Tax Inquiry: TDS on Capital Beneficial properties for NRIs Investing in MFs with Power of Attorney

My son Prabaharan is an NRI. I invest in mutual funds for him on the basis of a power of attorney. Payment is made from the joint savings account of Prabaharan and myself (account for Indian residents). In the above circumstances, is it necessary to deduct TDS from capital gains?

K. Ramachandran

Pursuant to the provisions of Section 196A of the Income Tax Act 1961 (the “Act”), any person responsible for paying non-residents regulatory investment fund income is required to deduct withholding tax (“TDS”) at 20% on that income at the time of credit or payment, whichever is earlier. I am aware that your son is the legal owner of the mutual funds and is considered a non-India resident and receives income in the form of capital gains from mutual fund transfers. Pursuant to the above provisions, TDS will be deducted from the payer at the time of credit or payment at the rate of 20 percent of these capital gains, whichever is earlier. Please note that I have not analyzed or commented on any stock exchange law / legal aspects for your request.

My father (61 years old) retired in March 2020 and invested ₹ 15 lakh in a senior citizens’ savings program at the Post in May 2020. Is the amount invested eligible for 80C every five years or only for the first year? Is the amount enough to meet the entire ₹ 1.5 lakh limit below 80 ° C for every 5 years?

Gokulanathan K

Pursuant to the provisions of Section 80C of the Income Tax Act 1961 (“Act”), deduction is possible for any amount incurred during the relevant fiscal year (“FY”), subject to a maximum eligible deduction of 150,000. Accordingly, for the amount deposited in May 2020, the deduction that can be claimed in the hands of your father would be for fiscal year 2020-21 which is capped at 150,000 (i.e. only for the year the amount is deposited into an account became). as part of the senior savings program). The amount invested in fiscal year 2020-21 is not deductible in future years.

The author is a practicing auditor

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