(MENAFN- Khaleej Times)I intend to take up US citizenship. Having done so if I subsequently return to India for good while retaining that citizenship will I be liable to pay tax in the United States in respect of my Indian income? Most of my funds are invested in India and a small portion elsewhere.
- K.R. Singh Dubai American citizens and US Green Card holders are liable to file income-tax returns in the United States in respect of income earned in and outside the US. A United States citizen has to file a federal income-tax return in the US for any year in which the gross income is equal to or higher than the applicable exemption limit and standard deduction irrespective of the country in which the income is earned. Therefore when you become a US citizen you will have to file the tax return in America in respect of all income earned by you whether it is in America the Gulf or India. While dividends from Indian companies and interest on Indian tax-free bonds are exempt in India such income would have to be included in your tax computation when you file the federal income-tax return in the US and tax will be chargeable thereon. No credit will be available under the US tax laws for the dividend distribution tax which Indian companies are liable to pay when they declare dividends to shareholders. The requirement for filing the US federal tax return will continue even when you return to India for good. In case of commercial disputes much of the litigation in courts goes on for several years. Are companies therefore taking recourse to arbitration to resolve their disputes and what is the law on the subject? - P.R. Sood Bahrain India has a fairly well-developed law on arbitration. Even courts suggest arbitration to litigants to settle commercial disputes. In fact most agreements have an arbitration clause. When such a clause exists disputes cannot go to courts but must go through the arbitration process. The Arbitration Act is now being amended to provide that the duration of any arbitration cannot exceed 18 months. It is also proposed to put a limit on fees which are charged by arbitrators. Arbitration is also the preferred mode for settlement of commercial disputes when Indian companies enter into contracts with foreign enterprises. Such contracts are governed by the Indian law. The Bombay High Court has recently ruled that the disputes cannot be resolved under any foreign law. However the seat of arbitration can be outside India - London Paris Singapore and Dubai are the generally preferred destinations. I am in the construction business. On returning to India I would like to be involved in this activity. I am told that the Indian government is planning to set up smart cities in several states of India. What is the progress in this regard? - K.P. Rao Dubai The Indian government has approved an outlay of Rs48 trillion for promoting the setting up of smart cities. Last month a list of 98 cities was released. Uttar Pradesh and Tamil Nadu will each have 12 such cities and Maharashtra will have 10. The smart cities will have adequate water supply assured electricity efficient public transport robust information technology connectivity and digitisation. Moreover the most important aspect of a smart city will be affordable housing. Therefore if you decide to set up a construction business in India when you return you will have ample scope and opportunity in the housing sector. The writer is a practising lawyer specialising in tax and exchange management laws of India.
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