NRI Taxation in India – A Complete Guide

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NRI Taxation in India: An NRI’s income taxes in India will depend upon his residential status for the year as per the income tax rules mentioned above. If your status is resident your global income is taxable in India. If your status is ‘NRI,’ your income earned or accrued in India is taxable in India.

NRI Incomes liable to tax in India:

Capital gains income: Capital assets like house property, shares and securities, gold etc. which are of Indian origin, shall be taxable in India. If an NRI transfers any capital asset situated in India, he shall be liable to pay capital gain tax.

Salary Income: Income from salary received in India or income for services rendered in India shall be subject to Indian tax laws.

House property income: Rental income from the house located in India is taxable for an NRI owner of the house property. The determination of the taxable house property income shall be in similar lines as the resident.

Income from Other Sources: Other sources income like interest received in saving account and fixed deposits held in Indian banks shall be taxable in the hands of NRI. Interest on NRE and FCNR account is not liable for tax in India.

Income from business & profession: Any income earned by a Non-resident Indian from a business set up or controlled in India will be consider income accrued and therefore taxable in India.

Double taxation relief (DTAA)

In case NRI income is taxed in both the countries, India and the country of residence, tax relief from a DTAA (Double Tax Avoidance Agreement) between the two countries can be sought.

How to determine NRI status?

Till the end of FY 2019-20 (i.e. financial year ended March 31, 2020), NRIs (covers Indian citizens and Persons of Indian Origin) included those individuals who being outside India visit India for less than 182 days in a financial year.

The Finance Act 2020 reduced this period to 120 days in cases where the total taxable Indian income (i.e., income accruing in India) of such visiting individuals during the financial year is more than Rs 15 lakhs. Accordingly, visiting NRIs whose total income whose total income (which is defined as taxable income) in India is up to Rs 15 lakhs during the financial year will continue to remain NRIs if the stay does not exceed 181 days, as was the case earlier.

If NRIs have taxable income in India than it is mandatory to file within in the due date. NRI Income tax return must be file on or before 31st July following the financial year by an individual.

The due date is consider as September 30 if the NRI is a working partner of a firm whose accounts are necessary to be audit. However, if the taxpayer has missed the due date, the taxpayer can file a belated return.

For more information reach out to CA Neetu Jain or mail at taxpert.neetu@gmail.com

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Author CA Neetu Jain

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