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Income Tax

Income Tax for NRI – Deductions and Exemptions for NRIs

Diksha Garg 4 years ago 3 min read

Taxes collected from the residential individuals by any authority serve as a backbone for that country’s economy. Similarly, in India, the government solely depends upon the revenues generated by taxes. In the Indian Constitution, there is a distinct section for Income Tax for NRI. The income tax Act of 1961 holds upon those who are receiving income from outside of the boundaries of the domestic country. The income tax regulations applicable to them are entirely different from other residential individuals.

In the following article, we are evaluating Income tax For NRIs with precise and reliable details.

How do I determine my residential Status?

For any accounting year, you will be considered as an Indian citizen if you upheld the following eligibility.

If you are staying in India for the six months of the accounting year.
II) If you have lived for an entire year in the last four years. To all those who are working as an Indian citizen in the foreign or who are fellows of the Indian ship battalion, just the first facet applies to you. This exhibits that you become a resident when you expend only 182 days within the boundary of India. Similar applies to PIO (Person of Indian Origin) who is on tour to India.

Anyone who doesn’t meet the above-mentioned criteria will be considered as NRI. For the financial year of 2019-2020 if somebody has arrived in India as a tourist before the 22nd of March and was incapable of leaving because of nationwide lockdown, then from 22nd to 31stof March the time will not be contemplated.

Is my income earned abroad taxable?

Any non-residential individual’s income tax in India solely relies on his staying status during an accounting year. If somebody’s residential status is ‘resident’ then his income earned within boundaries is taxable in India. Anybody who’s status is NRI and is procuring revenues in India will be also taxable. Any revenues one gains from real property, FD’s, Savings, and interests will be taxable for all NRI’s. The receipts earned from abroad are not taxable. For example, one earns interest on an NRE account and FCNR doesn’t require paying taxes in India. However, interests that one earns from an NRO account are taxable in India for all NRI’s.

Am I required to file my income tax return in India?

Whether NRI or residential, anybody whose earnings surpass Rs 250000 requires to report an income tax retrieval in India.

When is the last date to file an income tax return in India?

The 31st of July is the final date.

Do NRIs have to pay advance tax?

Anybody whose tax liabilities surpass Rs 10000 in an accounting year must pay the advance tax.

Taxable income for NRI

Anyone who got a salary in India is required to pay taxes on it. It means if your residential status is NRI and you have your salary in an Indian account then it is taxable.

You will be taxed on the revenues generated by the following assets.

Income from your salary
Receipts from real property
Rental receipts
Income from miscellaneous sources
Income from capital gains

What are the investments that qualify for special treatment?

The following investments qualify for special treatments

Stocks in PSU or private companies
Debentures
Deposits
Bonds and securities

Deductions and Exemptions for NRIs

Like other residential individuals NRIs can also claim several deductions and exemptions which are discussed below.

Deductions under Section 80C:- One can enjoy the utmost reduction up to 1.5 lakhs under this section.
Of the Section 80c deductions, the following are permitted to NRI’s

Life Insurance recompense payments
Children’s educational fee
On the loans acquired for house building of purchasing
ULIPS
Undertakings in ELSS

How can NRI’s Avoid Double Taxation?

Any NRI can avert double taxation by seeking relaxation from DTAA. Usually, there are two means to contend with the tax condition. One is the exemption method and the second is the credit method. You can check and evaluate both methods.