NRI’s salary income not taxable in India

SC Vasudeva

Q. My son is an officer in Merchant Navy sailing in foreign waters on a foreign flagship company whose head office is in Singapore. He has his NRE account in India in a nationalised bank and getting his salary amount (remittance) in US dollars in this bank. He has no income from any source in India. My queries are as below:

1. What are the conditions for a Merchant Navy officer to become an NRI for income tax calculation purpose?

2. As he has no income from Indian sources, is it necessary for him to file I-T return every year?

3. Is Section 2(V) & 2w of the FEMA Act, 1999 also applicable to him while calculating income tax?

— SK Sharma

A. In case your son has not been in India for a period of 180 days or more in the previous year, his salary income would not be taxable in India. In case he does not have any income in India, he need not file an income-tax return. The provisions of Foreign Exchange Management Act, 1999 do not override the provisions of the Act as far as the computation of your son’s total income is concerned. 

Q. Please let us know if at the age of 70 and 76 we can save tax by becoming a member of National Pension System (NPS).  — Satish Malhotra

A. There are two pension schemes which have been notified under Section 80CCD dealing with the deposit of amount under the said section. The scheme notified in the year 2016 under Section 80CCD(1B) of the Income-tax Act, 1961 (The Act) prescribes the age of 18 to 40 years. The scheme notified in 2003 does not provide the age as to when a person can start depositing the amount though it prescribes the age of exit on or after 60 years. A logical conclusion thus would be that a person who is aged between 70 and 76 years cannot open an account under NPS.

Q. I am retired Punjab Govt employee and senior citizen. Please guide me regarding the tax to be deposited for AY 2018-2019. My income details are as under:

(1) Pension: Rs 4,79,908             

(2)  Rent receipt of house after deductions under I-T Rules: Rs 2,08,050

(3) Income from other sources:  (a) Family pension:Rs 2,11,390            

Is LTC and NSC maturity interest to be counted for the computation of income and how can I save tax under any other scheme.  (b) LIC pension: Rs 9,264 (c) LTC: Rs 13,266

(4)  Income through interest: (i) Savings accounts: Rs 22,723  (ii) NSC maturity: Rs 39,265 

(5)   Savings: Rs 1,50,000 

— Surjeet Chugh 

A. Tax payable for assessment year 2018-19 on the basis of the figures given in your query works out at Rs 71,194 on a total income of Rs 7,95,600. It has been presumed that you are under the age of 80 years and the amount of Leave Travel Concession had been received during the specified block years and has actually been spent for the purpose of which it has been granted. The amount of interest on the maturity of NSC is taxable and has, therefore, been included in the total income specified hereinabove. Deduction of Rs 10,000 allowable under Section 80TTA of the Income-tax Act 1961 (The Act) for the assessment year 2018-19 has also been considered while computing the total income of Rs 7,95,600. It may be added that for the financial year 2018-19, relevant to the assessment year 2019-20, you will be entitled to a deduction of Rs 40,000 from your pension income as well as the amount of interest earned on savings account would not be taxable to the extent of Rs 50,000. There is no other scheme under which you can deposit amount so as to claim deduction beyond Rs 1,50,000. You may, however, make investment in the tax-free bonds as and when they are issued by any of the Government-approved institutions. The amount of interest earned on such bonds would not be taxable. Such investment is not covered under the provisions of Section 80C of the Act.