How to file tax on foreign exchange asset
If one owns foreign assets then it becomes absolutely mandatory to file tax on foreign exchange asset for Income-tax return in India. The people who need to file for the return of income tax fall under three categories namely resident, non-resident and resident but not ordinary resident (RNOR). The latter is however taxed only on Indian-source income. For specified foreign exchange assets the non-resident Indians are subject to a 10% withholding tax on long-term capital gains.
The non-residents nevertheless have a relief in terms of not getting affected by fluctuations in the value of the INR. This applies to all the shares and debentures especially in case of a private company. The gains are always converted into Indian currency after the tax has been computed on it. However, the entire process does not take into account the inflation adjustments (not permitted).
It is absolutely mandatory and highly advisable for a returning NRI that he is completely in sync with the numerous aspects of the Foreign Exchange Regulations. It is also important in the same regard to know of all that which categorises as overseas assets. These include stocks, bank deposits, properties, life insurance policies, debentures, bonds and the likes.
The tax liabilities so to say depend upon the residential status of the person. The concessional tax regime which is available to the NRIs also could be availed even after an NRI becomes a resident. The foreign assets that a person carries with himself if he comes back to India with an intention of staying back permanently are exempt from all such taxes. This all should be kept in mind before filing for tax on foreign exchange asset.
One must not shy away from seeking assistance to gain proper knowledge of tax laws specially for foreign exchange asset.