Hello Sir, I am a US citisen living and working here in India on OCI. Please advise me weather I do returns filing just like how others in India do? Or are there any additional things to do? While I understand I also have to file returns in US, I would first do in India and take it to file in US for overcoming double taxation. Please advise. Also, how can you help and how do I reach you for a phone call. Thanks.

Ans: Hello,
Dividends will be taxed at flat 25%
Duration for LTCG is 24months and more and the LTCG tax rate is 20%

Ans: At the time of transfer, Indian Income tax provisions will be applicable. If period for holding is more than 24 months, it will be long term capital asset.

The short-term capital gains are taxed at the slab rate whereas long-term gains are taxed at the rate of 20% along with the indexation benefit.

Ans: Current Financial Situation
Income Sources
Company Pension: $36,000/year
Brokerage Dividends: $26,000/year
401k Dividends: $23,000/year
US Rentals: $27,000/year
Expenses
Refurbishment of Bangalore home: $250,000
Utilities and Groceries
Medical Insurance for you and your wife
Taxation in India
Income from Company Pension
Your company pension is taxable in India. The tax rate depends on your total income.

Dividends from Brokerage and 401k
Dividends from 401k are taxed in India. The rate is 20% with indexation. Ensure to declare these in your Indian tax returns.

US Rentals
Rental income from abroad is taxable in India. You need to pay tax as per Indian tax laws.

Double Taxation Avoidance Agreement (DTAA)
India and the US have DTAA. It helps avoid double taxation. Declare all income in both countries. You can claim relief under DTAA.

Medical Insurance
Importance
Medical insurance is crucial. It covers unexpected medical expenses.

Options
Many insurance providers offer plans for senior citizens. Choose a comprehensive plan for you and your wife.

Refurbishment Costs
Budgeting
Plan your refurbishment budget. Ensure it fits within your financial capacity. Consider any additional costs that may arise.

Living Expenses
Utilities and Groceries
Estimate your monthly expenses. Factor in inflation and lifestyle changes.

Final Insights
Your income sources are diverse. This provides stability. Plan your taxes to avoid penalties. Focus on budgeting your refurbishment. Choose the right medical insurance. Regularly review your financial plan.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: Navigating tax regulations as a Non-Resident Indian (NRI) living in New York involves understanding the tax systems of both the United States and India. Here's a comprehensive guide to help you ensure compliance with tax regulations in both countries:

Understanding Tax Residency

United States:

• Resident Alien vs. Non-Resident Alien: For tax purposes, you are considered a resident alien if you pass the Green Card Test or the Substantial Presence Test.
• Substantial Presence Test: You must be physically present in the US for at least 31 days during the current year and 183 days over the past three years, calculated using a specific formula.

India:

• NRI Status: You are considered an NRI if you have spent less than 182 days in India during the financial year or less than 365 days in the preceding four years plus less than 60 days in the current year.

Filing Requirements

In the USA:

• Federal Taxes: File Form 1040 if you are a resident alien, reporting worldwide income. Non-resident aliens file Form 1040-NR.
• State Taxes: Depending on New York state regulations, you may need to file a state tax return.
• Foreign Accounts: If you have foreign bank accounts with a total value exceeding $10,000 at any time during the year, you must file FinCEN Form 114 (FBAR).

In India:

• Income Taxes: File ITR-2 if you have income from sources outside India and are an NRI. Report only income earned or accrued in India unless specified otherwise by the Double Taxation Avoidance Agreement (DTAA).
• TDS (Tax Deducted at Source): Ensure that TDS is correctly deducted on income from India (e.g., rent, dividends).

Double Taxation Avoidance Agreement (DTAA)

The DTAA between India and the USA aims to avoid double taxation on income earned in both countries. Key points include:

• Tax Credits: You can claim a tax credit in one country for taxes paid in the other.
• Reduced Rates: Certain types of income (e.g., dividends, royalties) may be taxed at reduced rates.

Specific Considerations

1. Global Income Reporting:

• In the USA, you must report your global income.
• In India, you report income earned in India if you are an NRI.

2. Foreign Tax Credit (FTC):

• Claim FTC in the USA for taxes paid in India on income taxed in both countries.

3. Investments:

• USA: Be aware of Passive Foreign Investment Company (PFIC) rules for investments in foreign mutual funds.
• India: Ensure compliance with the Foreign Exchange Management Act (FEMA) for investments in India.

4. Foreign Assets Reporting:

• USA: Report foreign financial assets exceeding specific thresholds using Form 8938.
• India: NRIs with certain specified foreign assets must file Schedule FA with their Indian tax return.

5. Estate and Gift Taxes:

• USA: Be aware of gift and estate tax rules if you transfer assets to or from India.

Steps to Ensure Compliance

1. Maintain Records:

• Keep detailed records of income earned, taxes paid, and days spent in each country.

2. Consult a Tax Professional:

• Engage a tax advisor experienced in international taxation to help navigate the complexities.

3. Regularly Review Tax Regulations:

• Stay updated on tax law changes in both countries.

4. Utilise Software and Tools:

• Use tax software that handles international taxation for accurate reporting and compliance.

By following these guidelines and seeking professional assistance, you can ensure compliance with tax regulations in both the USA and India.