Tax implications of NRI transferring money to wife's bank account in India

As per current income tax laws, an NRI is required to file an income tax return in India if his gross total income exceeds Rs 2.5 lakh in a financial year.

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Short-term capital loss on equity oriented mutual funds can be set-off against long-term capital gains of debt mutual funds.
I am an NRI, but my wife and child are residents in India. My wife doesn’t have any source of income. Can I open a Sukanya and PPF account for my child by keeping my wife as guardian? What would be the tax implications for the money that I transfer to my wife’s account?

Raj Khosla, Founder and Managing Director, MyMoneyMantra.com replies: An NRI is not permitted to open a PPF account in India. However, as your wife is an Indian resident she is entitled to open a Sukanya account for an Indian girl child and become the guardian. There will be no tax benefit as she doesn’t file ITR. There is no tax implication (in India) for transferring funds to your wife’s account. An NRI is liable to file income tax return in India only if annual income exceeds Rs 2.5 lakh in a financial year.

For the financial year 2019-20, I incurred short-term capital loss on redemption of equity funds worth Rs 1,53,400 and long-term capital gain on redemption of debt mutual funds worth Rs 3,50,740. Can I write off the short-term capital loss against the long-term capital gain?


Divakar Vijayasarathy, Founder and Managing Partner, DVS Advisors LLP replies: Short-term capital loss on equity oriented mutual funds can be set-off against long-term capital gains of debt mutual funds. There is no restriction on the type of mutual funds for setting off capital losses. The taxable long-term capital gains shall be Rs 1,97,340 (set off of short-term capital loss of Rs 1,53,400 against long-term capital gains of Rs 3,50,740). The said long-term capital gains shall be taxed at the rate of 20%.
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)
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