5 things which everybody should know about NRI Tax Return Filing in India

 NRI Tax Return


As we all know that in India, every year approx. 60 Million people files their Income Tax Return every year. These comprises of both Residents as well as Non Residents.

In this write up, we will try to understand 5 things which everybody should know about NRI Tax Return Filing in India

1)      Taxability of NRI depends upon his/her residential status in India. In case of NRIs, only income earned in India or received in India or deemed to accrue or arise in India is taxable. Accordingly, any income earned outside India is not taxable in India. However, in case of Residents, the things are different and his/her income earned in India as well as income earned outside Indi are taxable in India. Salary of NRI received anywhere in the world will be taxable in India only if services are also rendered in India. Therefore, residential status plays a vital role in determining taxability of NRI as well as obligation of NRI tax return filing in India.

 


2)      Interest earned by NRIs on NRE account as well as FCNR accounts are not taxable in India. However, income earned on NRO account is taxable in India. Like Residents, Non Residents also get the benefits of tax slab benefits while computing its final tax liability in India. NRIs are also liable to pay advance tax just like residents, in case their total tax liability in a year exceeds Rs. 10,000

 

3)      In case NRI makes investment in any specified assets and such income is the only income of NRI, such income will be taxed at 20%. Also, if TDS has been deducted on such income, then there is no need to file Income tax return. Investment in specified assets means income derived from following assets acquired in India in foreign currency, namely

 

a)      Shares of Indian company ( public or private)

b)      Debentures of listed Indian company

c)       Fixed deposits with banks and public corporates

d)      Investment in any securities of the Central Government

e)      Investment in any other asset of central government as many be specified

It may be noted that no further deduction will be allowed under Section 80 while making calculation of aforesaid investment income.

4)      Like Residents, Non Residents are also allowed to claim deduction u/s 80C, however, they are not allowed to make following types of investments:

 

a)      NRI cannot open new PPF account and make investment. However, they may continue the old PPF account which was opened while they were Residents in India

b)      NRI cannot make investments in National Saving Certificates i.e. NRC

c)       They cannot make investment in Senior Citizen Savings Scheme

d)      They cannot make investment in Post office 5 year deposit scheme

Above shall be kept in mind while filing NRI Tax Return in India.

 

5)      In case of returning NRIs who have recently moved back to India, their status may be Resident but not ordinary resident in case they fulfill any of the following conditions:

 

a)      They were NRI for 9 years out of 10 years preceding the year of their return in India

b)      In last 7 Financial years, their period of stay in India were 2 years or less i.e. 729 days or less

Such RNOR would not be liable to tax for next 2 years after their return. Accordingly, any deposit in NRE or FCNR account shall be exempt for next 2 years. After 2 years, NRIs will be treated as normal Residents and income from such foreign currency would become taxable in India.

Thus, we have mentioned about 5 important points which shall be kept in mind while doing NRI Tax return filing in India in order to avoid any legal hassles.

Location: India

Comments

Post a Comment

Popular posts from this blog

BUSINESS SETUP IN INDIA- Various options available for Doing Business in India

BUSINESS SETUP IN INDIA   One of the most common queries received by Indian consulting firms from global corporations nowadays is about business setup in India . Due to globalization, the companies all over the world has expanded its presence in other jurisdiction or territories from where they are either engaged in trading business or export import or providing services globally. Owing to its huge consumer market, India has also seen quite a surge in foreign company registration in India in recent years. Just like Indian companies are curious about how to setup business in foreign countries, similarly, foreign companies are also interested in business setup in India and want to know about various options available for setting up business in India. VARIOUS OPTIONS FOR BUSINESS SETUP IN INDIA Well, the type of entities for doing business in India depends upon various factors like Nature of business of the Company, Long term vision of the company and purpose of business set
Read more

OUTSOURCE ACCOUNTING SERVICE- PROS AND CONS

OUTSOURCE ACCOUNTING SERVICE One of the dilemmas faced by many businessmen is that whether to keep an in house accountant for day to day book keeping or to outsource accounting service to an external agency. There is no readymade answer to the same and it all depends upon nature of business, complexities of accounting, annual turnover of the company and other factors. Normally, during the initial stage of businesses, it makes sense to outsource accounting service instead of keeping an in house accountant merely from cost saving purpose and as the business grows, it is advisable to keep an in house accountant. In this write up, we would be discussing the pros and cons of account outsourcing instead of keeping an in-house accountant Pros of Account Outsourcing a)       Cost Saving As mentioned above, in the initial stage of business, lot of cost saving can be done by taking account outsourcing service of an external firm. This is due to the fact that keeping an in house
Read more

Filing of form 15CA and 15CB – Some practical issues

Image
  Form 15CA and 15CB  Normally, when any money is to be remitted outside India, the bankers often ask for the copies of form 15CA and 15CB which need to be filed electronically. It means that firstly the assessee need to upload form 15CA and 15CB electronically which requires e- verification through EVC mode and later copy of same need to be submitted to the banker for further processing of remittance outside India. Form 15CA and 15CB need to be filed even if all the taxes are already paid in India. Therefore, one cannot take a plea that since all the taxes are already paid, so what is the need for electronically uploading form 15CA and 15CB. For instance, often when an NRI disposed of his property in India, He need to compute capital gain tax liability, sometimes there is no capital gain tax but refund in the case of the assessee. However, while making remittance of sale proceeds, He needs to submit copy of form 15CA and 15CB. Another issue which normally arises in cases wher
Read more