Debt Counselling: Kuldip Kumar

My company is sending me to the US for a three-year project. Will I be considered a non-resident Indian for this period? Should I file taxes in the US and in India?

Taxability in India depends on the residential status of the individual for a financial year, which depends on the number of days an individual is physically present here. If you leave India for employment purposes, you will be considered a non-resident (NR) if your physical stay here during the year is less than 182 days. For subsequent years, you may continue to qualify to be an NR where while on assignment, you visit India and your stay in the country does not exceed 181 days. However, in the year of return, you may become a resident of India, if your stay here during that year is 60 days or more and 365 days or more during the past four years preceding the relevant financial year. The significance of residential status is that where you are an NR, you would be taxable only on your India-sourced income or income you receive in the country. Your US employment income being US sourced, would not be taxable in India. Your US employment income would be taxable in the US and you would need to pay taxes and file a US return in accordance with US tax laws.

I'm a homemaker and have no income of my own. My husband transfers money into my savings bank account, which I use for routine household expenses. Will I have to pay tax on this?

There is no tax on transfer of money by your husband to meet household expenses. The Income Tax Act contains the concept of 'clubbing of income' in the hands of the transferor where income is earned from an asset transferred by an individual to the spouse without an adequate consideration. In other words, if the husband transfers money to his wife and she earns interest thereon, the interest income so earned by wife will be clubbed in her husband's total income for the relevant year. However, the above rule may not be applicable in respect of income earned by the wife from 'pin money' (a reasonable allowance given to her for her dress and usual day-to-day household expenses) received from her husband. Courts in India have held that the clubbing provisions of the Act will not apply where an asset is acquired by the wife out of savings from pin money. You have mentioned that you don't have any income. If savings bank interest does not exceed Rs 2.5 lakh, there should not be any tax liability on you.

The views expressed are expert's own. Send your queries to yourmoney@bsmail.in