If you are an NRI, PIO or OCI holder, you might be confused regarding the NRI income tax rules. One of the main questions in the minds of an NRI is when should NRI file tax return? You should know that this procedure is not too complicated. In addition, you may have many queries regarding NRI tax filing online and the tax rates for NRI in Indian income. In order to clear up many of your queries, we have carefully gathered for you the important information for income tax return for NRI. Armed with this information, it should become much easier for you to file your income tax returns in India.
How To Determine Your Residential Status?
The first thing for you before you file your income tax returns in India is to determine your residential status for the year. This is how you can do this:
- You are considered a resident for tax purposes if you have stayed in India for 182 days or six months in the current financial year
- You are also considered a resident if you have stayed in India for 60 days or 2 months in the previous year, and have lived in India for one whole year in the past four years
You will be considered an NRI for tax purposes if you do not meet either of the two criteria listed above.
Is Your Income From Abroad Taxable In India?
If your status is “resident” for the current financial year, then your global income is taxable in India. However, if your status is NRI, then only the income generated by you in India is taxable for that year.
When are you, As An NRI, Required To File Income Tax Returns in India?
Irrespective of whether your residential status, any individual who has generated an income of more that INR 2,50,000 in the current financial year is required to file tax returns in India. For an NRI, if your income generated in India falls outside the minimum slab prescribed by the government, you should file a tax return. This will help you claim any applicable refunds and carry forward losses.
What Are The Sources Of Taxable Income For NRI?
Here are the main sources of taxable income for an NRI:
- Income from salary in India
- Income from house property
- Rental payments made to an NRI landlord
- Income from business and profession
- Income from capital gains
What Deductions And Exemptions Are Available To NRIs?
Here are some of the main deductions and exemptions available to NRIs:
- Life Insurance Premium payment
- Children’s tuition fees
- Principal repayments on loan for purchase of house
- Unit-linked insurance plan
- Donations for social causes
- Interest paid on education loan
- Premium paid for health insurance
What Is The Last Date For Filing Income Tax Returns in India?
The last date for paying income tax returns in India is July 31st. If you have a tax liability for more than INR 10,000 for the current financial year, you may have to pay your income tax in advance.
How Can NRIs Avoid Double Taxation?
This is one of the most common questions on an NRIs mind. For instance, if you are a green card holder and have taxable in India, you may be required to pay income tax in the USA for your global income. In India, you will have to pay taxes for income accrued in India. Thus, you could be taxed twice for the same income. This is known as double taxation, where you are taxed twice for the same income. In order to avoid this, there are several Double Taxation Avoidance Agreements (DTAA) in place. In the case above, you can file for a tax credit in the Unites States of America for income tax you have paid in India. Similarly, India has DTAAs with several foreign countries. Depending on the provisions in place with the country of residence, you will be getting a tax break in one of the countries for tax paid to the other country.
Now that you have a clear idea about when should an NRI file tax return, you have already won half your battle. In addition, you should also now have a thorough understanding about the NRI tax filing online procedure. The income tax rates for NRI in India income is the same as the rates that apply to any resident Indian. Now, you will have a clear idea about the NRI income tax rules. We hope this article has helped make all the procedures much clearer for you.