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A. BASICS
a) The testator should be of sound mind while making the Will
b) The properties that are mentioned in the Will should belong to the testator.
c) The declaration as regards the disposal of the properties of the testator must be intended to take effect only after the death of the testator
d) Will should be typed or neatly handwritten.
e) Will should be attested by at least two witnesses.
f) The Will should contain a list of the immovable and movable properties of the testator.
g) The shares of the beneficiaries should be clearly defined for the properties listed.
h) In case a legal heir is not being allotted a share or very less share, a reason for the same may be mentioned in the Will. This is to avoid legal issues later.
i) A beneficiary should not be a witness.
A Will has to be attested by at least two or more witnesses.
As per the Indian Succession Act, 1925, the probate of a Will means the copy of a Will certified by the court’s seal stating the document’s validity, genuineness and finality. Probate is not mandatory in India, except when the Will or codicil has been executed in the cities of Kolkata, Chennai (Madras) or Mumbai, or, if the immovable property is situated in these cities. Else, a probate is optional. However, it is advisable to probate a Will to avoid any future complications arising during the distribution of property.
A nominee is a person designated to receive specific assets upon death. It is usually applicable to financial assets and LIC policies. Nominee holds the property as a trustee and does not become the owner of the property. E.g., Balances in Bank Accounts.
It happens when a person dies without a Will. The property passes to his/her legal as per the laws of inheritance and succession applicable to his religion, applicable in the country of his stay.
B. General
It is permissible for Muslims.
II Income from House Property
Deduction for interest on loan for construction, purchase, or repair of the property is allowed as under:
S. No. | Type of property | Amount of interest allowed as deduction |
1 | Rented |
Maximum Rs. 2,00,000 per annum in both cases |
2 | Self-occupied |
A transfer of a house property by individual to his spouse, without adequate monetary consideration (unless it is a transfer in connection with an agreement to live apart), would result in the individual to be deemed owner of the property for income tax purposes
The rental income of the house property will be added to the income of the individual.
III Capital Gains
Certain investments can be made to claim exemption from capital gains.
These are determined as per the holding period of the assets. Some examples are:
S.No. | Type of capital gain | Period of holding | Rate of tax |
i. | Long-term | More than 24 months | 20% +4% cess with CII* |
ii. | Short-term | Less than 24 months | 30%+4% cess without CII |
S.No. | Type of capital gain | Period of holding | Rate of tax |
i. | Long-term | More than 12 months (Capital Gain less than Rs. 1,00,000) | NIL |
ii | Long-term | More than 12 months | 10% + cess |
iii | Short-term | Less than 12 months | 15%+4% cess |
S. No. | Type of capital gain | Period of holding | Rate of tax |
i. | Long-term | More than 24 months. | 10% +4% cess with CII |
ii. | Short-term | Less than 24 months | 15%+4% cess |
S.No. | Type of capital gain | Period of holding | Rate of tax |
i. | Long-term | More than 36 months | 20% + 4% cess with CII |
ii. | Short-term | Less than 36 months | As per slab rate +4% cess |
*CII – Cost inflation index
Note: 1. Cess @4% and Surcharge as per income slab is payable on tax payable. Please see page 20, 21 for tax rates.
CII is used to determine the indexed cost of acquisition of an asset. Capital gain on the sale of an asset is its sale prices, less its indexed cost of acquisition. The government notifies the CII every year.
CII is applicable for long term capital gains only.
Year-wise CII is tabulated below:
CII TABLE
Financial year | Cost inflation index | Financial year | Cost inflation index | Financial year | Cost inflation index |
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 | 100 105 109 113 117 122 129 | 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 | 137 148 167 184 200 220 240 | 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 | 254 264 272 280 289 301 |
II Salary Income
Income earned for services rendered in India shall be taxed in India. Salary includes payment for wages, annuity/pension, commissions, perquisites, advance/arrears of salary, bonus, gratuity etc.
Yes. If an NRI has worked in India, then his salary is taxable in India. It is immaterial whether the salary is received in India or abroad.
