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Income Tax Filing For NRI in India

If you NRI and have income from any source in India, the ITR for NRI applies to you. Click here to know all types Taxable income for the NRIs which will be helpful for NRI taxation also the tax deduction and exemptions for NRIs.

  • Oct 01, 2019

If you are a Non-Resident Indian (NRI) and have taxable income from any source in India, the Income Tax Return (ITR) for NRI applies to you. You are considered as an NRI if you have not lived in India for six months of the previous financial year, you were in India during the last financial year but for less than 60 days, or if you have lived in India for less than a year in the last four years.

Taxable income for the NRIs

Different forms of taxable income accrued in India for NRIs:

  • Salary for services provided in India
  • Income from real estate
  • Capital gain earned from selling assets in India
  • Income from the savings bank account and fixed deposit

The other sources of income that are taxable in India for the NRIs include:

1. Income from housing property

If you are an NRI who has regular income from a property in India, the earnings are taxable in the same way in which it is for the Resident Indians. If you have a home loan, you can claim a tax deduction on the interest paid. Under Section 80C of the Indian Income Tax Act, 1961, you can claim tax exemption on principal, registration, and stamp duty- related charges.

2. Income from capital gain

When filing a Non-Resident Indian Income Tax Return, do not forget that any income from capital gain is taxable in India. The earnings made from the sale of any property in India, including shares and securities, are considered as a capital gain. In case of sale of a property, the buyer has to subtract 20% Tax Deducted at Source(TDS) while making the payment if the property is sold two years after purchase. Any long-term capital gain made from equity-oriented investments is taxed at 10%.

3. Special provision related to long-term capital gains

Any long-term capital gain made from selling assets in foreign countries is also taxable in India. However, this income does not come with any tax benefits under Section 80 of the Income Tax Act, 1961. You can reinvest the income in following options to earn tax benefits under Section 115F of the Act:

  • Shares of an Indian company
  • Debentures of a public company in India
  • Deposits with Indian public companies and banks
  • Central government-issued securities
  • National Savings Certificate (NSC) VI and VII issues

Tax deductions and exemptions for NRIs

You can enjoy tax deduction and exemptions on:

  • Life insurance premiums
  • Payments made towards educational institutions for children’s tuition
  • Repayment of principal for home loans
  • Premium paid towards health insurance on behalf of self, dependent children, spouse, and parents
  • Repayment of educational loan taken for the higher education of self, spouse, children, and a legal heir
  • Any donation made towards social causes
  • Deduction up to INR 10,000 on the interest earned from the savings bank account

When you are filing for NRI taxation, remember these taxable incomes and deductions to avoid paying any additional amount.

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