Is NRI money taxable in India?

Short Answer

NRI money is taxable in India under certain circumstances usually when the income is earned in India. There are also many deductions and exemptions available. For further details read the long form with description.

Detailed Answer

Who are NRIs?

  • NRI stands for Non-Resident Indian.
  • Non-Resident Indians are described as the same when:
    1. who spent less than 182 days in India during the previous fiscal year, according to various definitions.
    2. who has left India or is staying outside India to conduct business or follow a career path, 
    3. who has left India or is staying outside India for the purpose of work, or
    4. who has left India or is staying outside India for some other reason, indicating that he intends to stay outside India indefinitely. 
  • In simple words, NRIs are Indians who live outside of India.

Is NRI income taxable in India?

Not all sorts of income are taxable in India, but your overall global income is considered taxable under Indian tax regulations if you meet the Resident Indian requirements. However, if your tax status over the year is ‘NRI', you are only responsible for income received or incurred in India only.

The NRI income is taxable under these circumstances:

  • In India, income can come from any land, asset, or source of income.
  • Gain on the sale or conversion of a capital asset in India.
  • When you are an Indian citizen, you will receive money from the salary that the constitution of India pays you for services performed outside of India.
  • Even if the dividend was paid outside of India, it was paid by an Indian corporation.
  • Profits from a trading relationship in India.
  • If the services are given in India, you will earn a pay cheque.
  • NRE and FCNR account interest is tax-free. NRO account interest is entirely taxable.

In such cases, the NRI needs to pay the tax and act very responsibly towards it.

Deductions and exemptions that are available to NRI:

NRIs are eligible for the majority of Section 80 exemptions. For the fiscal year 2019-20, a person can exempt up to Rs 1.5 lakhs from their money collected through Section 80C.

Under the section 80D:

It helps you to deduct the premium an individual paid on health insurance. This applies to premiums charged on insurance for oneself, partner, and minor children up to Rs 25,000. This sum rises to Rs 50,000 in the case of elderly people.

Under the section 80C:

  • ELSS investment
  • Payment of life insurance premiums
  • Repayment of principal on a loan used to purchase a property.
  • Payment of tuition for children.

How can NRI avoid double tax payments?

When you have been taxed in both India and your current place of residence, a DTAA (Double Tax Avoidance Agreement) between the two countries can provide you with taxation relief. It is necessary to provide all the necessary documents to avail this benefit. You will be given tax relief from at least in one of the countries.

Tagged With: nritaxabletaxable moneyexceptionsIndia
Categories: NRI Investment
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