Yes. It is taxable even if the employee gets payment abroad as he has worked in India.
Yes. As the NRI is on the pay-roll of an Indian company, the salary accrues here and hence taxable.
No. Remittance to India of salary income earned as above is not liable to tax.
V Business Income, Business Connection, Permanent Establishment
It includes any business activity carried out in India or through a person who is acting on behalf of the NRI. Some examples are:
‘Business Connection’ also includes the following:
(i) in the name of the non-resident; or
(ii) for the transfer of the ownership of, or for the granting of the right to use, property owned by that non-resident or
(iii) for the provision of services by the non-resident;
Where a business activity is undertaken through a broker, general commission agent or any other agent having an independent status who acts in the ordinary course of business.
It happens when the income though not actually received, has accrued directly or indirectly to the NRI through:
Yes. A non-resident who sets up business in India must register under GST.
Registration is also mandatory for e-commerce operators providing online information and database access or retrieval services to a person in India from a place outside India.
VI Income from other Sources and Gifts
These are permissible if incurred exclusively for earning income under that head, for example:
2. Gifts
A gift received in India from close relatives like father, mother, son, daughter, is not taxable in the hands of an NRI, whatever its value may be.
The following are also considered as close relatives.
Suppose, a person receives Rs. 35,000 from a colleague, to help him to start his business. This is not taxable. Later, he receives Rs. 20,000 from another friend. With this, as the total gifts receipt has crossed Rs. 50,000, the entire receipts of Rs. 55,000 will be added to income from other sources and chargeable to tax.
VII Exempt Incomes and Deductions Available from Total Income
Examples of incomes exempt under various heads are:
1.Interest:
2.Capital Gain:
Long-term capital gains (holding period more than one year) arising from sale of equity shares in a company and/or in mutual funds to the extent of Rs. 100,000 in a year .
3.Income from Other Sources:
Any amount received under a life insurance policy, including bonus is exempt from tax.
Some examples are:
S.No. | Section | Payment for | Maximum permissible deduction |
1 | 80C | Life insurance ,tuition fee, etc. | Rs. 1,50,000 |
2 | 80D | Medical/health insurance– self | Rs. 25,000 |
|
| Medical/health insurance for parents | Rs. 25,000 |
3 | 80E | Amount paid | |
4 | 80G | 50% or 100% of the donated amount, as the case may be | |
5 | 80GG | Not exceeding Rs. 5,000 per month |
Note: From FY 2020-21, these deductions are not permissible, where the option of the new slab is preferred by the asseessee.
VIII Permanent Account Number [PAN]
It is mandatory to quote PAN:
An application for PAN by an individual should be made as under:
S.No. | Non resident | Applicable form |
1 | Indian national | 49A |
2 | Foreign national | 49AA |
The application can be made online.
It is against law. Extra PAN should be surrendered.
IX Filing Return of Income, Payment of Taxes and Assessment of NRIs
Tax can be paid and income tax return can be uploaded online.
he income tax return form (ITR) is with reference to the nature of income. Sometimes, the person may earn income from several heads and the relevant form is to be selected to file the return.There are different forms for individuals, companies and trusts. ITRs are available on the income tax website and can be downloaded from the site http://www.incometaxindia.gov.in. Examples of forms are:
S.No. | Particulars of income | ITR Form No |
1 | Salary/pension income | ITR – 1 Sahaj |
2 | Business income | ITR – 4 |
3 | Companies | ITR – 6 |
4 | Trusts | ITR – 7 |
No. These are available to resident Indians only. For example, the income threshold limit for a senior citizen(NRI) would be Rs. 2,50,000, whereas for a resident senior citizen, it is Rs. 3,00,000.
