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The Income Tax Act, 1961 defines a non-resident Indian as an individual, being a citizen of India or a person of Indian origin, who is not a resident. A person is of Indian origin if he or either of his Indian parents or any of his grandparents was born in undivided India.
Over the years, the number of Indians moving abroad has been increasing steadily. People leave the country for better prospects of work or study, or even on business and holiday. Many of the people who go abroad maintain bank accounts in India to either invest here or save money here or just for ease of transactions to and fro. But if you are a Non Resident Indian (NRI) with a bank account in the country, it is advisable that you are aware of all the existing tax rules as far as NRIs are concerned.

Even if you are a Non-Resident Indian, you are liable to pay tax for any income that is earned or accrued in India. This is irrespective of whether the income is directly or indirectly received by the Non-Resident Indian in India or is accrued or deemed to have been accrued in India as far as the laws are concerned. A Non-Resident Indian will have to pay tax for any income from business transactions and also income generated from assets and investments in India.
The major difference between tax paid by a resident Indian and a Non-Resident Indian is that the latter only has to pay tax for his 'Indian Income' and his foreign income, that is income earned and accrued abroad, is completely exempted from tax in Income India.
It is important to note that Indian Income is income that accrues /arises (or is deemed to accrue/ arise in India) or which is received (or deemed to have been received) in India, though it might have accrued/risen elsewhere. Foreign Income is that which accrues or arises (or deemed to accrue or arise) outside India AND received (or deemed to be received) outside India.

Tax Free Income for Non-residents Indians
Non-residents Indians are granted certain tax exemptions if they are defined as or fulfill the criteria of Non-Resident Indian under the Income Tax Act, 1961. These tax free incomes available to Non-Resident Indians are: Interest earned on Savings Certificate, Interest earned on Non Resident (Non Repatriable) [NRNR] Deposit, Interest earned on Foreign Currency Non Resident (Bank) [FCNR(B)] Deposit, Overseas income of NRIs, Dividend income from Indian Public/Private Company, Indian Mutual Fund and from Unit Trust of India, Long-term capital gains arising on transfer of equity shares traded on recognized Stock Exchange and units of equity schemes of Mutual Fund is exempt from tax at par with residents, Remuneration or fee received by non-resident / non-citizen / citizen but not ordinarily resident 'consultants', for rending technical consultancy in India under approved programme including remuneration of their employees, and income of their family members which accrue or arise outside India, Interest on notified bonds.


Various Deductions for Non-residents Indians
There are several tax saving options available for Non-Resident Indians.  Non-Resident Indians are allowed the following deductions under Income Tax Act, 1961:
a. Home Loan Interest Deduction:Non-residents Indians are eligible to avail deductions on home loan interest for the interest portion of the EMI paid towards the repayment of home loans.
b. Savings Deduction:From the various tax saving avenues available to the general public – Equity instruments like ELSS, Debt instruments like PPF, National Savings Certificate, Bank FDs etc and Life Insurance and Pension Plans, Non-residents Indians are not allowed the following investments:

i.) Non-residents Indians not allowed to open a PPF account. An existing PPF account can be continued till maturity.

ii.) Non-residents Indians are also barred from investing in National Saving Certificates (NSC), Senior Citizens Savings Scheme (SCSS) and Post Office Time Deposits (POTD). Existing investments (i.e., those that were purchased before becoming an NRI) can be continued till maturity.

c. Health Insurance Premium Deduction
Non-residents Indians can also claim deduction for premium paid on mediclaim / health insurance policy of self and family (Rs 15,000 / Rs 20,000 as the case may be) and another Rs 15,000 (Rs 20,000 if either of parents is a senior citizen) premium paid to insure the health of parents.

d. Other Deductions
There are many other deductions available to resident Indians – Health Insurance Premium, Medical treatment of disabled dependent, Medical treatment of certain specified ailments,  Deduction for Handicapped person, Educational loan, Deduction for Donations and Rent paid. NRIs qualify for these deductions:
i). Deduction for interest paid on educational loan
ii). Deduction for certain specified donations
Deduction for Medical treatment of disabled dependent, Deduction for Medical treatment of certain specified ailments, and Deduction for Handicapped person are not available for Non-residents Indians.

The about 14,000 crore tax row between Indian tax authorities and British telecom major Vodafone could be nearing a resolution with the finance ministry expressing willingness to "discuss" the issue with the company executives.

Finance ministry has written to Vodafone, inviting its representatives for a discussion with country's top revenue officials in response to a request from the company after the tax authorities sent a new tax notice on January 3 demanding tax on its $11-billion acquisition of Hutchison Essar in 2007.

"We have written asking them to come and discuss their issues....we want to hear them out and understand what they want to say," a finance ministry official, privy to the development, told ET

Vodafone has already said it was open to an "amicable" solution.

The revenue secretary Sumit bose and Central Board of Direct Taxes chairman Poonam Kishore Saxena are expected to meet with Vodafone executives next week.

