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Income Tax for NRI: Decoding Tax Implications for NRIs

It is imperative for an individual to define his/her residential status to determine the taxability of income earned by such taxpayer. An individual is a resident of India (for tax purposes or otherwise) if:
·         He/she has lived in India for at least 182 days during the financial year.
·         He/she has lived in India for at least 60 days of a year, in the previous year, and at least 365 days in the preceding four years.

If an Indian citizen leaves India in any year for the purpose of employment, or as a member of a crew of an Indian merchant ship, the period of ‘60 days’ is to be replaced by ‘182 days.’ Similarly, when An Indian citizen or a person of Indian Origin (PIO) who is abroad coming to visit India, the period of ‘60 days’ is to be replaced by 182 days. If you satisfy any of the two conditions, you are a Resident Indian. Else, you have deemed a Non-Resident Indian (NRI).

If you reside and work abroad, the NRI income tax you pay will depend on your residential status for the year. If you fit the Resident Indian criteria, your total global income is taxable under Indian tax laws. But if your status for the year is ‘NRI’, only the income earned or accrued in India is taxable.
Ø  The NRI income tax be levied on the following:
·         Salary received for services provided in India (Global Income)
·         Capital gains earned on the transfer of assets located in India
·         Rental income from property owned in India
·         Revenue from Fixed Deposits 
·         Interest on Bank Savings Accounts

NRIs can avail of the tax deductions under Section 80C. Currently, a maximum deduction of up to Rs 1.5 lakh is permissible for tax deductions under the said the section in Life insurance premium payment, Repayment of principal on loan for the purchase of property investment in ELSS etc.An NRI can also claim a deduction on premium paid for Health Insurance under Section 80D of the Income Tax Act, 1961but it is available for premiums paid up to Rs 25,000 on insurance paid for self, spouse and dependent children. In the case of senior citizens, this amount increases to Rs 50,000.

The information provided in this article is for informational purposes only. It is not a substitute for specific advice in your own circumstances. You are recommended to visit https://www.incometaxindia.gov.infor more information on the taxation norms for an NRI or contact a tax consultant for specific professional advice pertaining to your situation or query or doubt.


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