Reader's corner: Taxation

Kuldip Kumar, partner and leader, Personal Tax, PwC India, answers your questions

I moved to Singapore five years earlier. I have Rs 5 lakh in a savings bank account in India. There have been no transactions since I moved out. I have not been filing taxes in India, as I have no income. Will the interest earned on the account be taxed? Do I have to file tax returns?

As you are an Indian citizen settled outside India, you will most likely be a non-resident (‘NR’) of India for tax purposes. As an NR of India, you are liable to tax in India only on your India source income. This includes any interest income from a bank account in India. However, an individual is required to file an income tax return in India only if his/her total taxable income for that year exceeds Rs 2,50,000. In your case, it looks like you only have savings bank interest and no other income. As such, you are not required to file a return unless your income exceeds the taxable threshold. But if there are short-term capital gains from sale of equity shares/equity-oriented mutual funds on which securities transaction tax (STT) is paid, you will need to pay tax; the basic exemption limit of Rs 2,50,000 does not apply. When you return to India and become ordinarily resident, you will have to file the return if you have any foreign asset even if your income is below the taxable threshold.

If the bank has not deducted tax on my fixed deposit, will I have to pay tax while filing returns? How do I calculate the tax and how do I pay it online? 

Yes, you will have to pay the taxes on your FD interest income before filing returns. It might happen that the bank has deducted the taxes but the withholding return is pending and tax-deducted details are not reflected in your 26AS. In such a scenario, you should ask the bank for the interest certificate and confirmation that they have not deducted the tax. If the bank confirms no taxes were deducted on FD interest income, you should proceed to calculate the tax and interest liability (if applicable) and deposit this before filing the return. You can fill the details of your income in the return form online and the system shall compute the due taxes and interest automatically. 

I paid for my parents’ medical tests but didn’t submit bills while giving proof of tax saving to my office. Can I claim tax exemption payment while filing tax returns?

If your question is related to medical reimbursement for self or family from the employer, which is not taxable up to Rs 15,000, then you might not have the opportunity to claim the deduction. Nevertheless, you may claim the deduction under Section 80D. If the tests were for preventive health checks, you can claim tax exemption while filing the return. Section 80D of the Income Tax Act provides for deduction up to Rs 5,000 for any payment on account of preventive health checks for self or family. If these tests were not for preventive health checks, you may still claim deduction under Section 80D for the expenditure on your resident parents up to Rs 30,000, provided they are 80 years or more of age and not covered under any medical insurance. While filing tax return, you are not required to give any proof or receipt. However,  keep the documents to prove such payment.

The writer is partner and leader-personal tax, PwC India. The views expressed are the expert’s own. Send your queries to yourmoney@bsmail.in