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NRI Problems: How e-vouchers are promoting vaccines in India

H.P. Ranina/Dubai
Filed on July 24, 2021
Sovereign gold bonds are Indian government securities that are denominated in grams of gold.


I have bank accounts in the Gulf and in London. My son is studying in India. I wish to close some of these old accounts and open a new account in Dubai along with the name of my son who is now a major. Would my son be liable to tax in India on interest which is credited to my account in the Gulf?

The tax department has been seeking to bring such foreign income to tax in the hands of an Indian taxpayer on the ground that he is a beneficial owner of the bank deposit and, therefore, the interest should be taxable in his hands in India. Under section 5 of the income-tax law, a resident Indian is taxable on all income which accrues or is received outside India, in addition to his Indian income.

However, the appellate authorities in India have held that a mere mention of a person’s name in the account opening form of a foreign bank does not necessarily mean that such person is the beneficial owner of the bank account. There must be specific evidence that the resident Indian is the beneficial owner of the funds lying in the foreign bank account. The appellate authorities are right in this view.

Recently, my mother living in Kochi subscribed to sovereign gold bonds. She feels that they are quite safe and are a good investment. As I am not sure about this investment, I need your guidance.

Sovereign gold bonds are government securities that are denominated in grams of gold. The bonds are issued by the Reserve Bank of India on behalf of the government. The bonds are quite safe because they are substitutes for physical gold purchased by an investor. The quantity of gold for which the investor subscribes is protected because he receives the then prevailing market price at the time of redemption.

The bonds can also be redeemed prematurely as per rules prescribed. The advantage of holding the bonds instead of physical gold is that the risks and costs of storage are eliminated. An investor can invest up to four kg of gold every financial year. The bonds carry an interest rate of 2.5 per cent per annum payable half-yearly.

I am told that prepaid vouchers are available in India for specific purposes. Even vaccines can be purchased by using these vouchers. Can you please throw some light on this?

Electronic vouchers can now be issued by approved agencies, subject to the issuing agency conforming to the guidelines laid down by National Payments Corporation of India. The guidelines permit the issue of electronic vouchers, which can be used by mobile owners without any app or bank account. The vouchers can only be used for one-time payment of specified goods.

The objective of issuing these vouchers is to promote Covid vaccinations in private medical institutions. These vouchers will be cost-effective because currently banks are issuing prepaid cards with a chip that costs about 200. The new electronic voucher will eliminate this cost. The issuer of these vouchers will be the bovernment, bank or an approved corporate body. The maximum limit of this voucher is to be pegged at 10,000. It will contain a designated merchant code so that it can be used only for buying designated products, for example, medicines, food grains, etc.

H.P. Ranina is a practicing lawyer, specialising in tax and exchange management laws of India

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