Income Tax proposition for NRIs in india

Income Tax proposition for NRIs in india

How is Residential Status determined?

The following conditions are followed when residential status is determined for a financial year:When an individual is an Indian citizen, who is working abroad or is an associate of a troop on an Indian ship, from the above-mentioned conditions, only the first condition is applicable to them. This condition is also applicable to a Person of Indian Origin or PIO, who is paying a visit to India. However, the second specification is not valid for these individuals . A PIO can be also referred to an individual whose parents or any of whose grandparents were born in undivided India. In order to qualify as an NRI, one is required to fulfill any of these conditions.

1. In case an individual resides in India for a minimum duration of 6 months i.e., 182 days during the financial year.
2. In case an individual resides in India for 2 months i.e., 60 days in the preceding year. In addition, he or she must have lived in the country for an entire year i.e., 365 days in the previous four years.

Is the income earned abroad taxable?

In India, if the income earned by an NRI is taxable depends upon the residential status of the individual for the year. In India, when an individual’s status is ‘resident,’ the global income is taxable. When the status is ‘NRI,’ then the income earned or accumulated by an individual in India is taxable. In the case of salary received in India or the salary acquired for providing any service in India, the capital profits on relocation of asset positioned in India, profits from fixed deposits or interest on savings bank account, the income gained from a house property positioned in India, are all instances of revenue received or ensued in India. The above-mentioned incomes are taxable for NRIs. Such income is not taxable in India, which is earned outside India. The Interest received on an NRE account and FCNR account is not taxable. However, for an NRI interest on NRO account is taxable.

Who is required to file Income Tax Return in India?

Any individual, irrespective of their residential status, whose income surpasses Rs.2,50,000 for the Financial Year, which ended on 31st March 2015 or Rs.2,00,000 for the Financial Year, which ended on 31st March 2014 is required to file an income tax return in India. An NRI may file their returns when he or she desires the following: In order to claim a refund, one has to file an income tax return for the specific financial year. When an individual earns only by selling an asset by means of capital gains in a financial year and TDS has been further deducted on that, thereafter an individual is not required to file the income tax return for that existing year.

1. Desires to apply for a refund.
2. Desires to carry forward after a loss.

Taxable Income of an NRI

• -Income acquired from Salary

The income acquired from salary is taxable when an individual receives the salary in India or another individual receives it on his or her behalf. Therefore, NRIs who receive their salary openly to an Indian account are required to follow the Indian tax laws. On the basis of the income earned and the slab rate, the tax rate is imposed. Income from salary is considered to be on the rise in India if the services are made available in India. When an individual’s employer is Government of India and the person is a resident of India, then the income from salary, even when the service is provided outside India, the tax is imposed in India.

Income generated from House Property

Income generated from a possession, located in India is taxable as an NRI. The computation of such income is the same even for a resident. According to the provisions, an NRI is eligible to request a typical deduction of 30%, subtraction of the property taxes, and gain an advantage on an interest deduction in case of a home loan. The NRI is permitted a withdrawal for foremost repayment. Under Section 80C, stamp duty and registration expenses paid on the obtainment of a property can be claimed as well. Income generated from a house property is levied at slab rates as relevant.

Rental Payments to an NRI

An occupant who pays rent to an NRI owner must retain information to deduct TDS at 30%. The income can be directed to an account in India or the NRI’s account in the nation the individual resides in. When a remittance is made to a Non-Resident Indian by an individual, then Form 15CA has to be submitted online Under certain circumstances, a certificate is acquired from a Chartered Accountant, enclosed with Form 15CB when uploaded online. A Chartered Accountant certifies details of the payment on Form 15CB. This will include TDS rate as well as TDS deduction as per Section 195 of the Income Tax Act. Form 15CB is not mandatory in the following cases:-

1. Payment shall not go beyond Rs 50,000 during a solo transaction. In addition, the payment shall not exceed Rs 2, 50,000 in a financial year. In such cases, only Form 15CA has to be submitted.
2. As mentioned in Section 197, in order to deduct lesser TDS, a certificate is issued by the AO.
3. However, neither of the above mentioned is necessary, if the transaction falls under Rule 37BB of the Income Tax Act.

Interest on Income from Other Sources may include the following:-

1. Income generated from fixed deposits and savings accounts held in Indian bank accounts.
2. Interest on income from NRO account is fully taxable.
3. Income generated from Business and Profession.
4. Income generated from Capital Gains.
5. Special Provision Related to Investment Income.

In conclusion, ‘Income Tax propositions for NRI’ can be informative for Indian citizens as well as citizens living abroad. A thorough reading will help individuals understand the Income Tax System in India.