The income tax scenario in India for NRIs is quite complicated. So, this detailed guide looks into how non-residents are taxed in India and offers details about the taxability of non-residents in India. So, let's find out more if you are looking for professional guidance for tax on foreign remittance in India. You can stay updated on the rules and follow the tax laws for non-residents in India.
Many Indians now live and work in other countries as the world becomes more connected. Knowing details about income tax duties in India is important for non-resident Indians. So, are you an NRI who wishes to consult chartered accountant firms in Gurgaon? Welcome to this guide that makes things clear about NRI taxation in India.
Find out more about the residential status, income that can be taxed, and rules you need to follow.
You must first understand who an NRI is before understanding the tax details. A person becomes an NRI if they fit any of these conditions (as per the Income Tax Act in India):
The person is not staying in India for 182 days or more during the financial year. Or the individual is not staying in India for 60 days or more in the financial year. The person should not be in India for 365 days or more over the last four years before that financial year.
Of course, these rules have certain exceptions, especially for Indian citizens who leave India for jobs or other purposes.
One quick note: If an Indian citizen works abroad or as a crew member on an Indian ship, the first condition is applicable. This means the individual is a resident if they spend a minimum of 182 days in India. On the same note, the rule is applied to the PIO or Person of Indian Origin visiting Indian during the preceding year. Their total income should be 15 lakhs or less.
Here are a few things you need to know regarding income tax for NRI in India before hiring a tax litigation consultant:
The individual's residence status is critical in determining tax liabilities in India. Individuals can be classified RNOR for a year if they have been non-residents in the nation for nine out of the previous ten years. Alternatively, they must be in India for fewer than or equal to 729 days in the seven years preceding the previous year.
So, you have learned about the income tax for NRI in India. Now, you must understand a few things about the taxable income for NRIs. So, the income earned or received in India or deemed to be received or earned in India is taxable for the NRIs. This types of income are earned through rental properties, investments in India, NRE accounts (for the RNORs), and salary received for the services rendered within the country.
It's important to note that income earned outside India is generally not taxable for NRIs unless it is derived from a business controlled in or a profession set up in India.
NRIs need to understand how foreign remittances to India are considered in terms of taxes. The good news is that money sent from outside India to the country is not taxed as income. However, anything earned from these funds after they come to India might be taxed.
For example, if a Non-Resident Indian sends money to the NRO account and makes interest on that, the interest gets calculated as taxable in India. Nonetheless, if they earn interest from NRE or FCNR accounts, this interest is not considered to fall under the taxable income.
A non-resident Indian may need to submit tax returns in India if the taxable income exceeds the basic limitation. This is true even when taxes are deducted at the source.
Not to forget, filing tax returns is more than simply complying with the law. It helps NRIs obtain refunds if too much tax has been deducted. Furthermore, filing taxes may be a great benefit when applying for loans or visas.
Filing the tax returns has a deadline – it is usually July 31st of a financial year. NRIs can file the returns online from the official website. You may seek consultation from a tax consultant in Gurgaon to understand the process in detail.
Learn about all the details regarding the taxation of expatriates in India and the importance of Income Tax Act and Double Taxation Avoidance Agreement.
Taxes are confusing in international payments. That is why, we have prepared a detailed guide on Form 15CA and 15CB for Cross-Border Payments! Read now!
Did you receive an income tax notice? What to do now? Let us learn how to respond to an income tax notice with this complete guide by top tax consultants!