There are two optional slab rates for the financial year 200-21. The NRI may select any of these to file income tax return. These are:
Option 1: Tax Slab Rate (old)- Option- 1
S. No. | Total Income | Tax Rate FY 2020-21 | |
1 | Income up to Rs. 2,50,000 | Nil | |
2 | Income between Rs. 2,50,001- Rs. 500,000 | 5% of Income exceeding Rs. 2,50,000 | |
3 |
Income between Rs. 500,001 – Rs. 10,00,000 | Rs. 12500 + 20% of Income exceeding Rs. 5,00,000 | |
4 | Income above Rs. 10,00,000 | Rs. 1,12,500 + 30% of income exceeding Rs. 10,00,000 | |
Option 2: Tax Slab Rates (new) Option -2 | |||
S. No. | Total Income | Tax Rate FY 2020-21 | |
1 | Up to Rs. 2,50,000 | NIL | |
2 | Income between Rs. 2,50,001- Rs. 5,00,000 | 5% | |
3 | Income between Rs. 5,00,001- Rs. 7,50,000 | 10% | |
4 | Income between Rs. 7,50,001- Rs. 10,00,000 | 15% | |
5 | Income between Rs. 10,00,001- Rs. 12,50,000 | 20% | |
6 | Income between Rs. 12,50,001- Rs. 15,00,000 | 25% | |
7 | Income above Rs. 15,00,000 | 30% | |
Surcharge on Income
part from tax, surcharge on income is payable as under where income exceeds Rs. 50 Lakhs. Cess@4% is payable for all slabs of income.
S.No. | Income | Surcharge on tax payable (Rs.) |
1 | Upto Rs 50 Lakhs | Nil |
2 | Rs. 50 lakh to Rs.1 crore | 10% |
3 | Rs. 1crores to Rs. 2 crores | 15% |
4 | Rs. 2 crores to Rs. 5 crores | 25% |
5 | Above Rs. 5 crores | 37% |
An example of Tax + Surcharge+ Cess payable for different income slabs: (Under option 1)
Figures in Rupees
S.No. | Income under various slabs | Tax | Surcharge | Cess | Total Tax payable |
| Col. 1 | Col. 2 | Col. 3 | Col. 4 [Col.(2+3)*4%] | Col. 5 (Col.2+3+4)
|
1 | 45,00,000 | 11,62,500 | Nil | 46,500 | 12,09,000 |
2 | 7,500,000 | 20,62,500 | 2,06,250 | 90,750 | 23,59,500 |
3 | 1,25,00,000 | 35,62,500 | 5,34,375 | 1,63,875 | 42,60,750 |
4 | 2,75,00,000 | 80,62,500 | 20,15,625 | 4,03,125 | 1,04,81,250 |
5 | 5,75,00,000 | 1,70,62,500 | 63,13,125 | 9,35,025 | 2,43,10,650 |
I Non-resident under The Income Tax Act, 1961‒
CII is applicable for long term capital gains only.
Year-wise CII is tabulated below:
CII TABLE
There is another class of residential status introduced by Finance Act,
2021. This is explained by way of a table below:
Deemed Resident (Treated as RNOR)
| Condition | Indian Income (other than from foreign sources) | Presence in India (no. of days) | Presence in India (no. of days) | Status |
| (Indian citizen, PIO, coming to India) | More than Rs.15 lakhs | 120 to 181days | 365 days or more | Resident |
| (Indian citizen, PIO, coming to India) | More than Rs.15 lakhs | 120 to 181days | Less than 365 days | Deemed Resident (treated as RNOR) |
*Indian citizen | More than Rs 15 lakhs | Not liable to tax in any other country or territory by reason of his domicile or residence or any other criteria of similar nature | (-do-) | |
* This shall not apply in case of an individual who is said to be resident in India in the previous year under condition 1-3 above.
S. No. | Status | Indian income | Foreign income |
1 | Resident | Taxable | Taxable |
2 | Ordinarily resident | Taxable | Taxable |
3 | Not ordinarily resident | Taxable | Not taxable |
4 | Non – resident | Taxable | Not taxable |
The residential status of the taxpayer is to be determined every year. It may so happen that in one year the individual would be a resident and ordinarily resident and in the next year he may become non-resident or resident but not ordinarily resident.
