NRI Taxation

NRI Taxation Starting from ₹ 4000/-

Introduction

Many citizens from India have settled abroad. shifting to other country does not necessarily mean Good-Bye to the Home Country India. Many NRIs have invested in India in the form of Purchase of ancestral land/property Mutual Funds, Shares, Securities, Life Insurance Policies, Unit Linked Insurance Plans (ULIPs), FCNR Fixed Deposit, holding of NRO & NRE Accounts etc. Thus, Non-Resident Indians may still have Incomes in India and need to get PAN card & accordingly file Income Tax Return in India. Non filing of Income Tax Return in India may bring penal consequences in the form of Interest, late fees, penalties, prosecution & attachment of Invested Assets.

Legal Window will provide you all the necessary services and legal advice related Return filling and also guide for other compliances related NRI. You may get in touch with our team on 072407-51000 or email admin@legalwindow.in for all NRI related compliance.

Advantage of NRI Taxation

Easy loan processing

Income Tax return filling helps NRI like Indian resident in taking loan from various Financial Institutions. NRI can use income tax return as an evidence of good wealth and income.

Allow carry forward losses

Income Tax return filling helps in carry forward the losses occured in previous year from the current year Income. Most businesses face losses in the initial years of the business. The business loss or capital losses can be carried forward for upto 8 years, if the ITR is filed. But if ITR is not filed, the taxpayer is deprived of this benefit.

TDS Refund

If the income of NRI is less than the maximum amount not chargeable to tax then NRI can claim the TDS refund which was deducted on his Indian income


Documents For Filing ITR 1

PAN Card

Aadhaar Card, if any

Passport Details

Form 16 Received By Employer

Bank Account Details [Copy of Cancelled Cheque]

User ID and Password of Income Tax Website ( if you don’t have then we will make it for you )

Procedure

1. Complete the Questionnaire
We will provide a questionnaire which is required to be filled by you in which we will sought the basic details and documents pertaining to the Filing of ITR of NRI.

2. Review of the documents
All the documents provided to us and the questionnaire will help us to process further for preparation of return of NRI


3. Filing of Income Tax Return
We will file further send you the computation for your review and will file your income tax return before the due date and protect you from any penalty

4. Acknowledgement
We will further inform you after filling your Income Tax Return and also provide you the return form and computation.


Our Package Includes

Assessment of foreign and domestic income

Complete advice

Treatment with tax notices

Additional Information

Income from Salary

Income from salary will be considered to arise in India if you are an employee and render services in India. So even though you may be an NRI, but if you are earning salary in India towards services provided by you in India, it shall be taxed in India immaterial of where you are receiving the income. In case your employer is Government of India and you are the citizen of India, the income from salary, will be taxable even if you rendered services outside the India is also charge to taxable in India.

Rental Payments to an NRI

A tenant who pays rent to an NRI owner must remember to deduct TDS at rate of 30%. The rental income can be received to an account in India or the NRI’s account in the country he is currently residing. If amount is to be sent out of India then tenant must fill-in Form 15CA and submit it online to the income tax department.

Special Provision Related to Investment Income

When an NRI invests in certain Indian assets, he is taxed at the rate of 20%. If the special investment income is the only income that NRI has received during the financial year, and TDS has been deducted on such amount, then there is no need to file an income tax return by the NRI.

Income from Business and Profession

Any income earned by an NRI from a business or profession controlled or set up in India is taxable in India to the NRI.

Income from House Property

Income from a property which is situated in India is taxable for an NRI as per Indian taxability provision. The calculation of such income shall be in the same manner as for a resident of India. The property may be rented out or lying vacant. An NRI is allowed to claim a standard deduction of 30%, deduct property taxes, and takes benefit of an interest deduction if there is a home loan taken by the NRI. The NRI is also allowed a standard deduction for principal repayment under Section 80C of the Act. Further deduction can also be claimed for Stamp duty and registration charges paid on the purchase of a property under Section 80C. Income from house property is taxed at slab rates as per the applicable provisions. Taxability provision for an NRI is in same way as of resident of India.

Income from Capital Gains

Capital gain on transfer or sale of capital asset which is situated in India shall be taxable in India. Capital gains on any investments made in India in shares, securities shall also be taxable in India. If you sell a house property and have a long-term capital gain, then the buyer of such asset has to deduct TDS at rate of 20%. However, you are allowed to claim capital gains exemption by investing in a house property as per Section 54 or investing in capital gain bonds as per Section 54EC.

Income from Other Sources

Interest income from fixed deposits and savings accounts held in Indian bank by the NRI accounts is taxable in India. Interest on NRE and FCNR account is tax-free but interest on NRO account is fully taxable.

Opening an NRI Bank Account?

The Difference Between NRE and NRO Accounts

NRIs (Non-Resident Indians) who have any income earned in India and abroad may benefit from having two different types of bank accounts in India

  • NRE (Non-Resident External) account
  • NRO (Non-Resident Ordinary) account

 Both NRE and NRO account may be opened in the form of current, savings recurring, or fixed deposit accounts, and depending on your banking needs, one or both may help you more easily manage both foreign and Indian-earned incomes.

