DETERMINATION OF NRI STATUS

When a assessee is not meeting the following conditions then he is considered as NRI:

1. When assessee is in India for 182 days during previous financial year.

OR

2. When assessee is in India for last 2 months in previous financial year and has stayed for 1 year in last four years.

The above conditions do not apply to Indian citizen working outside India or a member of crew of Indian Ship.

COMPUTATION OF INCOME

Computation of Total Income of Mr. X

1. Income From Salary xxxx
2. Income From House Property xxxx
3. Income From Profits or Gains
From Business or Profession xxxx
4. Income From Other sources xxxx
5. Income From Capital Gain xxxx
6. Gross Total Income[1+2+3+4+5] xxxx
7. Less: Deduction Under Chapter VIA xxxx

 

Total Income [6-7] xxxx

Sources Of Income

File ITR 1 For NRIs having Income From Salary

Documents For Filing ITR 1

1. PAN Card

2. Form 16 Received By Employer

3. Bank Account Details [Copy Of Cancelled Cheque]

4. User ID and Password of Income Tax Website [www.incometaxindiaefiling.gov.in]. You don’t have it? Don’t worry we’ll assist you for same.

INCOME FROM BUSINESS OR PROFESSION

Profit or gains earned by NRI shall be taxable in India and tax slab rates are applicable on the same income.

INCOME FROM HOUSE PROPERTY

Income from house property arises when property of NRI is situated in India. In general parity house property arises in the following two cases

House is not given on rent

A deduction of 30% is allowed along with benefit of housing loan and property tax is given from the income of house property.

INCOME FROM OTHER SOURCES

Interest Income of NRI from saving bank interest, fixed deposits, time deposits earned from bank accounts maintained in India are taxable.

Please note interest on NRE account is tax-free but interest on NRO account is fully taxable.

INCOME FROM CAPITAL GAIN

Where a capital asset [house property, shares, investments, debentures, etc.] is held by NRI in India shall be taxable in India.

However, following assets are not included in the income of a NRI under capital gains:

1. Shares held by NRI in a public or private company in India.

2. Debentures issued by public and listed company.

3. Securities issued by Central Government.

4. Deposits with banks and public companies.

5. Other assets notified in official gazette.

For the above assets, tax rate shall be 20%.

DEDUCTIONS AND EXEMPTION FROM GROSS TOTAL INCOME OF NRI

SECTION 80C

Maximum deduction of Rs. 1,50,000 is allowed on Gross Total Income. Deduction is like benefit given in Indian Tax Laws which will reduce the burden of tax.  Invest in following assets/securities to claim benefit under this section:

1. Principal repayment of housing loan

2. Tuition Fees of maximum two children

3. Premium on Life Insurance Policies

4. Investment in ELSS

5. Term deposit of not less than five years.

SECTION 80D

Deduction in respect of health/medical premium paid. Maximum deduction allowed is Rs. 25,000 in case of self, spouse and children (dependent) and Rs. 30,000 in case of senior citizen.

Additional benefit of Rs. 5,000 shall be given if amount is paid towards preventive health scheme. Rs. 5,000 is extra benefit in addition to Rs. 25,000 and 30,000 as the case may be.

SECTION 80E

This section is dedicated to provide deduction where NRI has taken education loan. The deduction allowed shall be the interest paid on education loan taken and the deduction shall be allowed for maximum of 8 financial years.

SECTION 80TTA

The relief of this section is also extended to NRI’s where a total deduction of Rs. 10,000 is allowed on the interest earned from saving bank accounts maintained by NRI.

SECTION 80G

Deduction under this section is allowed when NRI has given donations to various funds. It is advised to keep in record receipt of donations.

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Location: Delhi, New Delhi, IN
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3 responses to “Taxation Of Non-Resident Indians [NRI]”

  1. CA PANKAJ GOEL says:

    Thanks for this important update. Please guide me if NRI has short term capital gain income in india in FY 2017-18 and TDS has been deducted on that gain, then whether NRI can get refund this TDS or not. What ITR should he filed in that case for AY 2018-19

    • Manpreet04 says:

      Sir please share the type of asset.
      There are some specified assets on which if TDs is deducted then filing of itr is not mandatory.

      • CA PANKAJ GOEL says:

        My client (NRI) has short term capital gain on transfer of Equity shares in india in indian currency. STT has been deducted on that STCG. He has other interest income in his NRO account after deducting TDS on interest.

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