If an Indian citizen leaves the country for a job abroad or as a crew on an Indian ship and spends less than 182 days in India in a year, he or she is considered non-resident for tax purposes. For Non-residents there are certain, income tax rules that they need to follow. We are here with the three such income tax rules that every NRI should know in order to pay tax uninterruptedly in India and proceed for the further things for financial management well.
1)An NRI has to pay tax on any income that accrues or arises in India or is received in India. So salary received in India, rental income, interest income from fixed deposits or saving bank accounts and capital gains on assets sold in India are taxable. If the income of an NRI is more than the basic exemption limit for the year, he or she is liable to file return in India. Also, to claim tax refunds, or to carry forward losses to future years, NRIs have to file return.
2) If an NRI returns permanently to India after spending a few years abroad, his/her foreign income does not become taxable in India immediately. An individual, who has been a non-resident for nine consecutive years, remains RNOR (Resident but not Ordinarily Resident) for two years for tax purposes, which is transitional status between being an NRI and becoming a full-fledged resident Indian.
3) In this year’s Budget, it was announced that TDS (tax deducted at source) will not be deducted at a higher rate if an NRI without PAN can provide alternative documents. Earlier the NRI had to pay the tax at the rate of 20 per cent or the rate in force whichever is higher in case the NRI doesn’t furnish the PAN. As per the new provision, the NRI doesn’t have to pay the higher tax if he doesn’t furnish PAN and instead provides the documents specified under the recently notified rules in this regard.
However there are many other income tax rules but these are definitely the ones that would be much helpful for the NRI’s next time they would head for their taxes. Contacting a good and trustworthy NRI tax service company would also serve the purpose.