What is an NRE Account?

The NRE account is an Indian Rupee denominated account, from which money is freely repatriable outside India. The income is deemed to be earned outside India. You cannot deposit Indian Rupees into this account, only foreign currency can be deposited which will be converted into Indian Rupee at the time of deposit. The interest earned on the balances is free from any income tax.

What is an NRO Account?

An NRO account is a savings or current account opened in India by the NRIs to manage income earned in India such as rent, dividends, or pension. Foreign currency if any deposited into the NRO account is converted into Indian Rupees. Any NRI can open an NRO account. NRIs may also convert their existing resident savings account into an NRO account in case their status changes from resident to non-resident.

FAQs on NRI Taxation

Do NRIs Have to Pay Advance Tax?

If your tax liability exceeds Rs 10,000 in a financial year, you are required to pay advance tax. If you don’t pay your advance tax interest under Section 234B and Section 234C is applicable.

Should NRI file ITR?

NRI is not required to file Income tax return in India if he has no income arising in India. ITR filing is required by NRI if person has earning taxable income in India exceeding the basic exemption limit in India.

Is it mandatory to file Income Tax Return for NRI?

NRI with gross total income exceeding Rs 2,50,000/-, has to file the respective Income Tax Return.

Do I need to file tax in India if I work overseas?

If you are working in a country that has a tax treaty (DTAA) with Indian government, then you will definitely get benefit on Tax liability. If your status is resident then income you earn abroad will be taxable in India. However, if your residential status is NRI, then the income earned or accrued in India by you is only chargeable to tax in India.

On what rate investment income is taxable for NRI?

When an NRI invests in certain Indian assets, he is taxed at 20%. If the special investment income is the only income the NRI earns during the financial year, and TDS has been deducted on the same, then such an NRI is not required to file an income tax return.

An NRI has Capital Gain income accrued or arisen in India. Also has some other income accrued or arisen outside India. For the purpose of Income Tax, should the person include both incomes in Total Income or only the Capital Gain accrued in India? 

Only income related to accrued or arisen in India, comes under taxable in India for NRI tax payer.

How can I get PAN (Permanent Account Number) card in India?

A non-resident Indian (‘NRI’) can apply for PAN Card by submitting the relevant form and requisite documents and prescribed fees at the PAN application center of UTIITSL or NSDL. One can also make an online application through the website of UTIITSL or NSDL.

What are tax implications on the Interest Income from the Bank?

Interest received on FCNR Deposits Account --- Exempt from Tax u/s. 10(15) (iv)(fa)
Interest received on NRE account -- Exempt from Tax u/s. 10(4)(ii)
Interest received on NRO account -- Taxable in India

Which ITR form is filed for income from rental property for NRI?

NRIs can use ITR-2 form to report rental income earned from Indian property

Can an NRI file ITR 1?

NRI cannot file return of income in Form ITR-1. If an NRI is earning income from business or profession then return is required to be filed in Form ITR-3. And in all other cases, ITR-2 required to file.

What are the criteria for NRI status?

‘Non-resident Indian’ is an individual who is a citizen of India or a person of Indian origin and who is not a resident of India. An NRI status resident can be attained by staying overseas for more than 182 days. A person is said to a resident if he has been in India for more than 60 days in the year in India and 365 days during the four years prior to that year.

Can NRI claim TDS refund?

Yes, if you are an NRI, and your tax liability is less than the TDS deducted from your income, you can file an income tax return to claim a refund.

What penalty do NRI has to bear for non filling of ITR?

Provision applicable for non filling ITR for NRI are same as for resident person i.e. if belated ITR filled on or before December 31, the fine is Rs 5,000, while for filing ITR after 31 December, then the late fee amount doubles.

NRI returns to India and closes NRE Accounts, , is he required to report and pay Taxes on Interest earned from NRE Acc FD/Savings.?

You are considered an Indian resident for a financial year. When you are in India for at least 6 months (182 days to be exact) during the financial year., Your residential status would be Indian resident. When you become a Resident – interest earned on NRE accounts shall be taxable for you.  The income is taxable under head income from other sources.

What are the Documents to be enclosed along with PAN application Form?

NRI is required to submit the copy of passport (along with PAN application Form) as proof of identity.
NRI is also required to submit any of the following documents (along with PAN application Form) as proof of address:
a) Copy of passport /OCI Card (with address mentioned); or
b) Copy of the bank account statement in the country of residence; or
c) Copy of NRE bank account statement (showing at least two transactions in last six months period and duly attested by Indian Embassy / Consular office / high commission or Apostille or by the manager of the bank in which the account is held. The applicant may be a joint holder).
d) Copy of Aadhar Card of Relative (if you want to get the PAN card delivered at your relative’s address in India)

What if I don’t file my Income Tax Return in India?

Income Tax Department will issue Notice to furnish Income Tax Return along with all the details. Then you have to reply the notice through e filing portal and after cross verifying all the required details by the income tax department, you would be required to pay additional tax, interest, penalty as may be applicable.