Taxable Income for NRI in INDIA

Taxable Income for NRI in INDIA

Who is a Non-Resident Indian (NRI) under Income tax Act?

You are considered an Indian resident for a financial year:

  • when you are in India for at least 6 months (182 days to be exact) during the financial year.                                                                                 (OR)
  • You are in India for 2 months (60 days) for the year in the previous year and have lived for one whole year (365 days) in the last four years.

An Non-Resident Indian's (NRI) income taxes in India will depend upon his residential status for the year. If your status is 'resident', your global income is taxable in India. If your status is 'Non-Resident Indian (NRI) your income which is earned or accrued in India is taxable in India.

Income from salary:

Salary income is taxable when you receive salary in India or someone does on behalf.Therefore, if an Non-Resident Indian(NRI) receive salary directly to an Indian account it will be subject to Indian tax laws. This income is taxed at the slab rate one belongs to.

Income from Salary will be considered to arise in India if services are rendered in India. One is Non-Resident Indian(NRI), but if salary is paid towards services provided by in India, it shall be taxed in India.

Employer is Government of India and is a citizen of India, Income from salary of service is rendered outside India is also taxed in India. Note that income of Diplomats, Ambassadors is exempt from tax.

Income from House Property:

Income from a property which is situated in India is taxable for an Non-Resident Indian(NRI). The calculation of such income shall be in the same manner as for a resident. This property may be rented out or lying vacant.

An Non-Resident Indian(NRI) is allowed to claim standard deduction of 30%, deduct property taxes and take benefit of a interest deduction if there is a home loan. The Non-Resident Indian(NRI) is also allowed deduction for principal repayment under Section 80C. Stamp duty and registration charges paid on purchase of a property can also be claimed under Section 80C. Income from House Property is taxed at slab rates applicable.

Rental payments to an NRI:

A tenant who pays rent to an Non-Resident Indian(NRI) owner must remember to deduct Tax Deducted at Source(TDS). The income can be received to an account in India or the Non-Resident Indian(NRI) account in the country he is currently residing.A person making a remittance (a payment) to a Non Resident has to submit Form 15CA.

Income from Capital Gains:Any capital gain on transfer of capital asset which is situated in India shall be taxable in India. Capital Gains on investments in India in shares, securities shall also be taxable in India.If you sell a house property and have a long-term capital gain, the buyer shall deduct Tax Deducted at Source(TDS) at 20%. However, you are allowed to claim capital gains exemption by investing in a house property as per Section 54 or investing in Capital Gains Bonds as per Section 54EC.

Income from other sources:Interest income from fixed deposits and savings accounts held in Indian bank accounts is taxable in India. Interest on Non-Resident External(NRE) and Foreign Currency Non-Resident (FCNR) account is tax free. Interest on Non-Resident Ordinary(NRO) account is fully taxable.

Income from business and profession:Any income earned by an Non-Resident Indian(NRI) from a business controlled or set up in India is taxable to the Non-Resident Indian(NRI).

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