Non Resident Indian (NRI) Income Tax Return
@ just Rs. 2,000/- (all inclusive)
Rules and regulations are significant for non-resident Indians (NRI) as compared to rules and regulations applicable to resident Indian income tax payers. Indian income tax is a matter of significant concern for those who live outside of India, i.e., who are non-resident Indians because they remit money to India, they receive money from India, they have investments and investment income from India.
As per income tax act, whether income taxes will be levied or not depends on the residential status of an individual. Below table briefly explains what income will be taxable or not taxable based on the residential status of an individual:
Nature of income
If the residential status is Residential Indian individual
Income earned from anywhere in the world
If residential status is Non Residential Indian
01. If income is derived from India.
02. If income is derived from house property which is situated in India.
03. Income is accruing from transfer of capital assets, i.e. immovable property, securities etc.
04. Interest income earned from term deposits, savings bank accounts etc is held in India.
05. If income is derived from a country outside India.
06. If interest income is derived from an NRE account.
01. It will be taxable in India
02. It will be taxable in India
03. It will be taxable in India
04. It will be taxable in India
05. It will NOT BE TAXABLE in India.
06. It will NOT BE TAXABLE in India.
Income Tax treatment of salary income earned by a Non Resident Indian (NRI) in India
- If salary income is received for providing services in India then it will always be taxable in India as per Income Tax Act.
- If services are provided in a country outside India and the employer is resident in India, even then they will always be taxable in India as per the Income Tax Act.
- If services are provided in a country outside India and the employer is the Government of India, even then it will always be taxable in India as per the Income Tax Act.
Income Tax treatment of household property income/loss earned by a Non Resident Indian (NRI) in India
- If a non-resident Indian is earning income from a house property which is located in India then that will be fully chargeable to income tax in India.
- In respect of income from house property, non-resident Indian will be entitled to a standard deduction of 30%. Even deductions for a home loan will also be available.
- If a person is remitting rent amount to non-resident Indian then TDS has to be deducted at the rate 30% on rent amount.
- If a tenant is remitting a rental amount to a non-resident Indian outside India then form 15CA has to be generated even form 15CB may be required from a Chartered Accountant.
Income Tax treatment of business income/loss earned by a Non Resident Indian (NRI) in India
If business income is derived from a business entity from an establishment controlled in India then it will be fully taxable in India in the hands of non-resident Indians (NRI).
Income Tax treatment of capital gain income earned by a Non Resident Indian (NRI) in India
- If capital gain arises from transfer of securities in India then it will be taxable in the hands of Non Resident Indian.
- If capital gain is arising from transfer of an immovable property in India then it will be taxable in the hands of Non Resident Indian. In this case, it would be compulsory for the buyer to deduct TDS at a rate of 20%.
- In case of capital gains from the transfer of long-term capital assets, Non Resident Indian is entitled to claim income tax exemptions under sections 54 and 54EC.
In what situation is a Non Resident Indian (NRI) required to file an Income Tax Return
- If there is an income tax refund in case of Non Resident Indian (NRI) then he should file his ITR.
- If there is a carry forward loss in any head of income then filing of Income Tax Return is mandatory.
- If the taxable income of a Non Resident Indian is more than the basic exemption limit of Income Tax then filing of income tax return is compulsory for Non Resident Indian.
- If there is any short term or long term capital gain on any transaction or transfer then filing of income tax return is mandatory.
Income Tax applicability of investment income in the case of Non Resident India (NRI)
- If any investment income is derived by a Non Resident Income then it is taxable at 20% if it is a long term capital gain and will be taxed at 15% if there is short term capital gain.
- In term of section 115(f), if there is any Long term Capital Gain on transfer of Foreign Exchange Assets, then it will be exempted provided the Non Resident Indian has invested such long term gain in specified assets or in term of section 10(4) or 10(4B) of the Income tax act. Further, full gain is not compulsory for full gain to invest. If a part amount of long-term capital gain is invested then exemption will be available to the extent of the investment made.
- Specified assets in terms of section 115 include the following:
o If long term capital gain is invested in shares of the Indian Company.
o If long term capital gain is invested in subscription debentures of Indian public companies.
o If long term capital gain is invested in deposit of an Indian public company.
o If long term capital gain is invested in specified securities of the Central Government of India.
o If long term capital gain is invested in any such assets specified by the Central Government.
- Non resident Indians are not allowed to claim deductions under section 80 from their investment income.
The following investments are not permitted to a Non Resident Indian in India
- A Non Resident Indian is not allowed to open a Public Provident Fund (PPF) account in India. In other words, a Non Resident Indian cannot invest in PPF.
- A Non Resident Indian is not allowed to invest in National Saving Certificates (NSC).
- A Non Resident Indian is not allowed to invest in a 5 years scheme of post office.
- Any investment related to the scheme of senior citizens is not allowed to Non Resident Indian.
There are two types of accounts which a Non Resident Indian can open. One is an NRE account and the other is an NRO account.
All about NRE account
- NRE account stands for Non Resident External account.
- It is a type of bank account which Non Resident Indian opens in his name but it is used to credit foreign income of NRI.
- Interest earned on an NRE account is exempt from the income tax act.
- Non Resident Indians use this account to transfer their foreign earnings in India without attracting income tax.
- It can be opened as 2 Non Resident Indians joint holders.
- NRI can transfer his interest income along with the principal amount to any account maintained abroad.
- Amount can be withdrawn from this account in Indian currency.
All about NRO account
- NRO account stands for Non Resident Ordinary account.
- This account is opened by the Non Resident Indians to manage their income earned in India.
- Any interest earned on account of NRO income is taxable in India.
- Non resident Indian can send his interest and principal amount to any other account maintained outside India provided the limit of transfer on principal amount is 1 million USD in a Financial Year.
- Amount can be deposited and withdrawn from this account in Indian currency.
Scope of work
eTaxClub.com can serve to help you in filing your business income tax return of Non Resident Indian in a hassle free manner.
Our Income Tax matters expert will help you understand the document’s requirements and will guide you on compliance and legal tax saving methods. If there is any confusion regarding your NRI return then feel free to call us for free consultation
This is all we need from you
- Copy of passport required to determine days of stay in India.
- Demat account required.
- TDS certificate.
- Details of any other income.
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