• Taxable Income of an NRI
Income from salary

Your salary income is taxable when you receive your salary in India or someone does on your behalf. Therefore, if you are an NRI and you receive your salary directly to an Indian account it will be subject to Indian tax laws. This income is taxed at the slab rate you belong to.

Income from Salary will be considered to arise in India if your services are rendered in India. So even though you may be an NRI, but if your salary is paid towards services provided by you in India, it shall be taxed in India.

In case your employer is Government of India and you are the citizen of India, Income from salary if your service is rendered outside India is also taxed in India. Note that income of Diplomats, Ambassadors is exempted from tax.

Income from House Property

Income from a property which is situated in India is taxable for an NRI. The calculation of such income shall be in the same manner as for a resident. This property may be rented out or lying vacant.

An NRI is allowed to claim standard deduction of 30%, deduct property taxes and take benefit of interest deduction if there is a home loan. The NRI is also allowed deduction for principal repayment under section 80C. Stamp duty and registration charges paid on purchase of a property can also be claimed under section 80C. Income from House Property is taxed at slab rates applicable.

Rental payments to an NRI

A tenant who pays rent to an NRI owner must remember to deduct TDS at 30%. The income can be received to an account in India or the NRI’s account in the country he is currently residing.

A person making a remittance (a payment) to a Non-Resident has to submit Form 15CA. This form is submitted online. In some cases, a certificate from a Chartered Accountant in Form 15CB is required before uploading Form 15CA online. In Form 15CB, a CA certifies details of the payment, TDS rate and TDS deduction as per section 195 of the Income Tax Act, if any DTAA (Double Tax Avoidance Agreement) is applicable, and other details of nature and purpose of the remittance.

Form 15CB is not required when:

Remittance does not exceed Rs 50,000 (single transaction) and Rs 5,00,000 (in total in a financial year). Only Form 15CA is to be submitted in this case.

If lower TDS has to be deducted and a certificate is received under section 197 for it, a lower TDS has to be deducted by order of the AO.

Neither is required if the transaction falls under Rule 37BB of the Income Tax Act, where it lists 37 items.

In all other cases, if there is a remittance outside India, the person who is making the remittance will take a CA’s certificate in Form 15CB and after receiving the certificate submit Form 15CA to the government online.

Income from other sources

Interest income from fixed deposits and savings accounts held in Indian bank accounts is taxable in India. Interest on NRE and FCNR account is tax free. Interest on NRO account is fully taxable.

Income from Business and Profession

Any income earned by an NRI from a business controlled or set up in India is taxable to the NRI.

 Income from Capital Gains

Any capital gain on transfer of capital asset which is situated in India shall be taxable in India. Capital Gains on investments in India in shares, securities shall also be taxable in India.

If you sell a house property and have a long-term capital gain, the buyer shall deduct TDS at 20%. However, you are allowed to claim capital gains exemption by investing in a house property as per Section 54 or investing in Capital Gains Bonds as per Section 54EC.

Special provision related to investment income

When an NRI invests in certain Indian assets, he is taxed at 20%. If the special investment income is the only income the NRI has during the financial year, and TDS has been deducted on that, then such an NRI is not required to file an income tax return.

What are the investments that qualify for special treatment?

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