Tax exemption on personal loan interest component in India
Am I eligible for the tax exemption if yes then under which section.  Generally Personal loans are not eligible for tax exemption. Only housing loans from qualified institutions are eligible for tax deduction. As per the income tax act; The house should be in your name. The home loans taken from recognised institutions are fully qualified under section 24B and 80C. This means you can claim Interest exemption under 24B and Principal repayment under 80C. The Act also specifies that loan can be taken from friends/relatives for construction of property and will be eligible for Interest exemption under 24B only. The principal will not be eligible for exemption under 80C. Read the FAQ from Income Tax India. There has to be certificate showing how much interest was paid on the said loan. Further there should be records/receipts on how the money was spent. There is difference of opinion amongst CA. It is best you take a professional advise.
Yes, that is correct. Note, when there is a tax treaty between Canada and the other country -- [which is pretty much anywhere you have active business](http://www.fin.gc.ca/treaties-conventions/in_force--eng.asp) -- the tax credits are equal to the income received, making it tax free. Here is a better explanation:  &gt; The greatest advantage of having a foreign affiliate in the international business setting is  to repatriate foreign profits back to Canada tax free under certain conditions, for example,  if a foreign affiliate carries on an active business in a designated treaty country (i.e. a  country with which Canada has a tax treaty). The after-tax profit is included in a pool  called “exempt surplus”. If the repatriation of profit in the form of dividend was paid out  of the “exempt surplus” pool to a Canadian corporate shareholder, such dividend is  included in its income and the same amount is allowed to be deducted in computing its  taxable income. In other words, the dividend is not subject to Canadian tax if received by  a Canadian corporate shareholder.   [Source, p3](http://www.canadataxplan.com/test/canadataxplan/files/Book%20-%20English_summary_12-22-2008.pdf)  Edit... here from the NRC site:  &gt; Treaty Countries: **Active business income earned in a treaty country is classified as “exempt surplus.”** The exempt surplus of an FA also includes inter-affiliate dividends received out of the exempt surplus of other foreign affiliates, the exempt portion (25%) of all capital gains, and certain taxable capital gains. **Dividends paid out of the exempt surplus of an FA can be received free of additional taxes in Canada**, since the profits out of which they are paid are considered to have borne a rate of tax in the treaty country comparable to that of Canada.  [Source](http://www.nrcan.gc.ca/mining-materials/taxation/8880) see the section on Subsidiary Income. This is the reason BK is moving to Canada. [Also here is a very interesting deck on corporate tax minimization in latin america by the Canadian mining industry.](http://miningtaxcanada.com/wp-content/uploads/2010/05/TOR01-5160395-v1-RMLF_Cartagena_Slides.pdf) I can only answer about the U.S. For question 2, I believe the answer is no. If you are a non-resident alien for tax purposes, then only income connected to the U.S. is reported as income on the tax return. Unless there were any non-deductible contributions to your pre-tax IRAs, when you convert to Roth IRA, the entire amount of the conversion is added to your income. So the tax consequence is the same as if you had that much additional U.S. income. If you are a non-resident alien with no other income in the U.S., then the income you have to report on your U.S. tax return will basically consist of the conversion. Non-resident aliens do not have a standard deduction. However, all people have a personal exemption. If we take 2013 as an example, the exemption is $3900 per person. We will assume that you will file as single or married filing separately (non-resident aliens cannot file as married filing jointly). The first $3900 of income is covered by the exemption, and is not counted in taxable income. For single and MFS, the next $8925 of income is taxed at 10%, then next $27325 of income is taxed at 15%, and so on. So if you convert less than the personal exemption amount every year ($3900 in 2013), then in theory you do not pay any taxes. If you convert a little bit more, then some of the conversion will be taxed at 10%, etc. Up to RS50,000 is exempt from gift taxes.  In the US, if one provides more than half the expenses for a relative, they may be a dependent. I don't know the India rules. Can she send money to me in India through their NRI account? She can transfer the money to her NRE account and then to your Savings Account. Alternatively she can also transfer money directly to your savings account. There is no tax for this transaction in India as it is gift and exempt under gift tax act. If the amounts are large [run in quite a few tens of lacs], have some paperwork showing this as Gift. You can transfer this to son or doing anything you like with it. No there are no deductions when converting from an SB a/c to an NRO a/c. However, the bank may charge you a small fee to transfer your funds (Somewhere between 100-500 Rupees). The interest you earn on that NRO account will be deducted at source as compared to your S/B(30.9% p.a). In case you fall within basic exemption limit, you can claim it back at the end of the year, while filing your taxes.  You can remit upto $1 million from your NRO account every year. There are no taxes while you remit the money. However, you will need to fill out form 15CA and 15CB which ensures that the taxes have been collected before the money is remitted out of the country. I will add one point missing from the answers by CQM and THEAO. When you take a loan and invest the proceeds, the interest that you pay on the loan is deductible on Schedule A, Line 14 of your Federal income tax return under the category of Investment Interest Expense.  If the  interest expense is larger than all your investment earnings (not just those from the loan proceeds), then you can deduct at most the amount of the earnings, and carry over the excess investment interest paid this year for deduction  against investment earnings in future years. Also, if some of the earnings are long-term capital gains and you choose to deduct the corresponding investment interest expense, then those capital gains are taxed as ordinary income instead of at the favored LTCG rate. You also have the option of choosing to deduct only that amount of interest that offsets dividend (and short-term capital gain) income that is taxed at ordinary rates, pay tax at the LTCG rate on the capital gains, and carry over rest of the interest for deduction in future years. In previous years when the tax laws called for  reduction in the Schedule A deductions for high-income earners, this investment interest expense was exempt from the reduction. Whether future tax laws will allow this exemption depends on Congress. So, this should be taken into account when dealing with the taxes issue in deciding whether to take a loan to invest in the stock market. "As an investment opportunity: NO. As a friendly assist with money you don't mind ever getting back, legal depending on amount. A few years back I was in the housing market myself and researching interest rates and mortgages.  For one property I was very interested in, I would need about $4K extra in liquid cash to complete the down-payment.  A pair of options I saw were a ""combo loan"" 15yr 4% interest for the house, 1yr 8% interest for the $4K.  Alternately, the ""bank of mom and dad"" could offer the 4K loan for a much lower rate. The giftable limit where reporting is not required was $12,000 at the time I did the review.  IRS requires personal loans to be counted as having interest at the commercial rate.  Thus an interest free loan of $10K with commercial interest rate of 1% (for easy math) would be counted as a gift of $10,100 for that calendar year. Disclaimer: Ultimately, I did not use this approach and did not have it subjected to a legal review." To what end would you want to break the law? Why would you think it is beneficial to you in any way? The reason for these limitations is to protect people who have no financial reserves and are not sophisticated investors from making dangerous and risky investments with the little money they have to invest. You need to remember that there's no guarantee of principal with these loans and the rate of default is pretty high. From my own personal experience with Lending Club (and I've only invested in A and some B-rated loans) - rate of default is about 10%. This may be a nice exercise in microlending - but if you want to put all your savings into this, you're taking a huge risk. Risk which is completely unjustified since not only the returns are pretty low (again - from my aforementioned experience: <6% APR, you take higher rate loans - you get higher rate of defaults), but they're also taxed as ordinary gains. Why would you not, instead, invest in a more conservative bond or bond/stock mix fund which will pay you dividends that will get preferential tax treatment and appreciation would be subject to capital gains tax? No reason. And the limitation on who can invest in Lending Club is there for exactly this purpose - to weed out people like you who have no idea of what they're doing.