Non-Resident Taxation

Non-Resident Taxation


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Non-Resident Taxation

An NRI’s income taxes in India will depend upon his residential status for the year. If your status is ‘resident,’ your global income is taxable in India. If your status is ‘NRI,’ your income which is earned or accrued in India is taxable in India. Salary received in India or salary for service provided in India, income from a house property situated in India, capital gains on transfer of asset situated in India, income from fixed deposits or interest on savings bank account are all examples of income earned or accrued in India. These incomes are taxable for an NRI. Income which is earned outside India is not taxable in India. Interest earned on an NRE account and FCNR account is tax-free. Interest on NRO account is taxable for an NRI. Whether you are an NRI or not, if your income exceeds Rs.2,50,000 you are required to file an income tax return in India. And if your tax liability exceeds Rs 10,000 in a financial year, you are required to pay advance tax. Interest under Section 234B and Section 234C is applicable when you don’t pay your advance tax.

There may be situations where tax is deducted by some other country as well, the Government of India has entered into ninety-four DTAAs with a view to avoid double taxation of the same income in the country of residence of the taxpayer and the country of the source of income and can be availed by the NRs to get relief from double taxation. If the taxpayer has paid taxes in other country or if the taxes are withheld on his behalf under the tax laws of another country, he can claim credit of taxes in India for taxes so paid/withheld under the provisions of the DTAAs. Similarly, if the taxes are withheld in India on behalf of a person who is resident of any other country with which India has a DTAA or if taxes are paid by him in India, the credit of taxes so withheld/paid in India can be claimed while filing return of income in the NRs home country under the applicable DTAA or domestic tax laws of that country.

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