NRI can’t submit form 15G/15H

SC Vasudeva

Q. I am a non-resident Indian and have an NRO account in a bank. A substantial amount is currently lying in a savings bank account. I would like to convert an amount of Rs 10 lakh out of such savings account to a fixed deposit account. Will the amount of interest on such fixed deposit be taxable in India? Can I submit form 15G/15H for non-deduction of tax at source, if the interest is taxable?

— Vijay Kumar

A. The amount of interest on such fixed deposit would be taxable, if the total interest earned by you is above the maximum amount on which tax is not payable by an individual assessee. Currently, such limit is Rs 2,50,000. The facility of filing of form 15G is not available to a non-resident Indian and therefore, the bank will have to deduct tax at source at the applicable rate from interest payable to you.

Q. Is it possible to reinvest the proceeds of National Savings Certificates (NSCs) which matured in the July this year. Will the amount so invested be considered for the purposes of allowing deduction under Section 80C of the Act?

— Deepender Singh

A. The proceeds of matured National Savings Certificate can be re-invested in freshly issued NSCs and will be considered for allowability of deduction under Section 80C of the Act. It may be added that the entire amount of such proceeds is not taxable. The amount of interest included in such proceeds is subject to tax. The taxability of the amount of interest is irrespective of the fact whether deduction of the amount of interest has been claimed under Section 80C of the Act. In case such deduction has not been claimed, the entire amount of interest received in the year of maturity would be taxable.

Q. Is it possible for both husband and wife to claim deduction for house rent allowance in case both of them are employed and are also getting house rent allowance?

— Savitri Devi

A. An exemption in respect of house rent allowance is admissible subject to the conditions specified in Rule 2A of Income-tax Rules 1962 (The Rule) read with Section 10(13A) of the Income-tax Act 1961 (The Act). One of the conditions that needs to be fulfilled for availing such exemption is that an assessee must have actually paid house rent for occupying a residential accommodation. Therefore, in case both husband and wife are paying for the residential accommodation occupied by them, it will be possible for them to claim the exemption subject to the provisions of the aforesaid Rule.

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