"NRIs: Tax Rules & Obligations Simplified"

The article provides an overview of tax obligations for Non-Resident Indians (NRIs) in India, covering aspects such as taxable income, exemptions, tax rates, TDS, and filing requirements, along with details on capital gains, investments, and benefits under Double Tax Avoidance Agreements (DTAA). It highlights the criteria for NRI status and clarifies applicable deductions and exemptions.


Tax Obligations for Non-Resident Indians (NRIs) in India

Below is an overview of the tax obligations and rules applicable to NRIs in India:

Aspect Details
Residential Status Under the Income Tax Act, an individual is considered an NRI if they fail to meet the criteria for being a resident. The criteria include staying in India for at least 182 days in a financial year or 60 days in the financial year and 365 days in the preceding 4 years.
Taxable Income Income earned or accrued in India is taxable for NRIs. Examples include salary earned in India, rental income from properties in India, and capital gains from investments in India.
Exempt Income Income earned outside India is generally exempt from tax in India for NRIs. However, this may vary depending on Double Taxation Avoidance Agreements (DTAA) with other countries.
Tax Rates NRIs are taxed at the same rates as residents for most income categories. However, they are not eligible for certain deductions and exemptions available to residents.
TDS (Tax Deducted at Source) Any income received by NRIs from India, including rental income, interest, or capital gains, is subject to TDS as per applicable rates under the Income Tax Act.
Filing Income Tax Returns NRIs must file an income tax return if their taxable income in India exceeds the basic exemption limit or if they need to claim tax refunds.
Investments Income from certain investments, such as NRO accounts or mutual funds, is taxable. Income from NRE and FCNR accounts is usually tax-exempt.
Double Taxation Avoidance Agreement (DTAA) India has DTAA agreements with several countries to prevent NRIs from being taxed on the same income in both countries. NRIs can claim tax credits or exemptions under DTAA.
Capital Gains Tax NRIs are subject to capital gains tax on the sale of assets in India, such as property or shares. The tax rate depends on whether the gain is short-term or long-term.
Deductions and Exemptions NRIs can claim certain deductions under sections like 80C, 80D, and 80G. However, deductions under sections 80TTA (interest on savings accounts) and 80TTB (interest on deposits for senior citizens) are not available to NRIs.


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