The income tax rules that is in place for Non-Resident Indians is different from the law and rules that are in place for resident Indians. Non Resident Indians are expected to pay taxes for all the income or capital gains they earn in India.
The income tax rules applicable for NRIs (Non Resident Indians) differ from that of the resident Indians. It is important to note that NRIs should pay taxes for capital gains or income they earn in India.
According to the Income Tax department, an individual is categorised as a non-resident Indian under specific conditions as listed below:
- He or she lives outside India for 182 days in the previous year
- He or she does not stay in India for 60 days during the previous year and 365 days or more for four years prior to the previous year
Taxable Income of NRIs:
According to Foreign Exchange Management Act and Income Tax Act, 1961, a NRI can should taxes under specific conditions as listed below:
- Taxable income in a financial year in India is above Rs.2 lakh (exemption limit)
- Long-term or short-term capital gains earned from the sale of any property
The following table consists of details of taxable income of NRIs
| Particulars | Description |
| Income from House Property and Home Loan |
|
| Salary | Any income earned in India or even received on the behalf of a NRI can be taxed. In other words, if a NRI receives his or her salary for services in India, it is liable to be taxed |
| Investment |
|
| Income from other sources | The interest income accrued from savings bank accounts and fixed deposits held by a NRI in India are liable to be taxed |
| Investment Income |
|
Deductions Available to NRIs
The following table shows the deductions and exemptions available for NRIs
| Particulars | Deductions |
| Section 80C |
NRIs can avail of the following deductions under section 80C
|
| Section 80D | Premium paid a health insurance policy |
| Section 80G | Donations on social service activities |
| House property income for NRIs | NRIs can avail of deductions for Income from House Property in India, property tax and interest income on home loans |
| Section 80E | Interest earned on an education loan |
| Section 80TTA | Up to Rs.10,000 can be claimed as deduction on interest income on savings bank accounts |
Deductions Unavailable to NRIs
NRIs cannot avail of the following deductions available under the IT Act, 1961
- Investment under RGESS under section 80CCG
- Differently-abled under Section 80U, Section 80DD and Section 80DDB
- Investments which are unavailable to NRIs are listed below:
- Senior Citizen Savings Scheme
- National Savings Certificates
- Post Office 5 Year Deposit Scheme
- Public Provident Fund
