Investments in India need a PAN
Vijay Dhull: I am a merchant navy officer working with a foreign company and staying outside India for about eight months in a financial year. I earn about Rs 1,40,000 every month while sailing. Please answer my following queries: 1. Do I need a PAN card. If yes, do I have to file return even if I am fulfilling the NRI criteria.
2. Please suggest some good investment options for merchant navy personnel.
3. I believe that since I am fulfilling the NRI status by staying about 8 months outside India, my income is tax-free and the investment made by me in any scheme (MF, shares etc) will be tax-free. Also, north India has a large number of merchant navy personnel and if you can publish a special article on financial guidance, I will be very thankful to you.
Akhilesh Tilotia replies: In case you are investing in India, you will need a PAN. A PAN is now required for any mutual fund transactions. However, just because you have a PAN, does not necessarily mean that you need to file income tax returns.
I am not sure if there is any good investment option that can be recommended based on your profession. However, given your periodic income profile, you might want to consider a systematic investment plan (SIP). Define your goals and risk appetites, and choose the mutual funds that suit your need. You can then invest systematically in them. So for example, if your salary of Rs 140,000 is credited on the 1st of every month, and you know you will need Rs 60,000 as your expenditure, you can enroll in SIPs such that on the 7th of every month, this sum is invested on your behalf.
In India, any investment into equity oriented mutual funds and in shares is tax-free, if you hold that instrument for one year. So, if you have a horizon of investment that is longer than that, then you should not worry about tax consequences.
Sati Veena: I am an NRI. I acquired a plot in Vaishali Gajiabad in January 1999 by withdrawing Rs 7 lakh from my NRI account held in State Bank of India, Janak Puri, New Delhi. Now I have sold the plot for a sum of Rs 66.5 lakh. I have already paid an amount of Rs 11.56 lakh as income tax on capital gain. The balance amount of Rs 54.94 lakh is held in my NRO account with the same bank. I want to know whether the above amount of capital gain can be repatriated to the country of my residence that is Luxembourg. If so kindly quote the ruling.
Akhilesh Tilotia replies: Did you make the investment via an NRE account or an NRO account? In case, you made investments via the NRE account, that money is repatriable, otherwise not. You can repatriate the sale proceeds of up to two houses over your lifetime.
(The expert is a CFP and MBA (IIM-Ahmedabad), and is Director, PARK Financial Advisors, Mumbai.)