We help you to file Income Tax Return of NRI’s

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HOW N Raghu & Co help?

  • On call and mail consultation as per your convenience
  • Income Tax Return Filing for one financial year
  • Vigilant Analysis of Indian Income with foreign Income
  • Extensive analysis to determine if the income is falling under Capital Gain Head
  • Suggestion to maximise tax refund
  • Tax Payment Assistance
  • E-verification Assistance

Who is a Non- Resident of India (NRI)?

"Non-Resident" is a person who is not ordinarily Resident in India. The residential status for a particular year decides whether the individual is Resident or Non-Resident for that particular year. Thus, the residential status of an individual needs to be determined every year for the purpose of taxability in India.

How to determine Residential Status in India?

A individual is considered as "Resident in India" for a any financial year if he/she stayed in India -

  • for a period of 182 days or more during the relevant Financial year;
    Or
  • for 60 days in the relevant financial year and for a aggregate total of 365 days in the preceding 4 years relevant to financial year.

There are few exceptions to the above condition of 60 Days i.e. only the first condition is to be checked in below situation:

  • If individual is an Indian citizen who has left India in the financial year as a crew member of an Indian ship or for the purposes of employment abroad; or
  • If individual is a Person of Indian Origin(PIO) or a citizen of India who comes on a visit to India;

Therefore, an individual is a Non-Resident if he/she do not fulfil any of the above conditions.

Do NRI’s have to pay taxes in India?

YES. After you have determined your residential status, the next step is to identify whether your income is taxable or not in India as per your residential status

For Resident Individuals: All income i.e. Global income is taxable in India irrespective of whether the same income is earned in India or outside India.

For Non-Resident Indians: Only income earned or accrued in India or deemed to accrue or earned in India is taxable in India. Therefore, your income from any country outside India is not taxable in India.

Under what conditions an NRI need to file his Income Tax Return (ITR) in India?

  • If total income earned or accrued in India exceeds the basic exemption limit of ₹ 2,50,000;
  • NRI have a refund for TDS deducted on Interest, Rent etc;
  • If NRI wants to carry forward its losses or want to set off its losses with gain

Will NRI get the benefit of basic exemption limit?

The basic exemption limit is available to a non-resident individual as well. However, if your income consists of Short Term Capital Gains [section 111A] or Long Term Capital Gains only, then such exemption is not available as they are taxed at special rates. Similarly, if your income is only from such other incomes which are taxed at special rates like Winning from lottery, then basic exemption limit will not be available.

Should NRI be present in India at the time of filing his ITR?

NRI’s are not required to be physically present to file & verify their income tax returns. E verification of income tax return can be done online from anywhere in the world. Further, there is also an option to send physically signed copy of ITR-V to the CPC Income Tax Department, Bengaluru within 120 days from the date of filing the ITR

Taxability of rental income from property situated in India for NRI?

Rental income from property situated in India is considered as income accrued and taxable in India irrespective of residential status. Thus, rental income is taxable however benefit of basic exemption limit of Rs. 2.5 lakh can be availed.

Deductions which are allowed and not allowed to NRI?

Deductions Allowed Deductions Not Allowed
Sec 80C
  • LIC premium
  • Tuition Fees
  • Principal repayment of home loans
  • Unit Linked Insurance Plan (ULIP)
  • Equity Linked Tax Saving Scheme (ELSS)
Sec 80C
  • Investment in Public Provident fund (PPF) (Not allowed opening a new PPF account. However, PPF account opened while you are a resident is allowed to be maintained.)
  • Investment in National Saving Certificate (NSC)
  • Post Office 5 year Deposit scheme
  • Senior citizen savings scheme
Sec 80D-

Medical Insurance

Sec 80CCG-

Investment in Rajiv Gandhi Equity Saving Scheme (RGESS)

Sec 80E-

Interest paid on Education loan

Sec 80DD-

Deduction for maintenance including medical treatment of dependant handicapped as defined under the section

Sec 80G-

Payments made in the form of eligible Donations

Sec 80DDB-

Deduction for medical treatment of dependant handicapped (as certified by a prescribed specialist)

Sec 80TTA-

Interest on Savings Bank Account

Sec 80U-

Deduction allowed to a taxpayer who himself suffers from disability

NRI having property in India that he/she want to sell. What will be the tax implications for same

Capital gains arising from sale of property shall be taxable in India. In case the property is two years old the long tern capital gain will happen that will be taxable at 20%. However you can reduce your tax burden by choosing various investment options available for the purpose.

NRI having investment in shares which was purchased by paying STT

Capital gain arising on sell of shares on which STT is paid is either short term or long term. The lime limit for calculating the long term capital gain is one year from the date of purchase. In case of long term capital gain – capital gain is taxable at 10%. However Long term capital gain to the extent to 1 lakh per year is exempt. Short term capital gain is taxable at special rate of 15% with no such exemption.

Indian resident taking up employment abroad. Taxability of His/her income in India.

First of all his residential status shall be determined by applying the conditions as discussed above. If he/she falls under NRI category, then only income accrue/deemed to accrue in India shall be taxable in India. If they transfer their foreign earnings to their NR account in India, it will remain non taxable.

Taxability of Income from NRE Account

Any interest earned on the deposit in an NRE account is exempt from income tax. If you are NRI & permitted to open such account, your interest income is completely tax-free. But when you become a Normal Resident again – then interest earned on NRE accounts shall be taxable in India..

1

Taxability of Income from NRO Account ?

The interest earned on any type of NRO bank account is taxable

2

Taxability of Income from FDR Interest

Interest earned on NRE fixed deposit is tax-free in India. However, Interest from FD in NRO account taxable in hands of NRI

3

Role of Double Taxation Avoidance Agreement(DTAA)

Double Taxation Avoidance Agreement is an agreement entered between two countries which aims to avoid double taxation of the same income in both countries. For claiming the DTAA benefit in India, assessee needs to present Tax Residency Certificate. Tax Residency Certificate can be obtained by the assessee from the government of the country in which he/she resides. By using DTAA, income shall be taxable in the source country only and taxpayer get the benefit from double taxation.

4

 Income tax rate for NRI

Income tax slab rate for NRIs is same as Slab rate for individuals. However, NRIs do not get slab benefit for senior and super senior citizens.