The income tax regulations that apply to non-resident Indians differ from the laws and rules that apply to resident Indians. Non-resident Indians are required to pay taxes on all income and capital gains earned in India. The income tax for NRI differs from that for resident Indians. It is crucial to know that NRIs are required to pay taxes on capital gains or income earned in India.
There are two parts to when an individual is considered an Indian resident.
NRIs must pay tax on income earned or derived in India. NRIs must also pay tax on income perceived to accrue or originate in India. In India, money received or presumed to be received is taxed.
However, filing returns is required for both of the aforementioned. The gross revenue is unimportant. NRIs can also claim a tax deduction of up to Rs 1.5 lakhs under Section 80c of the Income Tax Act according to the NRI income tax slab rates. They cannot, however, invest in some securities, such as the Public Provident Fund (PFF). You must disclose your assets and liabilities in India if your income in India exceeds Rs 50 lakhs.
According to the Foreign Exchange Management Act and the Income Tax Act of 1961, a non-resident Indian (NRI) can pay taxes under the following conditions:
In India, taxable income in a fiscal year exceeds Rs.2 lakh (exemption limit)
Capital gains are made through the sale of any property, whether long-term or short-term.
The table below contains information about NRIs’ taxable income.
The income from a house is taxed at the current rates. In India, capital gains produced through the rent, sale, or lease of an asset are taxed under income tax laws. An NRI can claim a 30% discount on his or her house loan in India. An NRI can also claim a deduction for principal repayment, registration fees, and stamp duty under Section 80C. If a renter pays rent to his owner, who is an NRI, the former might deduct 30% and file Form 15CA.
Any money earned in India, or even received on behalf of an NRI, is subject to taxation. In other words, if an NRI earns a wage for services rendered in India, it is subject to taxation.
Short-term and long-term capital gains and income from securities are taxed. Gains on shares held in India are taxed. In India, capital gains on the transfer of an asset are taxed.
The interest income earned on savings bank accounts and fixed deposits maintained by an NRI in India is taxed.
NRIs are eligible for a tax break on investment income. If an NRI invests in assets in India, he gets taxed at a rate of 20%. Nonetheless, if TDS has been deducted from the invested income, he or she does not need to submit returns. The following investments are eligible for preferential treatment:
Tuition payments for youngsters Ulips
Payment of a life insurance policy premium
Principal repayments on a house loan under ELSS
Q1. What is ITR form for NRI?
NRIs often submit their taxes using ITR-2. Any modifications will be revealed only once the Central Board of Direct Taxes (CBDT) publishes all tax filing forms. You can declare both of your properties while submitting your ITR.
Q2. Do I need to file my Income Tax Return in India?
Any individual whose income is above Rs.2,50,000, whether an NRI or not, is required to submit an income tax return in India.
Q3. Should an NRI pay advance tax?
If your tax due in a fiscal year exceeds Rs 10,000, you must pay advance tax. When you fail to pay your advance tax, you will be charged interest under Sections 234B and 234C.
Q4. Is my income from business taxable?
Any money made by an NRI from a business controlled or established in India is taxed.
Q5. When do I not need to file an income tax return?
When an NRI invests in certain Indian assets, he is subject to a 20% tax. If the NRI’s sole income during the fiscal year is the special investment income, and TDS has been deducted from it, the NRI is not obliged to file an income tax return.