All NRIs (Non Resident Indians) enjoy tax-free income in India upto the Basic Exemption Limit. Beyond the Basic Exemption Limit the NRI income is taxable in India. The Basic Exemption Limit changes from year to year.
In India, taxes are to be paid according to NRI regulations. India is a member of the Double Taxation Avoidance Treaty, so you can enjoy a credit for taxes already paid in your country of residence, be exempt from paying taxes, or reduce your tax liability. All NRIs have to pay income tax on income earned in India but these rules regarding NRIs are applicable only if the income was earned in India. If you earn directly or indirectly in India, it is taxable.
An NRI is liable to pay tax under the following circumstances:
Business Transaction income
Capital Gains on Sale & Purchase of Mutual Fund, Shares & Other Investments
Sale of Land/house in India
Income from family property
Wages earned in India for services abroad
Bank Interest on Fixed Deposits
The Government of India encourages investment and foreign exchange to flow domestically.
To meet NRI tax regulations there are two main ways. When NRI earns income, first, his NRE account is credited with rental income from his property. NRE’s bank accounts are based on repatriation, so you can remit your earnings abroad at any time. All the NRIs can benefit from income tax exemption on NRE accounts. However, income from NRO accounts is taxable. Since all of these investments are made exclusively through NRE accounts, income tax exemptions will persuade you to invest more. You can invest through stocks, insurance, mutual funds, bonds, and other deposit plans. Insurance Policy are another way to benefit from tax exemption. The Income Tax Compliance for NRI is the same as for the general public. The NRI is required to file a Return of Income (ROI) if his annual income for any financial year exceeds basic exemption limit.
If you wish to take advantage of the Double Taxation Treaty, you must present proof of residency issued by the income tax authority of your country of residence. Submit this certificate of residence to NRI India bank savings account. From then on, banks apply the new TDS rate directly to savings.
In Case you wish to consult us on your NRI Income Tax Return or NRI Tax Compliance please get in touch with us at info@caskk.com or call us at our office.
