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Tax Implications on the Income of Non-Resident


In India, income taxes for NRI will depend upon a person’s residential status for the given year. Your income will be taxable in India if you have resident status. The payment you earn or accrue in India while an NRI is taxable in India. An example of income earned or accrued in India would be a salary received in India or a salary for service provided in India, capital gains on the transfer of an asset situated in India, or interest on fixed deposits or savings bank accounts. These incomes are taxable for an NRI. Income which is earned outside India isn’t taxable in India. The interest earned on an NRE account and FCNR account is tax-free. Draw on an NRO account is taxable for an NRI.

Is NRI need to file an income tax return in India?
If someone’s income exceeds Rs 2,50,000 NRI or not, the person needs to file a tax return in India.

What will be the last date to file an income tax return in India?
According to the government rule, the last date to file an income tax return in India is July 31st for NRI.

Do NRI’s have to pay advance tax?
If your liabilities exceed Rs 10,000 during a financial year, you must pay tax in advance. Interest under section 234B and section 234C is applicable once you don’t pay your advance tax.

Taxable income for an NRI
Your earnings profits are taxable as soon as you acquire your income in India or anybody else on your behalf. Therefore, if you are an NRI and receive your revenue onto an Indian account, it will be difficult to Indian tax laws. These earnings are taxed at the slab price you belong to.

Rental payments to an NRI
NRI tenants paying rent to NRI owners should remember to deduct TDS at 30%. NRI often receive their income from an account in India or a report in the country where they currently reside. For example, heena pays a monthly rent of Rs 40,000 to her NRI landlord. She must deduct 30% TDS or Rs 12,000 before transferring the cash to the landlord’s account. Heena must also get a form 15CA prepared and submit it online to the tax department interest is earned on an NRE account, and the FCNR account is tax-free. Draw on an NRO account is taxable for an NRI. An individual making a remittance (a payment) to a non-resident Indian must submit Form 15CA. This sort has got to be submitted online. Before uploading Form 15CA online, it is sometimes necessary to obtain a certificate from an accountant in Form 15CB. CA certifies essential points of the payment, the TDS rate, and TDS deduction as per Section 195 of the income tax act if any DTAA (Double Minimization Agreement) applies, and different essential points of the nature and cause of the remittance in Form 15CB. Form 15CB is now not required if:

  • Remittance doesn’t exceed Rs 5,00,000 (in total during a financial year). Therefore, only Form 15CA has got to be submitted during this case.
  • If lower TDS has got to be deducted and a certificate is received under Section 197 for it, lower TDS has got to be removed by order of the AO.
  • Neither is required if the process falls under Rule 37BB of the tax act, where it lists 28 items. Inspect the whole list here.

In all other cases, if there’s a remittance outside India, the one making the remittance will take a CA’s certificate in Form 15CB. After receiving the document, submit Form 15CA to the government online.

Income from other sources
In India, interest income from fixed deposits and savings accounts held in Indian banks is taxable. However, NRE and FCNR accounts are tax-free. Other than that, the interest on NRO accounts is taxable. 

Income from Business and Profession
If an NRI earns income from a business controlled or established in India, that income is taxable to the NRI. 

Income from capital gains
Transfers of capital assets located in India are taxable in India. In India, capital gains on investments in shares and securities are even taxable. In the case of selling a house property and having long-term financial growth, the customer is required to deduct TDS at 20%. However, you can get a financial gain exemption by investing during a home property as given in section 54 or investing in capital gain bonds as per section 54EC. 

Investment income is subject to a particular provision
NRI invests in certain Indian assets; the person will be taxed at 20%. If the particular investment income is the NRI’s only income during the financial year, and TDS has been deducted thereon, then such an NRI isn’t required to file a tax return. 

What types of investments qualify for special treatment?
Following the acquisition of Indian assets in foreign currency, the following income is generated:

  • Shares of an Indian company, whether public or private
  • Debentures issued by an Indian company listed on a public exchange (not a private company)
  • Bank deposits and public company deposits
  • Government security of any kind
  • Other assets of the central government listed in the official gazette for investment income cannot be deducted under section 80.

Following deductions not allowed to NRI
Some investments under section 80C:

  • Investment in PPF isn’t allowed (NRI’s aren’t allowed to open new PPF accounts. However, PPF accounts that are opened while they’re a resident are allowed to be maintained).
  • Investments in NSC’s.
  • Post office 5-year deposit scheme.
  • Senior savings scheme.

Deduction for the differently-abled under section 80DD
NRI are not eligible to claim deductions under this section for maintenance of a handicapped dependent (defined during this section as a person with a disability). 

Deduction for the differently-abled under section 80DDB
This section permits deductions for medical treatment for dependents who are disabled (as certified by a prescribed specialist). 

Deduction for the differently-abled under section 80U
The deduction for disability is only available to resident Indians who have a disability, as defined within the section.

At AJSH, we assist our clients in dealing with various income tax compliances, including income tax assessments, ITR filings, tax advisory and other related services by providing them adequate support and guidance from our end. If you have any questions or wish to know more about the tax implication on income of NRI, kindly contact us.


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