Is Foreign Asset Part Of Total Taxation?
The government of India charges income tax premised on the residential status and scope of income that is taxable. This income scope is based upon two parameters namely Indian and foreign income. Basically, tax is computed on income from salary, house property, professional and capital gains.
The person’s residential status plays an important status in computing the tax. The income that does not form a part of the total income includes the exemptions provided to non-residents like interests on bonds or securities notified by the Government of India, interest on foreign currency non-residential accounts and the likes.
It becomes crucial to investigate the correct nature of income and also to look at the minute details associated to it because that in essence determines the nature of taxation. Investment income or long term capital gains form the major part of the taxable income on foreign exchange assets.
The income acquired through convertible foreign exchange becomes very important in this regard. Taxation covers a lot of listed as well as unlisted entities therefore, it is absolutely essential to demarcate between private and public enterprise when it comes to shares in an Indian company because this is taxable.
The specified tax treatment is different for private company debentures therefore the distinction regarding the nature of company gains prominence. Deposits made by the non-resident Indians form a part of the taxable income. Therefore, the nature of the company (private in this case) company becomes prominent.
Securities in the nature of debt instruments issued by the Central Bank of India come under the concessional treatment in case of taxes charged.
Therefore, one can say taxation on foreign exchange assets is definitely a part of the total taxable income but it is necessary to be aware of the smallest detail of the law in this regard.