Tax Deductions for Non Resident Indians

Tax Deductions for Non Resident Indians

Non-Resident Indian(NRI) is a person who is not a resident in India during a previous year. But is there any tax liability on them, yes Non-Resident Indian's(NRI)  are liable to tax for incomes arising in India as per the Income Tax Act.

Not only Non-Resident Indian(NRI) income of India is taxable but certain Tax Deductions for Non-Resident Indians (NRI) are also available. Income Tax Return to filed by Non-Resident Indian (NRI) only if income exceeds basic exemption limit. If NRI income in India through aspects like capital gains from investments in shares, mutual funds, property rental and term deposits exceed the basic exemption limit as defined in the Income Tax Act, Non-Resident Indian(NRI) would have to file a tax return.

Most of the income of Non-Resident Indian(NRI) gets subjected to a heavy Tax deducted at source(TDS) and that often leads to Non-Resident Indian(NRI) paying more tax than they are normally liable for. Thus, knowing the applicable deductions and exemptions that can be availed is important.

Available Tax Deductions for Non-Resident Indian(NRI) are as follows:

      • Life insurance premium payment.
      • Tuition fee payment.
      • Principal payment on loan for purchase of house property.
      • Investment in Unit Linked Investment Plans(ULIP).
      • Deduction from House Property Income.

      Premiums of health insurance of the immediate family and dependents.
      Up to a maximum of INR 5000 for preventive health check-ups.

      Deduction of interest paid on an education loan for the higher education of self, spouse, children or a dependent student subject to the earlier of a period of 8 years or till the interest is paid.

      Donations as per Section 80G.

      Maximum of INR 10,000 on interest from savings bank account.
Long term capital gains from property held for 36 months or more can be invested in another property and the amount used in the transaction will be exempted for coming financial year it will be 24 months.
Similar to resident Indian, Non-Resident Indian(NRI) can also claim tax deductions on life insurance premium, Fixed Deposits(FD), and pension schemes. Personal tax return for FY 2016-17 has to be filed before September 30th, 2017. The due date is July 31st, 2017 for other individual taxpayers whose income is from monthly salary, rent, Fixed Deposits(FD) Interest, capital gains from property sale or mutual funds.

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