NRI TAXATION
Non-resident Indians or NRIs are required to settle taxes for their incomes earned or accrued in the country according to the Section NRI Taxation under the Indian Income Tax Act, 1961. The taxation rules and benefits allowed to the NRIs are different from those entitled to resident Indians. The last date to file income tax return in India is July 31st of the assessment year for NRIs.
There are several criteria and procedures applicable to file for income tax returns for NRIs such as –
Documents needed for the application of Import Export Code Registration:
- Residential Status: It is mandatory to determine the living status of the non-residents depending on the total number of days resided in the country in a financial year according to Section 6 of the Income Tax Act, 1961. Income taxes in India of an NRI will depend on the residential status for the financial year.
- Taxable Income: NRIs are liable to pay tax for incomes that include any salary received in India or provided in India, income from business and profession controlled or set up in India, capital gains on transfer of assets located in India, income from a house property located in India, income from interest on savings bank account or fixed deposits held in India. All taxable income will be taxed at the slab rate that an individual belongs to.
- Advance Tax: NRIs are required to pay advance tax if the tax liability exceeds Rs. 10,000 in a financial year. All advance taxes paid should be reflected in Form 26AS in the tax return.
- Double Taxation Treaty Benefit (DTAA): Depending on the type of income that is taxable in both India as well as in the foreign country or the country of residence, there are some relief provided under the DTAA or Double Taxation Avoidance Agreement. If the income is taxable under this agreement, NRIs need to pay tax in India and can claim the credit against the tax liability in their country of residence on the same income subject to certain conditions. The TRC or Tax Residency Certificate of the country of residence is necessary for claiming this benefit.
- Deductions and Exemptions: NRIs are entitled to claim various deductions and exemptions from their total income earned or accrued in India through some revenues such as deductions under Section 80C. Some of the deductions that are allowed for NRIs under Section 80C are life insurance premium, principal repayments on loan for a house property purchase, children’s tuition fee payment to any educational institution situated in India, investments in ELSS, and contributions to unit-linked insurance plan or ULIPS. Other allowable deductions that NRIs are eligible to claim are deductions under 80D, 80E, 80G, 80TTA, deduction from house property income, and exemptions from capital gains under Sections 54, 54EC, and 54F.
It is important that NRIs declare absolved revenues such as long-term capital benefits on catalogued guarantees, dividends on FCNR/NRE investments, gains on duty-free bonds and interests, qualified allowances collected, etc. Also, NRIs who don’t have an Indian bank account are required to provide details of their foreign bank account when applying for a refund or compensation while filing income tax returns.
NRIs who have a total income of Rs. 50 lakhs and above are obligated to provide the details of their movable and immovable assets situated in India and the equivalent liabilities according to Schedule of Assets & Liabilities (Schedule AL) while filing ITR.
How Eaccountspro can help you?
Our tax experts and advisors will help set up a seamless process for data collection to prepare your return as required. Whether you are an Indian resident living in a foreign country, a resident individual who has recently moved abroad, a resident individual on a temporary foreign job or assignment, an NRI who has recently moved back to India, or an Indian resident with global income, we can help you file accurate income tax returns. At Eaccountspro, you can also take the assistance of our consultation service to address all your doubts and queries regarding NRI taxation.
