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Taxes collected from the individuals by the central government are very important for the Indian economy. The government uses the money received in the form of taxes to improve infrastructure, provide public health care services, and develop rural areas.
Under the Indian Income Tax Act, 1961, Non-Resident Indian (NRI) taxation applies to those individuals that reside outside India but generate income in India through FDs, shares, property rentals, etc. The income tax rules and perks which are applicable in the case of NRIs are really different from the ones applicable to the resident Indians.
In this article, we will discuss the tax for NRIs.
There are two factors which can help to determine whether or not an individual qualifies as a resident of India in a particular FY (April - March), based on the Income Tax Act, 1961, and he has to file an ITR accordingly. These factors are mentioned below:
There are two tax regimes that are operational in India, namely New Tax Regime and Old Tax Regime. The primary income threshold for taxation is reached when an individual’s income exceeds Rs. 2.5 lakh in the old tax regime or Rs. 3 lakhs in case of the new tax regime.
If either of the two conditions are satisfied with respect to the individual’s period of stay, he will be considered a resident:
If you aren’t a resident as per any of the two conditions mentioned above, you can check if you’re eligible for deemed residency for taxation purposes. If you satisfy both the conditions mentioned below, you will be a deemed resident of India.
According to the Income Tax Act, 1961, if you are neither a resident nor a deemed resident, you will be considered an NRI.
As per the Foreign Exchange Management Act (FEMA), 1999 and the Income Tax Act, 1961, taxes can be paid by an NRI under the following conditions:
Let’s discuss an NRI’s taxable income in detail:
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It is really important for the Non Resident Indians (NRIs) to understand the income tax slabs that apply in their case so that they can choose the right tax regime, stay compliant with the laws, and optimize their tax liabilities. NRIs must stay updated about the prevailing tax rates and exemptions which apply to their income sources in India. For assistance in filing your ITR, you can reach out to Registrationwala.
Hey there, I'm Dushyant Sharma. With the extensive knowledge I've gained in past 8 years, I have been creating content on various subjects such as banking, insurance, telecom, and all the important registration and licensing processes for various companies. I'm here to help everyone with my expertise in these areas through my articles.