These are as follows:
II Income from House Property
Deduction for interest on loan for construction, purchase, or repair of the property is allowed as under:
S. No. | Type of property | Amount of interest allowed as deduction |
1 | Rented |
Maximum Rs. 2,00,000 per annum in both cases |
2 | Self-occupied |
A transfer of a house property by individual to his spouse, without adequate monetary consideration (unless it is a transfer in connection with an agreement to live apart), would result in the individual to be deemed owner of the property for income tax purposes
The rental income of the house property will be added to the income of the individual.
III Capital Gains
Certain investments can be made to claim exemption from capital gains.
These are determined as per the holding period of the assets. Some examples are:
S.No. | Type of capital gain | Period of holding | Rate of tax |
i. | Long-term | More than 24 months | 20% +4% cess with CII* |
ii. | Short-term | Less than 24 months | 30%+4% cess without CII |
S.No. | Type of capital gain | Period of holding | Rate of tax |
i. | Long-term | More than 12 months (Capital Gain less than Rs. 1,00,000) | NIL |
ii | Long-term | More than 12 months | 10% + cess |
iii | Short-term | Less than 12 months | 15%+4% cess |
S. No. | Type of capital gain | Period of holding | Rate of tax |
i. | Long-term | More than 24 months. | 10% +4% cess with CII |
ii. | Short-term | Less than 24 months | 15%+4% cess |
S.No. | Type of capital gain | Period of holding | Rate of tax |
i. | Long-term | More than 36 months | 20% + 4% cess with CII |
ii. | Short-term | Less than 36 months | As per slab rate +4% cess |
*CII – Cost inflation index
Note: 1. Cess @4% and Surcharge as per income slab is payable on tax payable. Please see page 20, 21 for tax rates.
CII is used to determine the indexed cost of acquisition of an asset. Capital gain on the sale of an asset is its sale prices, less its indexed cost of acquisition. The government notifies the CII every year.
CII is applicable for long term capital gains only.
Year-wise CII is tabulated below:
CII TABLE
Financial year | Cost inflation index | Financial year | Cost inflation index | Financial year | Cost inflation index |
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 | 100 105 109 113 117 122 129 | 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 | 137 148 167 184 200 220 240 | 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 | 254 264 272 280 289 301 |
II Salary Income
Income earned for services rendered in India shall be taxed in India. Salary includes payment for wages, annuity/pension, commissions, perquisites, advance/arrears of salary, bonus, gratuity etc.
Yes. If an NRI has worked in India, then his salary is taxable in India. It is immaterial whether the salary is received in India or abroad.
Yes. It is taxable even if the employee gets payment abroad as he has worked in India.
Yes. As the NRI is on the pay-roll of an Indian company, the salary accrues here and hence taxable.
No. Remittance to India of salary income earned as above is not liable to tax.
V Business Income, Business Connection, Permanent Establishment
It includes any business activity carried out in India or through a person who is acting on behalf of the NRI. Some examples are:
‘Business Connection’ also includes the following:
(i) in the name of the non-resident; or
(ii) for the transfer of the ownership of, or for the granting of the right to use, property owned by that non-resident or
(iii) for the provision of services by the non-resident;
Where a business activity is undertaken through a broker, general commission agent or any other agent having an independent status who acts in the ordinary course of business.
It happens when the income though not actually received, has accrued directly or indirectly to the NRI through:
Yes. A non-resident who sets up business in India must register under GST.
Registration is also mandatory for e-commerce operators providing online information and database access or retrieval services to a person in India from a place outside India.
VI Income from other Sources and Gifts
These are permissible if incurred exclusively for earning income under that head, for example:
2. Gifts
A gift received in India from close relatives like father, mother, son, daughter, is not taxable in the hands of an NRI, whatever its value may be.
The following are also considered as close relatives.
Suppose, a person receives Rs. 35,000 from a colleague, to help him to start his business. This is not taxable. Later, he receives Rs. 20,000 from another friend. With this, as the total gifts receipt has crossed Rs. 50,000, the entire receipts of Rs. 55,000 will be added to income from other sources and chargeable to tax.
