India Tax: CBDT issues clarifications which are relevant to NRIs too

In my last column, we talked about the various aspects a Non-Resident Indian would need to know in relation to their Indian tax filing for the financial year 2018-19 but there were certain aspects which needed further clarification from the authorities. 

Central Board of Direct Taxes (CBDT) has released clarifications in the form of frequently asked questions (FAQs) addressing some such matters and those relevant to NRIs are summarised below: 

If you are a non-resident of India (NRI), you need to mention your overseas residency and provide details of the jurisdiction and tax payer identification number (TIN) in the return form. It has been clarified that if you are not allotted a TIN in your overseas tax jurisdiction, you can mention your passport number instead of TIN and name of the country in which the passport was issued should be mentioned as the ‘jurisdiction of residence’.

CBDT logo. Courtesy: Facebook

Where you are a director in any company (including a foreign company), you also need to provide details of such companies. Quoting of permanent account number (PAN) is not mandatory while filling the details of the foreign company in which you are a director. It is now clarified that if such a foreign company already holds a PAN, you should mention the same in ITR form. So, you need to check and obtain from the foreign company where it has been allotted a PAN.

If you have long term gain/loss to report in relation to listed shares/ equity oriented mutual funds on which securities transaction tax (STT) has been paid, return form provided the column to record international securities identification number details and scrip wise computation of gain. It is clarified that you can very well compute the gains manually yourself and then input the same directly in the respective Schedule CG of the return form instead of giving scrip wise details.

If you have sold land and/or building to a non-resident, while mentioning the details of such capital gain in the return form, you need to report the PAN of such non-resident, where the same is mentioned in the documents. 

Return form required reporting of unlisted shares. It has now been clarified that shares listed on overseas stock exchanges will be considered as listed and as such details of those shares need not be given in the return form. Where you are holding shares which were listed earlier and eventually got de-listed, you need to report the details of such de-listed shares under as ‘unlisted shares’. If you cannot obtain the PAN of such de-listed company, then you can enter a default value in place of PAN as “NNNNN0000N”. It is also clarified that details of unlisted shares need to be provided even though such shares are held as stock in trade of a business. Further, unlisted equity shares in a co-operative bank/ credit society, need not be reported. 

Income tax ad. Courtesy: CBDT website

It is clarified that where you have acquired/ sold any such shares through gift, will, amalgamation, merger, demerger, or bonus issues etc., you can enter ‘zero’ against cost of acquisition or sale consideration as asked in the relevant column of the schedule. It is also clarified that this schedule is only for reporting purpose and not relevant for the purpose of computing income or tax liability.

These clarifications shall indeed help those taxpayers who are yet to file the return. But, these clarifications have perhaps come out a little late. What will happen to those who already have filed the returns based on their interpretation and judgement? Whether they need to revise the return, which of course will require additional time and effort or they may leave it as it is. A suitable clarification in this regard would help such taxpayers at large. 

It is better where changes in the return forms are notified during the year rather than after its close so that tax payers can collate the relevant details and are well prepared to file their return. 

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Note: Connected to India articles on NRI personal finance are intended to help Non-Resident Indians (NRIs) understand the increasingly complex world of financial investments. It is not a solicitation, recommendation, endorsement, of any third party service provider to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction.