Income tax return (ITR) filing: From selling shares, taxable salary to NRIs, all you want to know

If I have capital gains tax from selling shares of more than Rs 1 lakh, but no other income, will I have to file tax? I am a housewife and I trade in shares sometimes. —Leena Thakkar

Obligation to file the income-tax return arises when income exceeds the threshold limit specified in this behalf (that is, Rs 2,50,000 if the age is up to 60 years and Rs 3,00,00 if age is more than 60 years). In your case, you shall not be required to file income-tax return as your income is below the threshold limit.

I am a college lecturer. Since I am not a permanent employee yet, I get a lumpsum amount and not a salary. Since there is no break-up of HRA, gratuity, etc, can I claim any tax benefit? My total annual salary is Rs 6 lakh. —Himani Rawat

To claim the salary benefits, there must exist the employer-employee relation and most importantly, salary income should be earned. Since, the amount earned by you is a fixed amount which is not salary, you will not be eligible to claim any salary related tax benefit.

If NRI sells stock after becoming resident in India, can he avail benefit of treaty between India and UAE? Paragraph 4 of Article 13 of India UAE Treaty says gains from the alienation of shares other than those mentioned in Paragraph 3 in a company which is a resident of a contracting state may be taxed in that state. So, if any resident sells shares of company resident of Dubai, then capital gains shall be taxable in Dubai. But Section 5 of Income Tax Act says all incomes of resident shall be taxable in India. Therefore, there will be double taxation. Now, can resident avail the benefit of treaty as per section 90? If yes then, how the benefit to be given, that is, either exemption is to be given in which country - India or UAE? Or credit of tax paid is to be given in which country - India or UAE? —Yatin Sharma

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As per Section 90 of the Income Tax Act, a taxpayer resident in one of the two countries can claim the benefit of the tax treaty signed amongst them, if its provisions are more beneficial in comparison to the domestic law. Accordingly, if you qualify as a resident in India, you can claim the beneficial provisions of the tax treaty and claim that the capital gain tax shall be paid in Dubai only. At the time of filing income-tax return in India, you can claim exemption from the payment of tax in India and pay the required tax in Dubai only.

By Suraj Nangia, partner, Nangia Advisors LLP

Source: DNA Money