The tax accumulated from residents is the basis of Indian Economy. Section NRI Taxation under the Indian Income Tax Act, 1961, applies to that revenue outside the home country. The income tax rules and perks allowed to them are different from those applicable to Indian residents.
- Staying in India for at least 6 months or 182 days during a financial year
- Staying in India for 2 months/60 days in last financial year AND have stayed for whole year/365 days in last four years.
For Indian citizen employed in abroad or a crew member of Indian Ship then the first/main condition will applicable to them. Also, a PIO visiting in India will be also treated as an Indian citizen under the first/main condition. PIO are the ones, any of his Grandparents or parents born in undivided India i.e. before 1947.
Residential status is the main indicator of Income Tax liability in India for an Non Resident Indian. For a resident, their worldwide income is taxable in India. For NRI’s, income received or earned within India is taxable income.
E.g of Income earned and are chargeable income in India:
- Salary received in India
- Salary for service provided in India
- Income from an Indian house property
- Capital gains on transfer of Indian assets
- Income from Fixed Deposits
- Interest on savings bank account
Income that is received/earned outside India is not taxable revenue in India. If you earned any kind of interest on an NRE account and FCNR account is not taxable in India. But interest earned/received on NRO Bank account is taxable in India for an NRI.
Filing income tax return in India
Any NRI who receive more than INR 2, 50,000 in a FY is liable to electronically file income tax return in India.
NRI’s need to electronically file income tax returns (ITR) for the following reasons:
- To claim a refund
- To carry forward a loss
- The only income earned from selling an asset in a financial year where TDS has been deducted is not required to e-file income tax return for that year.
The last date of filing Income Tax Return in India for NRI’s is 31st July.
NRI’s with tax liability above Rs 10,000 in a FY are required to pay advance tax in India. If advance tax payments are missed in a FY than interest need to be paid for that as stated under Section 234B and Section 234C.
DEDUCTIONS AND EXEMPTIONS FOR NRI’S
DEDUCTIONS UNDER SECTION 80C:
Most of the deductions in Section 80 are also available to NRIs. For FY 2019-20, a maximum deduction of up to Rs 1.5lakh is allowed under Section 80C from gross total income for an individual. Those allowed to NRI’S are as follows:
- Insurance premium payment: The policy must be in the NRI’s name or in the name of their spouse or any child’s name (child may be dependent/independent, minor/major, or married/unmarried). The premium must be less than 10% of sum assured.
- Children’s tuition fee payment: Tuition fees paid to any school, college, university or other educational institution situated within India for the purpose of full-time education of any two children (including payments for play school, pre-nursery and nursery).
- Principal repayments on loan for the purchase of a house property: Deduction is allowable for repayment of loan taken for buying or constructing residential house property. Also allowed for registration fees, stamp duty and other expenses for resolution of transfer of such property to the NRI.
- Unit-linked insurance plan (ULIPS): ULIPS is sold with life insurance cover for deduction under Section 80C. Comprises contribution to unit-linked insurance plan of mutual fund.
- Investments in ELSS: ELSS has been the most preferred option in recent years as it allows you to claim a deduction under Section 80C up to Rs 1.5l akh it offers the EEE (Exmpt-Exmpt-Exmpt) advantage to taxpayers and at the same time offers an excellent opportunity to earn as these funds invest principally in the equity market in a expanded manner
OTHER DEDUCTIONS UNDER INCOME TAX LAW
- Deduction from House Property Income for NRIs
- Deduction under Section 80D
- Deduction under Section 80E
- Deduction under Section 80G
- Deduction under Section 80TTA
- Deductions not Allowed to NRIs
- Investment under RGESS (Section 80CCG)
- Deduction for the Differently-Able under Section 80DD
- Deduction for the Differently-Able under Section 80DDB
- Deduction for the Differently-Able under Section 80U
- Exemption for Property sale for an NRI
- The documents to be submitted comprise the passport to show the number of days spent outside India to meet the requirements as an NRI.
- NRI’S demat account statements for the transactions and bank account held in India.
- TDS certificates received from other parties.
It is not compulsory for an NRI to file tax returns if the total income during the applicable financial year consist only of investments income or long-term capital gains, or, both the tax has been deducted at source from that income.
Passport Size Photograph of all Directors & Shareholders
PAN Card of all Directors & Shareholders
Self-Attested ID Proof of all the Directors
(Driving License/Passport/Voter ID)
Passport Copy of Directors & Shareholders (If they have)
Residence Proof of Shareholders
Electricity Bill or Other Utility Bill for Address Proof
Rental Agreement or Sale Deed of Business Place
ASA is here to help to you with all the required tax submissions prescribed for a Non- resident in India including tax liabilities, deduction and penalties.
Our teams of experienced professionals who are a part of this industry for quite a long time are well aware of the pertaining rules and regulations and documents required for filing the returns.
We assure to provide best service possible and to work for at every hour of the day.