Navigating NRI taxation in India requires a clear understanding of the Income Tax Act, 1961. The definition of a Non-Resident Indian (NRI) hinges on their physical presence in India. An NRI is an individual who has stayed in India for less than 182 days in the current financial year or has been outside India for 365 days in the preceding four years and less than 60 days in the current year. Returning NRIs can attain RNOR (Resident, Not Ordinarily Resident) status under specific conditions, crucial for determining tax liabilities.
NRIs face distinct tax rules and are taxed uniformly regardless of gender or age. Their taxable income includes salary, rental income, and capital gains, with limited deductions. Section 80C allows deductions up to Rs 1.5 lakh for specific investments and expenses. Other exemptions include interest earned from NRE or FCNR accounts and certain government bonds.
Double Taxation Avoidance Agreements (DTAA) help NRIs avoid being taxed twice on the same income in different countries. To benefit, NRIs must provide a Tax Residency Certificate (TRC) from their country of residence.
Compliance involves adhering to TDS provisions on various incomes and meeting advance tax requirements if liability exceeds INR 10,000 annually. FEMA regulations govern NRIs’ foreign exchange transactions, investments, and repatriation of funds, requiring careful adherence to avoid penalties.
NRIs should maintain accurate financial records, consult tax experts, and stay updated with tax laws to manage their obligations effectively.
Source: https://indiacsr.in/nri-taxation-rules-in-india-what-you-need-to-know/