FAQs

An Indian abroad is popularly known as Non-Resident Indian (NRI). NRI status is legally defined under the Foreign Exchange Management Act, 1999 and the Income-tax Act, 1961 for applicability of respective laws.

Person resident outside India means a person who is not resident in India.

A person residing in India for more than one hundred and eighty-two days during the course of the preceding financial year but does not include:-

• Person who has gone out of India or who stays outsideIndia, in either case
• For or on taking up employment outside India, or
• For carrying on outside India a business or vocation outside India, or
• For any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period

A person who has come to or stays in India, in either case, otherwise than

• For or on taking up employment in India, or
• For carrying on in India a business or vocation in India, or
• For any other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period

Any person or body corporate registered or incorporated in India,

An office, branch or agency in India owned or controlled by a person resident outside India,

An office, branch or agency outside India owned or controlled by a person resident in India;

We prove various NRI service India like NRI financial services, NRI legal services. The term non-resident is negatively defined under section 6 of the Income-tax Act, 1961. An individual who is not a resident under the Income-tax Act is a non-resident. The residential status of an Individual is determined based on the number of days of stay in India. Financial year (FY) is April to March.

For the purposes of levy of tax, the Income-tax Act in India has classified the status of an individual assesses into three viz.

• Resident and ordinarily resident (ROR).
• Resident but not ordinarily resident (R but NOR).
• Non-resident (NR).

The definition is explained in simple terms as under.

• Not applicable to a resident going outside India for employment, a resident who leaves India as a member of crew of an Indian ship, an Indian citizen or person of Indian origin who is abroad and comes to India for a visit i.e. if such a person stays in India for less than 182 days, he would be a non-resident.
• Non-citizens of India should only use this form (i.e. Form 49AA) for submitting application for allotment of PAN. However, a Qualified Foreign Investor (QFI) has to apply for PAN in Form 49AA through a Depository Participant only.
• In the case of a ROR, his global income is taxed in India. Normally a returning Indian would be assessed as RNOR on his return to India.
• In the case of a Non-resident, only the income earned or received in India is taxed in India. Accordingly, income earned outside India by him would not be taxable in India.

PIO means an individual (not being a citizen of Pakistan or Bangladesh or Sir Lanka or Afghanistan or China or Iran or Nepal or Bhutan) who:

• At any time, held an Indian Passport or
• Who or either of whose father or mother or whose grandfather or grandmother was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955).

India has contracted Double Tax Avoidance Agreements (DTAAs) with various countries. Taxability of Non Resident's Indian income would be decided as per the provisions of these DTAAs. Most of these DTAAs contain provisions for lower rates of tax in case of incomes like dividend, royalties, fees for technical services etc.

An NRI's income taxes in India will depend upon your their 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 a NRE account and FCNR account is tax free. Interest on NRO account is taxable for an NRI.

Here’s how you can check your residential status for a financial year.

You're considered a 'resident' in a financial year if you satisfy one of the conditions below:-

• You are in India for 182 days or more during that financial year

OR

• You are in India for 60 days or more during that financial year AND you are in India for at least 365 days during the 4 years preceding that financial year.

An exception is made for Indian citizens working abroad and members of a crew of an Indian ship or a PIO visiting India, where 60 days is replaced with 182 days.

You are an NRI if you do not meet any of these conditions

Income Tax Return must be filed by an NRI when their total income (before any deductions) is more than Rs 2,50,000 (for AY 2015-16 or FY 2014-15).

Income Tax Return must be compulsorily filed in the following cases:-

• NRI has short term or long term capital gains from any investments or assets (even when gains are less than Rs 2,50,000).
• To get a tax refund.
• To carry forward losses so they can be adjusted later.

A return need not be filed if income from short term or long term capital gains is the only income the NRI has and TDS has been deducted on it.

Deductions under section 80

Some of the deduction under section 80C are available to NRIs – life insurance premium paid in India, ULIPs and ELSS purchased in India. Purchase of NSCs or investments in new PPF accounts are not allowed as deductions under Section 80C for NRIs. Deduction under section 80D for health insurance premium payments for parents are also allowed to be claimed. Here is complete guide to deductions under section 80C.

Deduction from House Property Income for NRIs

NRIs can claim all the deductions available to a Resident from Income from House Property for a house purchased in India. Deduction towards property tax paid and interest on home loan deduction is also allowed. You can read about house property income in detail here.