"Resident vs NRI Tax Rules: Key Differences Unveiled"

The article compares tax rules for resident Indians and NRIs, highlighting differences in taxable income, foreign income treatment, deductions, TDS rates, and eligibility for double taxation relief under DTAA. It emphasizes how Indian-sourced income remains taxable for NRIs, while residents face global taxation.


Aspect Resident Indian Tax Rules NRI Tax Rules
Taxable Income Global income is taxable in India. Only Indian-sourced income is taxable in India.
Income from Foreign Sources Foreign income is subject to tax in India. Foreign income is not taxable in India.
Tax Filing Requirements Mandatory for individuals earning taxable income above the basic exemption limit. Mandatory only if income earned in India exceeds the basic exemption limit.
Tax Rates Progressive tax rates based on income slabs. Same progressive tax rates apply for income earned in India.
Investment Income Income from investments in India and abroad is taxable. Only income from investments in India is taxable.
Double Taxation Can claim relief under Double Taxation Avoidance Agreements (DTAA) for foreign income. Can claim relief under DTAA for Indian income taxed abroad.
Tax on Interest Income Interest income is taxable as per applicable tax slabs. Interest income from certain accounts like NRE accounts is tax-free.
Capital Gains Taxed based on the type and duration of the investment. Taxed based on the type and duration of the investment, but only for Indian assets.
Eligibility for Deductions Eligible for various deductions under income tax laws. Eligible for certain deductions but limited compared to residents.
TDS (Tax Deducted at Source) TDS is applicable based on income type and threshold limits. Higher TDS rates may apply for NRIs.


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