Income Tax Provisions For NRI
Who is an NRI?
An Indian who has spent less than 182 days in India or he is in India for less than 365 days during the 4 years preceding that year and less than 60 days in that year, He is an NRI for the purpose of income tax in India. Since you are an Indian citizen on an employment abroad, to qualify as a resident you must spend 182 days or more in India.
How an NRI income tax is taxable in india?
An NRI’s income taxes in India will depend upon your residential status for the year.
- If your status is ‘resident,’ your global income is taxable in India.
- If your status is ‘NRI,’ your income which is earned or accrued in India is taxable in India.
- Salary received in India or salary for service provided in India, income from a house property situated in India, Capital gains on transfer of asset situated in India, income from fixed deposits or interest on savings bank account are all examples of income earned or accrued in India.
- Interest on NRO account is taxable for an NRI.
These incomes are taxable for an NRI. Income which is earned outside India is not taxable in India. Interest earned on an NRE account and FCNR account is also tax-free.
When an NRI must file Income Tax returns?
NRI or not, any individual whose income exceeds Rs.3,00,000 for that financial year is required to file an income tax return in India.NRIs must file their returns when they want to claim a refund or is having a loss that they want to carry forward.
Is my income earned abroad taxable in india?
Only income which is earned or accrued in India shall be taxable in India. Income in the USA is not taxable in India since you are an NRI. Interest earned in India is taxable for an NRI. (Do note that interest on NRO account is taxable whereas interest earned on NRE account is exempt from tax).
What are the forms an NRI has to fill while filing his taxes?
An NRI has to fill the ITR-1 or ITR-2 form. If the income does not exceed Rs 5 million ITR-1 can be filled. But, If an NRI has taxable capitals gains or income from more than two house properties, he will have to file his return using ITR-2 form.
What is Double Taxation Avoidance Agreement?
In short, It is an aggrement India has signed with other countries so that an NRIs may not end up paying taxes twice.
Under the provisions of this treaty, they ensure that there is no overlapping of tax payments.
In the exemption method, a person is taxed in one country and exempted in another.
In the credit input method, you income is taxed in both countries, and the exemption is claimed in the country of your current residence.
How is Income from House Property is taxable for an NRI?
Income from a housing or a land property which is located in India is taxable for an NRI. The calculation of such income shall be in the same manner as for a resident. The property may be rented out or lying vacant. An NRI is allowed to claim a standard deduction of 30%, deduct property taxes, and take benefit of an interest deduction if there is a home loan. The NRI is also allowed a deduction for principal repayment under Section 80C. Stamp duty and registration charges paid on the purchase of a property can also be claimed under Section 80C. Income from house property is taxed at slab rates as applicable. A tenant who pays rent to an NRI owner must remember to deduct TDS at 30%. The income can be received to an account in India or the NRI’s account in the country he is currently residing.