Understanding NRI Taxation in India

The taxability of an NRI in India depends entirely on their residential status as defined under the Income Tax Act, 1961.

• If you are Resident in India, your global income becomes taxable in India.
• If you are a Non-Resident Indian (NRI), only the income earned or accrued in India is subject to taxation.

Taxable Income for NRIs in India includes:

• Salary earned in India or for services rendered in India
• Capital gains on transfer of assets located in India
• Rental income from house property in India
• Interest earned on NRO accounts, fixed deposits, or Indian savings accounts

Non-Taxable Income for NRIs in India:

• Foreign income earned abroad
• Interest earned on NRE and FCNR accounts (exempt under Indian tax laws)

Key Provisions & Recent Highlights

• NRIs cannot invest in schemes like NSC, Post Office Time Deposits, or PPF (new or extended)
• They can invest in:
  1. Mutual funds
  2. Real estate
  3. ELSS mutual funds
  4. Life insurance, pension plans, health policies

Important Sections of the Income Tax Act:

• Section 115D: Computation of taxable income for NRIs
• Section 115E: Concessional 20% tax on specific income
• Section 115F: Exemption on capital gains if reinvested
• Section 115G: Exemption from filing return under specific conditions
• Section 115H: Benefits when an NRI becomes a resident
• Section 115I: Tax treatment on foreign exchange asset income

Eligible Deductions & Exemptions for NRIs

Despite TDS being applicable on most Indian incomes of NRIs, various deductions help reduce tax liability:

• Section 80C
  1. Life insurance premiums
  2. Principal repayment on housing loans
  3. ULIP investments.
  4. Tuition fees for children (paid in India)
  
  
• Section 80D
  1. Health insurance premiums for self and family
  2. ₹25,000 deduction (₹50,000 for senior citizen parents)
  3. Preventive health check-up (₹5,000 max)
  
  
• Section 80E
  1. Interest on education loan (up to 8 years)
  
  
• Section 80G
  1. Donations to eligible NGOs or institutions
  
  
• Section 80TTA
  1. Interest from savings account (up to ₹10,000)

Capital Gains, Inheritance & Repatriation

• Inheritance of property/assets is not taxed
• Rental income and sale proceeds from inherited assets are taxable
• Reinvesting capital gains under Sections 54, 54EC, or 54F offers tax relief
• Assistance with Form 15CA/15CB for smooth repatriation of funds abroad

Filing ITR as an NRI

You must file an Income Tax Return in India if:

• Total Indian income exceeds ₹2.5 lakh/year
• You have capital gains, irrespective of the amount
• You want to claim TDS refunds
• You need to carry forward capital losses

Why Saket Mahajan & Co.?

• Experts in NRI Taxation, FEMA & DTAA Compliance
• Seamless ITR filing for NRIs & expats
• Real-time capital gains tax advisory
• End-to-end support for investments & tax exemptions
• Repatriation guidance & certification

Who We Help

• NRIs living in the US, UK, UAE, Canada, Australia & Singapore
• Foreign nationals earning Indian-sourced income
• Indian citizens returning from abroad
• Startups with cross-border operations