Vodafone had threatened to invoke the India-Netherlands bilateral investment treaty a few months ago but has recently indicated its willingness to settle the six year old tax dispute in its January 5 reply to the new tax notice.

"Vodafone has previously said that it would prefer to reach an amicable solution to this matter," official spokesperson, Vodafone Plc said on Friday.

However, the company continues to maintain that no tax was payable on the above transaction. Top policymakers in the government including Prime Minister Manmohan Singh and finance minister P Chidambaram have maintained that the United Progressive Alliance government is keen on a non-adversarial, predictable and a stable tax regime for investors.

The UK-based telecom company had deal acquired Indian telecom company Hutchison Essar in 2007 from Hong Kong based Hutchison Whampoa through a $11.2 billion overseas transaction executed in Cayman Islands.

The income tax authorities had raised a tax demand demand on the company for not withholding tax on the payment made to Hutchison Whampoa, which Vodafone disputed.

The Supreme Court ruled in favour of the company, but the government amended the Income Tax law retrospectively in the budget this year making the company liable to pay tax.

The government subsequently referred the matter to a committee headed by Parthasarathi Shome, who has now joined the finance ministry as Chidambaram's advisor, after the retrospective amendment invited local and global condemnation. The Shome committee said the tax should be applied prospectively, and if that is not possible at least the interest and penalty amount should be waived off.

The government now is keen on reaching a politically feasible solution that will also send out strong signals internationally that the country's tax authorities' are not aggressive litigants. "Persistent litigation is does not benefit anyone --the taxpayer or the tax department and also sends out negative signals to international investors...." said an income tax official, pointing that the provision for settling cases out of court through Mutual Agreement Procedure or MAP was introduced precisely for this reason.

Vodafone had also requested for MAP in 2010 under Indo- Dutch tax treaty but India turned down the request.

47(xiiib)any transfer of a capital asset or intangible asset by a private company or unlisted public company (hereafter in this clause referred to as the company) to a limited liability partnership or any transfer of a share or shares held in the company by a shareholder as a result of conversion of the company into a limited liability partnership in accordance with the provisions of section 56 or section 57 of the Limited Liability Partnership Act, 2008 (6 of 2009)55:

Provided that—

(a) all the assets and liabilities of the company immediately before the conversion become the assets and liabilities of the limited liability partnership;

(b) all the shareholders of the company immediately before the conversion become the partners of the limited liability partnership and their capital contribution and profit sharing ratio in the limited liability partnership are in the same proportion as their shareholding in the company on the date of conversion;

(c) the shareholders of the company do not receive any consideration or benefit, directly or indirectly, in any form or manner, other than by way of share in profit and capital contribution in the limited liability partnership;

(d) the aggregate of the profit sharing ratio of the shareholders of the company in the limited liability partnership shall not be less than fifty per cent at any time during the period of five years from the date of conversion;

(e) the total sales, turnover or gross receipts in the business of the company in any of the three previous years preceding the previous year in which the conversion takes place does not exceed sixty lakh rupees; and

(f) no amount is paid, either directly or indirectly, to any partner out of balance of accumulated profit standing in the accounts of the company on the date of conversion for a period of three years from the date of conversion.

Explanation.—For the purposes of this clause, the expressions "private company" and "unlisted public company" shall have the meanings56 respectively assigned to them in the Limited Liability Partnership Act, 2008 (6 of 2009);]


BUT PROVISION AS



Conversion of a Partnership Firm into an LLP:

No specific tax shelter has been incorporated under Income-tax Act for conversion of firm into LLP. However Memorandum explaining the provisions of the Finance (No. 2) Bill 2009 provides that General Partnership and LLP is treated as equivalent (except for recovery purposes) for Income-tax purpose. The Explanatory Memorandum, also stated, that conversion of a General Partnership Firm to an LLP will have no tax implications if

        a)the rights and obligations of partners remain the same after conversion and

        b)there is no transfer of any Asset or Liability after conversion.

    If the above conditions are violated, the provision of Capital gains specified in section 45 shall apply. However above clarification is ambiguous and may create various issues.

is exempt but certain provisions are there

Boss in my opinion if you are dealer then no need but if you are an investor then it requires.Then also carry forward section to take care along with the definition of speculative in terms of IT Act.

According to provisions LTCL cannot set off against business income.It can only be set off against LTCP

Mr. Sanjay, lets make clear about section Sec 44AB states that for Income tax audit if the turnover does not exceeds 60 lacs in p.y. then no need for audit (a.y.-12-13).Now, it makes it very clear that in Sec 44AD (Notwithstanding anything contained in the foregoing provisions of this section, an eligible assessee who claims that his profits and gains from the eligible business are lower than the profits and gains specified in sub-section (1) and whose total income exceeds the maximum amount which is not chargeable to income-tax, shall be required to keep and maintain such books of account and other documents as required under sub-section (2) of section 44AA and get them audited and furnish a report of such audit as required under section 44AB.)Yes audit to be carried out.