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Introduction
Gauging and planning funds in one country is a trouble; having to do in two different nations can be flummoxing. This happens with NRIs! When it comes to registering taxes, NRIs find themselves incapacitated as the Income Tax (IT) rules are different for different countries; one that is valid in India is invalid in other countries.
The Income Tax Act, 1961 demarks a Non-Resident Indian (NRI) as an individual, who being a citizen of India by birth or a person of Indian origin, who isn’t a permanent resident of India.
Over the years a number of Indians have moved and settled abroad for better employment opportunities. The number of Indians living abroad for business or permanent settlement is rising at a greater pace. People leave their home country for work, business, medical emergencies or a holiday.
Does an NRI need to pay tax in India?
Despite being a green card holder, many NRIs hold valid bank accounts in India where they invest and save money . If you are one among those having bank accounts in India, knowing the NRI taxation rules is crucial.
Many NRIs opine they aren’t liable to pay any tax to the Government of India for the funds earned and banked here. Even if you are an NRI, you are apt to pay tax for the income earned or fixed in India.
An NRI has to pay tax on the income or profit earned from business transactions and also the income
generated from the investments or property in India.
Difference between Indian and NRI Tax Rules
The primary and most important difference is an NRI resident has to pay tax only for the income earned in India. The income earned from foreign dealings (outside India) or investments (earned and received outside India) are exempted from tax.
NRI income earned or received out of India will not be taxed by the Government of India. However, an Indian income earned and received in India is taxed as per the rules.
The NRI Taxation Rules:
Briefly take a glance on some of the exemptions and tax-saving tips (based on the nri taxation rules) that an NRI must know:
Are Filing Returns Necessary?
There is no need for an NRI to file IT return if he/she doesn’t have any income in India. However, if you are benefiting from dividends, interests or property investments, whose amount is beyond the taxable limit, filing returns for you is compulsory. An NRI is entitled to claim refunds if his tax deducted at source is more than his actual tax liability.
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