INCOME TAX RULES FOR NRIS TO LIVE BY
Considering a more financial definition, one could easily say that if a person being an Indian citizen leaves the country to take up a job or goes away on a cruise and ultimately ends up spending less than 182 days in the country, he or she will be considered a non-resident for taxation purposes.
Taxation in India for a non-resident is wholly dependent on whether or not the concerned person has been in the country in the past year. Taxability in India is calculated by essentially gauging the number of days for which a person has been present in India. Income tax rules for NRIs are reasonably hassle-free and convenient, only if one’s aware of the fact-based norms surrounding the very concept.
Determining the Importance of Tax Residential Status in India
India’s tax laws recognize the term “tax resident” or “non-resident” for taxation purposes. Citizens hailing from India or Navy and Marine officers who have left India during the beginning of a financial year are fundamentally considered tax residents of India since they have been in the country for more than 182 days.
Basically, the residential status of a person is determined by calculating the period of time for which he/she has been present in India. To narrow things down, residential status can be further classified into 3 subparts:
Filing Income Tax Returns in India : Vital for an NRI or Not?
By formal definition, if the source of any income can be tracked down to India or if any income is accrued/ensued in India (an incidence where India is the source country of the income), that particular income will automatically become taxable in India. This income can be placed under any bracket. Be it an interest on fixed deposits, rents on properties and houses, share market profits and losses and so on.
An NRI must file his/her income tax returns, provided the following prerequisites are met with before commencement of the procedure:
NRI Income and the Opportunities of Taxability
An NRI’s income can essentially be classified into two parts - Indian Income and Foreign Income. Following are some matrices that elucidate the tax implications on salaries/incomes obtained by NRIs.
In case of an Indian income:
In case of a Foreign income:
Last Date to File Income Tax Returns for an NRI
For an NRI, the final date for filing income tax return in India is July 31st. Furthermore, an NRI becomes liable to pay advance tax, if their tax liability exceeds the amount of Rs.10,000 during a financial year.
Considering a more financial definition, one could easily say that if a person being an Indian citizen leaves the country to take up a job or goes away on a cruise and ultimately ends up spending less than 182 days in the country, he or she will be considered a non-resident for taxation purposes.
Taxation in India for a non-resident is wholly dependent on whether or not the concerned person has been in the country in the past year. Taxability in India is calculated by essentially gauging the number of days for which a person has been present in India. Income tax rules for NRIs are reasonably hassle-free and convenient, only if one’s aware of the fact-based norms surrounding the very concept.
Determining the Importance of Tax Residential Status in India
India’s tax laws recognize the term “tax resident” or “non-resident” for taxation purposes. Citizens hailing from India or Navy and Marine officers who have left India during the beginning of a financial year are fundamentally considered tax residents of India since they have been in the country for more than 182 days.
Basically, the residential status of a person is determined by calculating the period of time for which he/she has been present in India. To narrow things down, residential status can be further classified into 3 subparts:
- Resident & Ordinary Resident (ROR)
- Resident But Not Ordinary Resident (RNOR)
- Non-Resident (NRI)
Filing Income Tax Returns in India : Vital for an NRI or Not?
By formal definition, if the source of any income can be tracked down to India or if any income is accrued/ensued in India (an incidence where India is the source country of the income), that particular income will automatically become taxable in India. This income can be placed under any bracket. Be it an interest on fixed deposits, rents on properties and houses, share market profits and losses and so on.
An NRI must file his/her income tax returns, provided the following prerequisites are met with before commencement of the procedure:
- If the taxable income exceeds the basic exemption of Rs.2 lakh
- If he/she has earned long-term and short-term gains through investment sales such as mutual funds, shares, properties and so on
- If they have a tax refund to claim
- If they want to claim tax benefits on a home loan
NRI Income and the Opportunities of Taxability
An NRI’s income can essentially be classified into two parts - Indian Income and Foreign Income. Following are some matrices that elucidate the tax implications on salaries/incomes obtained by NRIs.
In case of an Indian income:
- If the income is acquired by the NRI during a financial year, it is taxable in India
- If the income is accrued or deemed to be accrued in the source location (in this case, India) in the course of the financial year, it is taxable in India
- If an income’s first receipt has been generated in India during the financial year, but the income is accrued outside India, it is taxable in India
In case of a Foreign income:
- If the income is acquired by the concerned NRI outside India, during the financial year, it is not taxable in India
- If the income has been accrued outside India through a profession or business that is operated from India, during the financial year, it is not taxable in India
- If the income is accrued outside India from any other source excluding businesses and professions that are controlled from India, it is not taxable in India
Last Date to File Income Tax Returns for an NRI
For an NRI, the final date for filing income tax return in India is July 31st. Furthermore, an NRI becomes liable to pay advance tax, if their tax liability exceeds the amount of Rs.10,000 during a financial year.