Income Tax on NRI

Income taxes and refund for NRI

Income Tax on NRI

Being a NRI (Non Resident Indian) is fun. NRI, have to pay Income tax as per  law of respective countries where you are residing. But there are certain incomes for which NRI’s have have to pay Income tax in India.

FAQ’s on NRI (Non Resident Indian) and queries on Income tax on NRI is addressed below:

Que: I am an NRI for last 5 years, and I am earning rent from property that I have let out in India? Do I need to file Income Tax Return in India? Mohit, Italy

Ans: If you have given a House property on rent, you can claim an adhoc deduction of 30% of net annual value as repairs and maintenance expenses. You can also claim a deduction on interest on Housing loan.

You don’t need to file income tax return if your Income is less than Maximum exemption limit. For year 2018-2019, Income Limit is Rs 250,000/-.

Que) My status is NRI and during last year i have earned certain Interest from my bank in India and Bank has deducted TDS on Interest. How can I Claim Income Tax refund on the TDS so Deducted? Kishan, Australia

Ans) For claiming Income Tax Refund, you will be required to file Income tax return in ITR form 1 and due date for filing  tax return is 31st July.

We can also assist in filing your Income tax return and getting Income tax Refunds. Visit here for filing your Income tax Return.

Que) How can assist me in Getting Income tax Refund? Sumita, America.

Ans) We can assist in filing Income tax Return.

Within 2-3 months Income tax refund Amount will be credited in your Saving Bank Account.

Que) I have made some sales in shares during the year and I have earned some profits. My only Income in India is capital gain from shares. Being NRI do I Still Require to file Income tax return in India? Hanish, London

Ans) Income tax Return need to be filed for both Long term and Short term capital gain for sale of investment or other assets even if total income is below exemption limit.

NRI’s don’t get benefit of Exemption limit on basis of age or gender that is available to resident Indians.

Income tax rate for Short term capital gains on equity shares and equity mutual funds is 15% and long term capital gains on securities and assets where tax rate is either 20% or 10% without indexation.

Que )  Which Income are exempt from Income tax for NRI’s? Divya, Singapore

Ans: Following Incomes are exempt for NRI’s.

  • Dividends from equity shares and equity mutual funds is tax free in India
  • Interest received on the NRE account and FCNR account is tax free
  • Long term capital gains on equity shares and equity mutual funds, that is capital gains from sale after one year of purchase, are tax free in India (provided you pay securities transaction tax at time of sale)
  • Income from interest on National Saving Certificate VI/VII issue and notified bonds purchased by you in foreign exchange.

This mean, even if your earnings from these Incomes is more than maximum exemption limit , you don’t have to file Income tax Return.

Que) I have got gift from My Mother and I am an NRI. Do i have to pay tax on Gift ? Shruti, America

Ans: There is no income tax on gifts received from your parents or close relatives. Visit here for more details on Income tax on Gifts.

Que: My Status is NRI and I have got only interest Income from Bank In India and TDS is already deducted. Do I still need to file my Income Tax Return? Rahul, Canada

Ans) Section 115G states that Income Tax Return not to be filed by a non-resident Indian under sub-section (1) of section 139  if—

(a) his total income in respect of which he is assessable under this Act during the previous year consisted only of investment income or income by way of long-term capital gains or both; and
(b) the tax deductible at source ( TDS) under the provisions of Chapter XVII-B has been deducted from such income.

But you should file your Income tax return to get refund for TDS that has been deducted.

Que) What is last date for filing Income tax return . Is there any penalty for not filing Income tax return for NRI’s?

Ans) Last date for Filing Return is 31st July.

  • If you do not have any tax payable (that is all your tax has been deducted at source), you can still file your tax return by 31st March 2020 without any penalties
  • If you do have tax payable, you can still file your returns by 31st March 2020 but you will be charged an interest of 1% per month for every month of delay starting from 31st July 2019 till the time you file your tax returns
  • If you do not file your tax returns even by the 31st of March 2020, you may be charged a penalty of Rs 5,000 for every year of delay or sometimes may not be able to file your returns at all after 2020.

Que) Do NRI get Income tax deduction under section 80C ? Vidhi, Paris

Ans) You can take benefit of Section 80C for Investment made under section 80C  in – Schemes such as PPF, life insurance premiums, equity linked saving schemes, etc.  up to a total of Rs 1.5 lakh per annum.

Que) As a NRI will get Income tax deduction under section 80D ? Vidhi, Paris

Ans) You can take benefit of Medical  Premium under Section 80D.

  1. Health insurance premium in India for yourself or your dependents, you can claim a deduction under section 80D.
  2. If the health insurance is taken for your spouse and dependent children, you can claim a deduction of Rs 25,000 per annum.
  3. An additional Rs 25,000 is available as deduction on insurance premium paid on behalf of your parents.
  4. If either of your parents is over the age of 60 ( ie Senior Citizen), the additional deduction will be Rs 50,000 instead of Rs 25,000.

Que) I want to transfer remittances from Dubai to my account here in India? What is the Income tax implication on such transfer for Non Resident Indian ? Amit, Dubai

Ans) Since income earned outside India falls outside the purview of the IT Act, you cannot be taxed on remittances to India. So you can send money to your own accounts in India without any fear of attracting tax. You can utilize the money for any purpose you like.

When you are remitting money to India, you will not be taxed unless the transfer is compensation received against services in the country which then results in the amount being chargeable to tax for the recipient.

Que : My NRO account TDS has been deducted at source @30%. My interest income is 1 Lakhs Rupees ? Do I Need to File Income Tax Return?

A) As your total income is less than 2.5 Lakh Rupees you are not liable to file tax return. (See Income tax slab)

You should file Income tax Return to claim Income tax refund for TDS of Rs 30,000/- deducted. While filing return,  make sure that you put correct bank details such as account number and IFSC code of the branch as refunds are processed electronically.

See more on filing Income tax return for NRI

Que) What are the tax implications for an NRI looking at selling his property in India?

A) If the property is more than 3 years old, long term capital gains tax will be incurred on the sale of the property. On long term capital gains, tax is payable @ 20%. However, tax can be minimised by making alternative investments in India.

Visit here How to Save Income Tax on sale of House Property for NRI

Que) Can NRIs  also claim exemption by investing the amount of capital gains in bonds issued by the National Highways Authority of India (NHAI) or Rural Electrification Corporation (REC) in case of Profit from sale of property which is long term?

A) Yes Investment in the specified bonds is to be made within six months of such sale and there is a lock-in period of five years for capital gains bonds.

Que) I am a NRI living in US. Can you please advise me if long term capital gains tax are payable on sales of shares purchased by paying STT, and if it is exempt is there a limit?

A) LTCG on sale of shares is fully exempted on sale of listed company shares, purchased by paying STT, provided the transaction is long-term. i.e that share are hold for period of more than 12 months.

Que) I am working for a company based in America. Company doesn’t have any offices in India. My salary is transferred to bank account in India. I am paid in dollars , remittance is send in my bank account is converted by my bank from dollars to rupees.  I am also getting FIRC certificates from the bank whenever my salary is credited to my account. Please advice , do I need to pay income tax. 

A) Since you status is resident of India, you are required to pay income tax for all income you earn. You need to file income tax return and pay taxes accordingly.

Since your company would not be deducting income tax , you have to calculate income tax (as per income tax slab) and pay advance income tax .

Download Income tax calculator to calculate income tax liability.

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