Finance

NRI and income tax: Rules you need to follow

No doubt, as an NRI, you will have unrestricted access to plenty of facilities and amenities, which also includes several financial opportunities. At the same time, you will also have the opportunity to invest in several financial options back home, such as an NRI account or deposit.
However, like an Indian resident, you will be required to pay certain income tax. Here are a few rules you need to keep track of, about the income tax:
• As per the current government regulations, an NRI will have to pay tax on any income that is accrued or raised in India or even received in India. Therefore, income that is earned through salary, rental income, interest income from a fixed deposit or bank account is taxable. Even capital gains on any asset that is sold come under this category. If the income of an NRI is more than the exemption limit in the financial year, the individual is liable to file returns in India. In order to claim tax refunds or to carry forward any losses in the future, the individual will be required to file returns.

• If an NRI returns to India permanently after spending a fixed amount of years abroad, the foreign income that is earned is not taxable immediately. In this case, an individual who has been a non – resident for nine consecutive years will remain an RNOR, which is a transition between an NRI and a resident. As per the government regulation, any income which is earned outside the country will not be taxed, unless it is a business or profession that is controlled from India. Once the status has been transferred to a’ resident’, the international income that is earned will be taxed in India.

• Previously, an NRI would be required to pay TDS if the individual did not possess the PAN document. The TDS would be charged at 20% or the rate in force, whichever was higher. As per the current budget, there is no requirement to pay TDS if no PAN documents have been provided. However, certain set of documents under the recently notified rules, must be provided to avoid paying TDS.

• NRI’s cannot open a public provident fund, which is the PPF. However, if the individual has already possessed a PPF account previous to becoming an NRI, the account can be held only until the time of maturity. At this time, the account will not have the option to be extended, whereas the funds would have to be remitted in the NRI account, in the country of residence. In case, post maturity, the account is left unattended; it will be considered as “extended without contribution.”

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s