Are You An NRI? – Know the NRI Taxation Rules in India

Also, Taxation rules for returning NRI's


For every Indian citizen, the tax-filing period is a time of relentlessly looking for ways to save income tax, especially NRI taxation is a matter of concern for the vast number Indians living around the globe. The taxation policies in India are indeed very friendly for NRI. In general, the income earned outside the country is not taxable under Indian taxation system.

An NRI need to file an ITR (Income Tax return) in following cases:

1. All the profits gained by NRIs from their Business in India or from salary received by them for their services provided here are taxable in India. All these cases shall be taxed according to Indian tax slab rates.

2. If you own a house or any other property in India then your income from that property will be considered under Indian tax slab.

3. If you are having an account in an Indian bank whether it is a saving deposit, fixed or term deposit the interest earned from all these accounts will be taxable in India.

4. Capital gained from assets of NRI in India like property, shares, investments, debentures etc. are taxable.

Now NRI’s should have to use ITR 2 instead of ITR 1. They also have an option to furnish details of any one foreign Bank Account for the purpose of credit of tax refunds. 

Also read this post: Which Income Tax Return (ITR) Form To Fill For FY 2017-18 (AY 18-19)

Types of deductions and exemptions available for NRI’s

SECTION 80C: According to section 80C, a citizen of India (whether an NRI or a permanent resident) can get a deduction of maximum 1.5 lakh from their gross total income if he/she invests in any of following saving schemes:-

  1. Repayment of housing loan
  2. Tuition fees
  3. Life Insurance policy
  4. Investment in Equity funds or Mutual funds.
  5. Fixed deposit of at least five years.
  6. Investment in ULIPS
  7. Principal payment on loan for purchase of house property

SECTION 80D: This section gives you the benefit of deduction in your taxable amount for having a medical/ health insurance or in case of any medical emergency happened to you or your family. A total deduction of 25,000 is allowed for you, your partner and your dependent children. This amount is a bit more for senior citizen it is almost 30,000. Secondly, you can also claim an additional benefit of Rs.5,000 for paying the premium of preventive health schemes.

SECTION 80E: According to this section if an NRI had taken any kind of education loan for studying in India or Abroad then he/she can get a deduction equal to the interest of his/her loan. He/ she can enjoy this deduction up to 8 financial years.

SECTION 80TTA: This section is solely meant for NRI’s. According to this, an NRI can get a deduction of Rs. 10,000 on interest earned by them on their saving accounts in Indian banks.

SECTION 80G: NRI’s are allowed to claim a deduction in their taxable amount for donations for social causes to any registered helping institutions for underprivileged. The main thing is that you must have to keep the receipt for that donation for claiming your return.

Tax liabilities for returning NRI’s:

A returning NRI need not pay any tax on their income and assets outside India if their status in present financial year is still NRI. This exemption includes income from property capital gain, property, bank interest, debentures etc.

Suppose, you are a returning NRI trying to sell your property outside India and the capital gained by this transaction is transferred to your account in an overseas bank. In this case, this money is not considered under the taxable slab of India. If you want that money for buying anything in India then you can transfer it from your overseas account in part without creating a tax liability.

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