CMA Awadh Jaiswal
As the due date is coming closure most of the NRI is trying to reach out their tax consultants for clearing their doubts or started goggling the Tax Portals. The most common doubts are:
If you are also one of them, relax!!! DO NOT WORRY, here is an effort to clear your all doubts and help you in all the possible way. Let’s decode it one by one…
Taxability in India depends on the Tax Status of assesses and whether your tax status is of NRI or not? Can be determined by this parameter:
“If you are an Indian Citizen working abroad, your Tax Status will be of
Non Resident if you are out of India for more than 182 days in the Financial Year.”
A. For an NRI, only Income Earned in India or Accrued in India is Taxable in India, rest of the Income is exempted in India. It means Income Earned outside India by an NRI is not taxable in India.
Certain Points to remember in this regard:
B. Income from House Property situated in India/Housing Loan for Acquisition of House
Income from House Property situated in India (Rental Income) is taxable for an NRI. However Deduction u/s 24 of Income Tax Act, 1961 for Standard Deduction @ 30% and for Interest on Housing Loan and Deduction u/s 80C for Principal Repayment, Stamp Duty and Registration Charges are available to NRI, in the same way as it is available to a Resident Individual.
A. Bank Account: Basically there are three types of Account an NRI can maintain in India (Apart from his local account in his country of Residence, i.e.-Foreign country).
a) NRO (Non Resident Ordinary) Account: An NRI is supposed to close his Indian Saving Account or convert it to NRO Account and any Indian Income (Rent, Commission, Dividend etc) should be deposited into his NRO Account.
b) NRE (Non Resident External) Account: This Account is for remitting the overseas savings to India by converting the Foreign Currency into Indian Rupees.
c) FNCR (Foreign Currency Non Resident) Account: It’s a kind of Fixed Deposit Account with some lock in period that can be maintained only in Foreign Currency.
B. Demat Account: Once you become an NRI, you are supposed to close your normal Demat account and transfer (if not selling) your existing shares to NRO Demat Account. This NRO Demat account will allow you to purchase shares from the primary market only.
For, Purchasing shares from the secondary share market an NRI need to open PIS (Portfolio Investment Scheme) Account, where he/she can buy shares from his/her NRE account fund. Further upon sale, sale proceeds will be credited to NRE/NRO account respectively based on shares were purchased on repatriable / non-repatriable basis.
Basic Exemption of Rs.250,000/- (Rs.300,0000/- for Senior Citizen and Rs.500,000/- for Super Senior Citizen) and most of the deductions under chapter-VIA (like-LIC, ,Tuition Fee, Housing loan, Mediclaim, Education Loan etc) is available to an NRI, except :
As far as Filing of Income Tax Return is concerned- An NRI should mandatorily file his Income tax return if :
**So, even if Gross Earning is less than the Basic Exemption, and you have some amount of Tax Deducted at Source, it is advisable to file your income Tax Return and claim the TDS Refund. Without filing the Return, it’s not possible to get the TDS Refund.
Returning NRI will be treated as RNOR (Resident but Not Ordinary Resident) for 2 years if:
An Assessee having RNOR status is allowed to enjoy exemptions available to NRI for a period of 2 years after returning India, hence deposits held in foreign currency, which are exempt for an NRI, shall be exempt to returning NRIs for 2 years thereafter they (returning NRIs) will be treated as resident Individuals.
(Author is a “Finance Functional Consultant” with “Awal Gulf Manufacturing Company”, Manama, Kingdom of Bahrain and can be reached at “firstname.lastname@example.org”).