a lot of money.

Reality:-

NO. There are no shortcuts for a good financial life. Slow & steady wins the race. The initial burst may create an illusion that you are doing good but at the end of the journey you ‘ll realize that you were not doing good at all. One more old known story here.

The Rabbit & the Tortoise:-

tortoise_hare

At the start of the story, the Rabbit was clearly in lead but the Tortoise, kept working hard & what was the end result? We all know it. Same is with your financial life. The person working on such tips/shortcuts may get ahead but in the long run, only the TORTOISE ‘ll win. So what’s the lesson here for you. Start small & simple but keep doing it without fail. the fruit of your hard work ‘ll come to you.

So what’s your take on this article? Can you face your own Myth for ‘Need of  Tips & Tricks’ now?

Financial Planning for WHOM? The Myths and Realities – 3

July 10, 2013

Regarding the Financial Planning, there are many myths in the minds of the common investor public. I’m trying to discuss some of these here. This is the Third Article in this series.

Myth no. 3:-

I need a perfect product/insurance policy/portfolio/MF for my financial planning.

Reality:-

There is nothing called perfect. All of us pay too much attention to be perfect but forget the core thing. Nothing is Ideal or perfect in this world. No matter how hard you try to get perfectness, critics ‘ll still find something here or something there missing in you. Do not believe me. Just check the lives of so many stars. Amitabh Bachchan, Sachin Tendulkar, Mahatma Gandhi & many more. Can you say with 100% surety that all these stars are perfect? Let me share you a story here. Some of you may be already aware of it.

 Father & Son:-

Once upon a time, a father & a son were riding a horse & going somewhere.

son father

On the way, few people met & commented –

“Look at this Father Son Duo, both are so strong & healthy & still riding a poor horse. The horse is facing so much pain.”

The Father & Son duo, heard the comment, discussed & it was decided that father ‘ll walk & son ‘ll ride the horse. After few miles, some more people commented –

“Oh! look at this selfish son. Father is old & weak, yet he is walking & son is riding. Actually Son should walk & father should ride the horse.”

The duo decided accordingly & Son started walking & father sat on the horse.

Few miles down the path, some more people met & commented –

“Oh! look at the selfish father, the son is so young & still walking whereas the father who is quite strong should walk.”

The duo listened & decided that both should walk. After few miles down the path, final comments made to the duo.

“Look at the fools. They are having a horse & both are still walking instead of riding the horse.”

Story ends here. I do not know what the father son duo did after that final comment but can you draw a parallel from this story to your own financial planning? There can not be a common perfect situation or perfect thing for all of us. The requirements of each of us are different. So instead of focussing on a perfect thing, we should act on what is good for us. This Good can be merely good, can be better or can be the best for us. The important thing is, take a decision. Not taking a decision & waiting endlessly for a perfect thing is not going to help you. If you wait endlessly for that perfect thing, actually you are missing the chances to convert simple things into perfect for you.

So what’s your take on this article? Can you face your own Myth for ‘Need of Perfect Thing’ now?


Financial Planning for WHOM? The Myths and Realities – 2

July 6, 2013

Regarding the Financial Planning, there are many myths in the minds of the common investor public. I’m trying to discuss some of these here. This is the Second Article in this series.

Myth no. 2:-

To start my financial planning, I need a large corpus from which I ‘ll invest here & there & thus I ‘ll be able to do my financial planning.

Reality:-

Again the truth is on opposite side. You do not need to wait for a one big sum to start your financial planning. Life is all about taking small steps. How? when you were a kid, did you started writing full sentences from day one of your school? No. You were first familiarized with the alphabets. Then the work started on writing the alphabets. then some plain simple words & slowly, you were shifted to write down sentences & later on for full paragraphs. It took a lot of time. At least 4-5 years of your Pre & Primary schooling to reach from identifying alphabets to writing paragraphs.

Same is the case with Financial Planning. One needs to start small. Start simple. But the most important thing here is START. START now. As the tagline of NIKE says

JUST DO IT

So no matter, where are you standing in your life, start taking simple & small steps towards a worry free financial life.

So what’s your take on this article?  Can you face your own Myth for ‘Need of Big Corpus to Start’ now?


Financial Planning for WHOM? The Myths and Realities – 1

July 2, 2013

Regarding the Financial Planning, there are many myths in the minds of the common investor public. I’m trying to discuss some of these here. This is the First Article in this series.

Myth no. 1:-

There is a common myth in general public, Financial Planning is for Riches, not for us, the less privileged ones.

Reality:-

This is actually the reverse. The so called riches may or may not require the financial planning at all but the people who are facing scarcity of the resource (money), needs the financial planning than any other. Please do tell me – If you are passing through a desert, ‘ll you think for water conservation (the water you are carrying with you) or when you are sitting near a river or pond & think for water conservation? Answering it is simply simple. Please do note, I’m not recommending that the people who are having rivers or ponds of their own, may splash/consume water at their will. No they also need the conservation for their future generations as well as for the betterment and upliftment of the whole society.

 

I hope by now the answer to the question, “ Financial Planning to Whom?” is clear to you. It’s about you. You need it. Need it today. Need it now. Now you may ask, what to do for financial planning? From where to Start? How to do? Last but not the least, With whom to sit & ask for guidance to do it properly? Relax. Over the next few articles, slowly you ‘ll get the answers for all these questions. Please be at calm with yourself. That’s the first thing you should adopt to make your financial life happy & worry free.

The Ant & The Grasshopper:-

All of us had read or heard the old story of an Ant & a Grasshopper. What was the lesson we all learnt from that story?

ant & grasshopper

Work Hard & save for a rainy day when things are not smooth for you. Now compare it with Financial Planning. The Ant in the story was not only doing hard work during summer days but also saving & investing her resources to be used later on. This was a classic example of FINANCIAL PLANNING on part of Ant. The end result of the story is known to all of us. Should I repeat it here? Of course not. Now can you draw some parallels from this old story of Ant & Grasshopper to your own life? Answer honestly now. Who are you? Ant or Grasshopper?

So what’s your take on this article? Can you face your own Myth for ‘Need of Financial Planning’ now?