A Complete Guide to NRI Taxation in India

by Abhinav K. Digital Marketing Expert, Freelance

A foundation of any economy lies in the tax collected from the citizens of the country.

Non Resident Indians or NRIs as they are popularly called are major contributor of taxes in India. In this write up we will try to understand NRI Taxation in India in brief.

NRI Taxation laws fall on those people who earns outside the country and it is to be noted that their perks and rules are quite different compared to the people living and earning in India.

Who are considered to be a NRI?

A person is considered to be a Non-Resident Indian when they fall under any of the below mentioned categories,

The person needs to be in India for 182 days or more during a financial year
Or
If the person has been in India for 365 days in the preceding 4 years and for at least 60 days in the present year.

Further, an Indian citizen whose Indian income exceeds Rs 15 lac during the previous year shall be deemed to be resident in India in that previous year, if He is not liable to tax in any other country or territory by reason of his domicile or residence or any other criteria of similar nature.

Why determining residential status is important?

In case Non Resident becomes Resident, he would be liable to his Foreign Income Taxable in India. This is because in case of Residents, His global income becomes taxable in India.

However, He would be eligible to get tax credit of doubly taxed income in home country as well as source country. This is an important aspect of NRI Taxation in India.

Therefore, NRIs would be taxed according to the NRI Taxation system prevalent in India.

Is all NRI income taxable?

Not all incomes of NRIs are taxable in India. Only income earned in India through source in India is taxable in India.

Some components of NRIs income however are taxable in India and they are listed below:

Salary received in India
Salary received for providing services in India
Income from selling any Indian property
Capital gains in India
Transfer of asserts that is situated in India
Fixed deposit income
Interest earnings from savings account

Under what situation NRI income is taxable?

NRI Tax in India would be applicable in case his income from India exceeds maximum amount not chargeable to tax i.e Rs 2,50,000. Also, in case His tax liability is more than Rs 10,000, He would also be liable to pay advance tax in India. Also, he needs to file his tax return in India on or before due date i.e 31^st July every year.

How to file the returns?

Tax laws in India are complicated. Also, in case of NRIs whose foreign income taxable in India, expert knowledge of DTAA is required in order to provide treaty benefits. Therefore, it is advisable that NRIs should get some professional help from CA or tax consultants in order to file their tax returns in India. They would guide you throughout the process and would also advice you the best ways to get all the NRI Taxation benefits.

Ezybiz India is one such Tax and Business Advisory firm wherein you would get experienced CAs that would guide you through the process completely at the most affordable prices. They would also advice on the Treaty benefits and other tax planning to minimize your tax liability.