NRI Tax in India

Can you tell me in detail about the Taxable incomes for NRI (Non Residential Indian) in India? Also tell me about NRI Tax exemption in India?

[Shaleen]

Paying a percentage of earning as taxes to India contributes towards its functioning and development. Income Tax is levied on all sources of income other than agricultural income in India.

Income taxes are applicable on all the resident citizens who earn their income in India. If you are an NRI (Non Residential Indian), you are only liable to pay taxes for the income that is earned in India. Thus the Income tax rules for the NRIs differ from that of the resident citizens.

Taxable incomes for NRIs include:

Salary:
Income earned from your salary in India or income received on one’s behalf is taxable.

Property and Assets:
Any income or capital gain that generate from the sale/ rent or lease of a valued property or an asset based in India is taxed as per the Income Tax rules.

Securities and Investments:
Income or capital gains from long-term or short term investments are accountable to be taxed.

Non-Residential Indians are liable to pay taxes to the government on the income from salaries, assets or from investments or securities held in India. One needs to file tax returns.

Presently, as per Income Tax Act, 1961 and Foreign Exchange Management Act (FEMA), one qualifies to pay taxes in case you fulfill either of the following conditions:

1. The taxable income in India during a particular financial year is more than the exemption limit of Rs 2 lakh.
2. One has earned short-term or long term capital gains from sale of any investment or property, even if the gains are less than the exemption limit.

NRI Tax Exemption:

NRIs are taxed as per the tax rate and slabs prescribed for resident Indians below 60 years irrespective of whether one is a senior citizen or not.

All NRIs are required to pay taxes in order to avail credit of TDS. As far as Tax Returns are concerned, NRIs cannot file for tax returns under the following circumstances:

• If taxable income consists of only investment income or long term capital gains.
• When the tax has already been deducted at source, on such income.