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Income Tax for NRIs

Income Tax for NRIs

Section I: Basics

How do I determine my residential status?

You are considered an Indian resident for a financial year:

    • when you are in India for at least 6 months (182 days to be exact) during the financial year

OR

  • you are in India for 2 months (60 days) for the year in the previous year AND have lived for one whole year (365 days) in the last four years.

If you are an Indian Citizen working abroad or a member of a crew on an Indian ship only the first condition is available to you – which means you are a resident when you spend atleast 182 days in India. The same is applicable to a PIO who is on a visit to India. The second condition is not applicable to these individuals.

A PIO is a person who, or any of his parents, or any of his grandparents were born in undivided India.

Is my income earned abroad taxable?

An NRI’s income taxes in India will depend upon his residential status for the year.

If your status is ‘resident’, your global income is taxable in India. If your status is ‘NRI’, your income which is earned or accrued in India is taxable in India.

Salary received in India or salary for service provided in India, income from a house property situated in India, capital gains on transfer of asset situated in India, income from Fixed Deposits or interest on savings bank account are all examples of income earned or accrued in India.

These incomes are taxable for an NRI. Income which is earned outside India is not taxable in India. Interest earned on a NRE account and FCNR account is tax free. Interest on NRO account is taxable for an NRI.

Am I required to file my income tax return in India?

NRI or not, any individual whose income exceeds Rs.2,50,000 (for FY ending 31st March 2015 or Rs.2,00,000 for FY ending 31st March 2014) is required to file an income tax return in India.

NRIs must file their returns when they:

  • want to claim a refund
  • have a loss that they want to carry forward

If capital gains from selling an asset is your only income in a financial year and TDS has been deducted on that, then you are not required to file your income tax return for that year.

Income Tax for NRIs

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