VII Exempt Incomes and Deductions Available from Total Income
Examples of incomes exempt under various heads are:
1.Interest:
2.Capital Gain:
Long-term capital gains (holding period more than one year) arising from sale of equity shares in a company and/or in mutual funds to the extent of Rs. 100,000 in a year .
3.Income from Other Sources:
Any amount received under a life insurance policy, including bonus is exempt from tax.
Some examples are:
S.No. | Section | Payment for | Maximum permissible deduction |
1 | 80C | Life insurance ,tuition fee, etc. | Rs. 1,50,000 |
2 | 80D | Medical/health insurance– self | Rs. 25,000 |
|
| Medical/health insurance for parents | Rs. 25,000 |
3 | 80E | Amount paid | |
4 | 80G | 50% or 100% of the donated amount, as the case may be | |
5 | 80GG | Not exceeding Rs. 5,000 per month |
Note: From FY 2020-21, these deductions are not permissible, where the option of the new slab is preferred by the asseessee.
VIII Permanent Account Number [PAN]
It is mandatory to quote PAN:
An application for PAN by an individual should be made as under:
S.No. | Non resident | Applicable form |
1 | Indian national | 49A |
2 | Foreign national | 49AA |
The application can be made online.
It is against law. Extra PAN should be surrendered.
IX Filing Return of Income, Payment of Taxes and Assessment of NRIs
Tax can be paid and income tax return can be uploaded online.
he income tax return form (ITR) is with reference to the nature of income. Sometimes, the person may earn income from several heads and the relevant form is to be selected to file the return.There are different forms for individuals, companies and trusts. ITRs are available on the income tax website and can be downloaded from the site http://www.incometaxindia.gov.in. Examples of forms are:
S.No. | Particulars of income | ITR Form No |
1 | Salary/pension income | ITR – 1 Sahaj |
2 | Business income | ITR – 4 |
3 | Companies | ITR – 6 |
4 | Trusts | ITR – 7 |
No. These are available to resident Indians only. For example, the income threshold limit for a senior citizen(NRI) would be Rs. 2,50,000, whereas for a resident senior citizen, it is Rs. 3,00,000.
There are two optional slab rates for the financial year 200-21. The NRI may select any of these to file income tax return. These are:
Option 1: Tax Slab Rate (old)- Option- 1
S. No. | Total Income | Tax Rate FY 2020-21 | |
1 | Income up to Rs. 2,50,000 | Nil | |
2 | Income between Rs. 2,50,001- Rs. 500,000 | 5% of Income exceeding Rs. 2,50,000 | |
3 |
Income between Rs. 500,001 – Rs. 10,00,000 | Rs. 12500 + 20% of Income exceeding Rs. 5,00,000 | |
4 | Income above Rs. 10,00,000 | Rs. 1,12,500 + 30% of income exceeding Rs. 10,00,000 | |
Option 2: Tax Slab Rates (new) Option -2 | |||
S. No. | Total Income | Tax Rate FY 2020-21 | |
1 | Up to Rs. 2,50,000 | NIL | |
2 | Income between Rs. 2,50,001- Rs. 5,00,000 | 5% | |
3 | Income between Rs. 5,00,001- Rs. 7,50,000 | 10% | |
4 | Income between Rs. 7,50,001- Rs. 10,00,000 | 15% | |
5 | Income between Rs. 10,00,001- Rs. 12,50,000 | 20% | |
6 | Income between Rs. 12,50,001- Rs. 15,00,000 | 25% | |
7 | Income above Rs. 15,00,000 | 30% | |
Surcharge on Income
part from tax, surcharge on income is payable as under where income exceeds Rs. 50 Lakhs. Cess@4% is payable for all slabs of income.
