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Top 7 Rules Of Income Tax Return For NRIs

These days, India is making rapid progress in different sectors. For Example- space industry, medical, tourism, aviation, real estate, export of software to foreign countries, etc. The rapid development of these industries has encouraged several NRIs to make an investment in India and earn a huge return.

When non-resident Indians are involved in financial activities in India (such as rentals, property purchases, investments, remittances, etc), they have to pay the tax as well. Here is a brief overview of NRIs tax liabilities and the related law. Just go through them carefully. It will help NIRs a lot, and they will be able to pay off their legitimate taxes easily and quickly.

1. Exemption From The Tax Liability
Always keep in mind that no tax is applied to the income which is earned outside India by NRIs. Most of the NIRs have bank accounts in India- non-resident external accounts or foreign currency non-resident account. Indians are liable to pay on their savings bank account interest if it goes above Rs, 10,000, but NRIs are exempted from it. Also, no tax is applied on remittances sent by NIRs to their relatives in India. However, under specific scenarios, such amounts are taxed at concessional rates.

2. Income Tax
As an NRI, if you earn money from long term or short term investments or sell assets, it will be taxed as per the applicable law. Apart from this, you will have to pay tax on income earned through the renting houses or apartments. You can take advantage of a standard deduction of 30% of the rent and minimize your tax liability. If you don't understand how to calculate the payable taxes, you can avail the services of Tax Law firms in India. They have experienced lawyers that could help you to determine your exact tax liability in an easy way.

3. Permanent shifting in India
If an NRI returns to India permanently after spending some years in foreign countries, he/she will not have to pay taxes in India immediately. As per the law, an NRI, who spent 9 consecutive years in a foreign country, he/she remains RNOR (Resident but not Ordinarily Resident). Actually, it's a period of 2 years in which his status becomes from an NRI to a full-fledged Indian resident. During that period, as per the law, income earned by him outside India will not be taxed if it's a business which is not controlled by India.

4. TDS
The government of India announced this year that TDS (tax deducted at source) will be deducted if NRIs (without a PAN card) present the alternative documents. Previously, they had to pay the tax at the rate of 20% or more.

5. Disclosing Foreign Assets And Foreign Income
If an NRI returns to India and becomes an ordinary resident Indian after completing all legal formalities, he/she will have to disclose all details of his foreign income and assets while filing income tax return. If he/she doesn't disclose all details about this, there is the provision of stringent penalties under the Undisclosed Foreign Income and Assets Bill, 2015. The Income tax department can determine the tax amount on such income or properties under the new provisions of the unaccounted money.

6. Public Provident Fund
As per the law, NRIs can't open a public provident fund (PPF) account. But, if they have already a PPF account becoming NRIs, they can run the account until its maturity. When the maturity periods gets completed, NRI would have to remit the proceeds in the country of residence and will not extend post mandatory 15 years' lock-in period. If anyone extends, it is termed as “extended without contribution”.

7. Tax Filing

Income Tax Slab For Different Age Group People

When filing the income tax returns, you must disclose the total income you earn in India as it will help you to get some tax benefits in a Double Taxation Avoidance Agreement (DTAA) with India. You can seek the help of International lawyers in India determine your actual tax liabilities appropriately and handle any legal issues raised by the tax authorities.

Concluding Remarks
NRI doing business in India are liable to pay taxes as per the Indian law. These are some main rules and regulations regarding NRIs tax laws. Just read it properly and pay taxes accordingly to avoid any sort of legal trouble.

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