Taxation is the primary source of revenue for any government and is based on the theory of the maximum welfare of society. The rates of income tax are different for people who are residing in India and for those who live overseas.
According to the statistics, there are 32 million NRIs and PIOs residing outside India, and India is the largest country of origin for expatriates and immigrant communities with a 55 million-strong diaspora across the globe.
In this article, we will try to guide you about everything you should know regarding the NRI income tax filing and also assist you with our highly recommended NRI advisory services in Chennai. Let’s start with the basic concepts.
How are NRIs taxed in India?
An NRI or a Non-Resident Indian is a person who:
After the presentation of Budget 2020 by our Honorable Finance Minister Mrs. Nirmala Sitharaman, She has included some additional points to treat an Individual as a Non-resident, Such as
If an Individual does not meet the above new conditions, Then such Individual’s Indian Income will be taxable as per his/her taxable brackets as Resident and not Ordinarily Resident. If an Individual satisfies the new conditions, Then Such Individual will be taxed as per the erstwhile conditions.
Another new provision was added by finance minister while presenting Budget 2020, Named it as “Stateless Income”
If an Individual satisfies the stateless income conditions, then such Individual will be deemed to be resident and income will be taxed as Resident and not Ordinarily Resident. However This Stateless Income Concept is not applicable to Overseas Citizen of India (OCI).
In case of an NRI, Income Tax Returns are filed under the following circumstances:
What is the tax slab for NRIs?
There is no tax charged for a yearly income up to Rs.250,000. NRIs are taxed at 5% for income between Rs.2,50,000 and Rs.5,00,000 per annum. The tax rate is 20% for income between Rs.5,00,000 and Rs.10,00,000 per annum. Income above Rs.10,00,000 per annum is taxed at 30%.
|Income Range||Tax Rate (Old Regime)||Tax Rate (New Regime)|
|Up to Rs.2,50,000||No tax||No tax|
|Between INR 2.5 lakhs and INR 5 lakhs||10%||5%|
|Between INR 5 lakhs and INR 7.5 lakhs||20%||10%|
|Between INR 7.5 lakhs and INR 10 lakhs||20%||15%|
|Between INR 10 lakhs and INR 12.5 lakhs||30%||20%|
|Between INR 12.5 lakhs and INR 15 lakhs||30%||25%|
|Above INR 15 lakhs||30%||30%|
Apart from this, income from other sources such as mutual funds, shares, house property, fixed deposits and winning a lottery is also taxable in India for NRIs.
Also, there is a separate tax bracket for people under 60 years and people who are 60 years and older and those who are above 80 years of age.
How can NRIs avoid double taxation?
Double taxation refers to the process in which an income is subject to taxes twice. Generally, NRIs live overseas but earn income in India, and this can lead to double taxation in many cases.
India has signed DTAA, that is, Double Tax Avoidance Agreement, with several countries so that NRIs can avoid paying double tax.
Some of the countries with which India has signed a DTAA
|Country||DTAA TDS Rate|
|The United States of America||15%|
NRIs can avail tax relief under the DTAA method by filing Form 10F, a tax residency certificate and self-declaration in the prescribed format to the entity responsible for deducting tax at the source.
Why do NRIs need to contact NRI tax consultants?
If you are not careful, the investment or financial calculations that looked perfect initially can lead you into hefty tax payments, impacting your overall personal income. Our NRI tax consultants team in India can offer you a wealth of training, knowledge, qualification and experience that is difficult for you to achieve yourself.
We offer specialised and customised services to NRI’s and PIO’s settled abroad. Some of the NRI taxation services offered by us include:
Our vision is not to make your business fit to our services; instead, we strive to make every effort to see how our services can be tailored to add value to your business.