S.No. | Income | Surcharge on tax payable (Rs.) |
1 | Upto Rs 50 Lakhs | Nil |
2 | Rs. 50 lakh to Rs.1 crore | 10% |
3 | Rs. 1crores to Rs. 2 crores | 15% |
4 | Rs. 2 crores to Rs. 5 crores | 25% |
5 | Above Rs. 5 crores | 37% |
An example of Tax + Surcharge+ Cess payable for different income slabs: (Under option 1)
Figures in Rupees
S.No. | Income under various slabs | Tax | Surcharge | Cess | Total Tax payable |
| Col. 1 | Col. 2 | Col. 3 | Col. 4 [Col.(2+3)*4%] | Col. 5 (Col.2+3+4)
|
1 | 45,00,000 | 11,62,500 | Nil | 46,500 | 12,09,000 |
2 | 7,500,000 | 20,62,500 | 2,06,250 | 90,750 | 23,59,500 |
3 | 1,25,00,000 | 35,62,500 | 5,34,375 | 1,63,875 | 42,60,750 |
4 | 2,75,00,000 | 80,62,500 | 20,15,625 | 4,03,125 | 1,04,81,250 |
5 | 5,75,00,000 | 1,70,62,500 | 63,13,125 | 9,35,025 | 2,43,10,650 |
Indian Succession Act,1925,(hereinafter referred to as ‘ISA Act’) governsWills made by persons other than Muslims.
Hindus are governed by the Hindu succession Act,1956, hereinafter referred to as ‘HSA Act’. v
Application of certain provisions of the ISA Act are applicable to Hindus as provided in section 57 of the ISA Act, Schedule III.
Muslims are governed by the provisions of their personal law.
A Will is a legal document that prescribes the mode of succession or transmission of property of a person after his demise. As per The Indian Succession Act, 1925., “Will” means the legal declaration of the intention of a testator with respect to his property which he desires to be carried into effect after his death.
Thus, there are three main components of a Will
The Will helps to distribute the estate according to the wishes of that individual. The shares of properties, both immovable and movable can be specified in the Will for the legal heirs/beneficiaries. Preparing a Will ensures that your funds and property are distributed according to your wishes. Without a Will, those wishes may not be carried out. A Will helps to avoid family disputes and litigation.
1.The testator should be of sound mind while making the Will
2.The properties that are mentioned in the Will should belong to the testator.
3.The declaration as regards the disposal of the properties of thetestator must be intended to take effect only after the death of the testator
4. Will should be typed or neatly handwritten.
5. Will should be attested by at least two witnesses.
6. The Will should contain a list of the immovable and movable properties
of the testator .
7. The shares of the beneficiaries should be clearly defined for the properties listed.
8. In case a legal heir is not being allotted a share or very less share, a reason for the same may be mentioned in the Will. This is to avoid legal issues later.
9. A beneficiary should not be a witness.
Yes, a will can be contested in court if there are concerns about its validity, such as lack of testamentary capacity, absence of signatures, undue influence, or fraud. A will made under duress, pressure, or undue influence may be challenged in court for its validity.
All properties held in the name of the individual,such as:
Care should be taken that beneficiaries of the property documents in the will are also the nominees mentioned in the respective property documents.
This is to avoid a legal hurdle later.
Yes, a will can be contested in court if there are concerns about its validity, such as lack of testamentary capacity, absence of signatures, undue influence, or fraud. A will made under duress, pressure, or undue influence may be challenged in court for its validity.
In India, Wills with digital signature are not accepted
Yes, any number of times a fresh Will can be prepared. as long as he is of sound mind.
The contents of a Will made last is the one to be complied with.
As per the Hindu Succession Act, beneficiary can be a witness.
However, Itis advisable to avoid having a beneficiary of a will to act as a witness, as it could potentially lead to conflicts regarding authenticity.
It is advisable to store it in a safe and secure location, such as a bank’s safe deposit box, to prevent loss or damage. It can also be stored at home or with your lawyer or a close relative or a friend.
It is permissible for Muslims.
Domicile is the permanent residence of an individual though he may be vising foreign countries on long assignments. Domicile governs succession to movable and immovable properties of the person.
No. it is not required to notarise a Will in India.
It is advisable to make a two separate Wills for overseas properties and for properties situated in India. The Laws of the foreign country shall be applicable for assets overseas.
A guardian can be appointed for minor children, ensuring their care and well-being.
A suitable person may be a family member a friend who shares your values.
Some types of Wills are:
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