My son who is a Non Resident Indian (NRI) and Overseas Citizen of India (OCI) cardholder is looking to buy a house in his country of residence. Is it necessary for him to show this in his Income Tax Return (ITR) in India? If yes then in what form?
—Name withheld on request
(This question was answered by Sonu Iyer, Tax Partner and People Advisory Services Leader, EY India).
Under the income tax laws of India, all foreign assets must be reported in the India ITR if the individual qualifies as a “resident and ordinarily resident” of the country during the relevant financial year. Also, income earned from such foreign assets during the relevant financial year along with the nature of income and the head of income under which such income is offered for tax in India needs to be reported in respect of each foreign asset to ITR Is.
Foreign assets to be reported include foreign bank accounts, financial interests, immovable property, accounts in which the individual has the authority to sign, trusts, any other capital asset held by the individual outside India. One has to be very careful in reporting foreign assets or income in India’s income tax return. Any omission or misstatement may invite additional tax, interest and penal consequences under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.
Assuming that your son does not qualify as a “resident and ordinarily resident” of India during the relevant financial year, he is not required to report a home outside India in India’s income tax return. If your son qualifies as a “Resident and Ordinary Resident”. , he can choose the income tax return form ITR-2 (if no business income) or ITR-3 (if business income) to report foreign assets and foreign income in India’s income tax return.
(Please send questions and thoughts to minmoney@livemint.com)
Never miss a story! Stay connected and informed with Mint.
download
Our App Now!!
,