A Complete Guide On Taxable Income Of Non-Resident Indians (NRI’s)

Whether you has to pay tax and file a return in India, depends upon your residential status. How residential status is determined? You have to find out your residential status in financial year 2015-2016.

If you have spent less than 60 days in India, then you are an NRI (non-resident Indian). If you are an Indian citizen leaving India for a job abroad and you have spent less than 182 days in India, then you will be considered NRI. The time limit of 182 days is permitted to persons of Indian origin who come on a visit to India. Suppose you have spent more than 60 days in India, but less than 182 days, in such a case if you have spent a total of 365 days in the past 4 years in India, then you will be considered a resident of India.

If you are an NRI, and earn an income from a source in India, such income is taxable. Apart from this, income from a job where services are provided in India is taxable as well. Therefore, though you may be a non-resident Indian, if you worked in India for a part of financial year 2015-16 and earned a salary, then this salary will be included in your taxable income. Also, if you have rented out a property in India, you have to pay tax for the rent that it earns in India.

Furthermore. There is a similar tax treatment for capital gains on sale of assets situated in India. Or we can say you have to sum up all the incomes, which either originate in India or are received here. Also, the tax slabs applicable to NRIs are the same as residents of India. Rules have been laid down for TDS on certain payments made to NRIs. Also, those paying rent to NRIs have to deduct TDS. You can take credit of the TDS against your final tax due like inhabitants.

How to know your total taxable income if you are an NRI. Let understand it with an example. Suppose, you are an NRI and lives in the US.Salary is paid to you in dollars in the US, and have some money in a bank account in India and earn interest on it. Apart from this, you have an apartment in Mumbai as given it on rent for Rs.30,000 pm. Also, you gift an expensive gift item to his parents and transfers Rs.15,000 every month to their account to help with their household expenses. You also buy an insurance policy of Rs 25,000 in India for your parents. You total income from rent is Rs 3,60,000. A standard deduction of 30% is allowed from income via house property as per Section 24 of the Income Tax Act.

Thus, your income from the rented apartment is Rs 2,52,000. Add to this interest income from bank accounts of Rs 20,000. So, you total income to Rs 2,72,000, which shall be taxed in India. You can claim a deduction of Rs 25,000 under Section 80C towards life insurance purchased for your parents. So, total taxable income is Rs 2,47,000, on which income tax slabs shall be applied as well as tax paid accordingly. You will also have to file a return in India. Keep in mind that the expensive gift car and the Rs 15,000 sent for your parents is not taxable for you as well as for your parents.

There are many NRI Tax Consultants in Pune and providing taxes related consultancy services at affordable prices. You can go for a reliable one if you need consultancy services on NRI Taxes in India.


Sachin Gujar & Associates,
Chartered Accountants
47/22, Erandwana, Law College Road,
Ekta Apts, 3rd Floor, Above Nirmitee Furniture,
Pune - 411004

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