You are liable for paying taxes in India even if you’re a Non-Resident Indian. But you may utilize these NRI tax methods to your most significant advantage.
Creating an NRE Accounts
An NRE account might be a fixed, reoccurring, or savings deposit. Taxes are not due on the principle or interest payments in India. Additionally, you may transfer principle and interest elements tax-free from India to the nation where you now live. All reputable Indian banks provide NRE account management.
Use the DTAA as a powerful tool to prevent double taxation.
Taxes on a single source of income should never be paid twice. As a result, India and many other nations have ratified A double Avoiding Tax Agreement (DTAA). Individuals may use this contract’s terms to prevent double taxation. Three methods exist for claiming relief because of double taxation:
Following the TDS procedure is the exemption approach. In one nation, taxes apply; in the other, they do not.
• The deduction technique ensures that taxes are collected in the nation where money is produced and deducted from the overall income received worldwide. The differential between income generated and taxes previously paid in one nation is then used to compute tax in the second country.
• The tax credit approach assists the amount of tax collected in a single nation.
Effectively utilize RNOR status
The Resident but Just not Generally Resident (RNOR) category is available to you if you just returned to the country. Only income earned or accrued in India is subject to taxation for those holding the “RNOR” status, and India would not tax income generated outside of the country. In India, withdrawals from foreign accounts, foreign-earned rent, and foreign-earned capital gains are tax-free. For two fiscal years, starting when you arrive back in India, you may benefit first from RNOR status, provided you have a NRI for 8 out of 10 previous years.
Deductions that apply to NRIs
The majority of tax deductions that are available to residents are also available to NRIs. Therefore, the following may be deducted:
• Amounts paid as interest on Indian house loans.
• The cost of self-, spouse-, child-, and parent-owned health insurance has been paid.
• Interest on student loan debt
• Section 80G donations
• Interest earnings on NRO savings account up to a limit of Rs. 10,000
To maximize the amount of taxes you pay, use these expenditures judiciously.
For instance, if you know you’re traveling to India again and want to own and reside within your home, you should consider taking out a home equity loan. You should get healthcare coverage for your Indian parents if they are dependents.
Tax refunds and advance payments
You must also pay advance taxation as an NRI tax consultant in Pune. You must pay progressive taxes if your annual tax due exceeds Rs 10,000. If you haven’t paid it on time, interest will be charged. On or before the 15th of June, September, December, and March, advanced tax may be paid.
Similarly, you are entitled to a full refund if you overpaid tax. If you submit your IT return or have it confirmed within the requirements for the financial year, you will automatically get the excess tax back.
When handling your taxes, you must exercise caution. As just an NRI, one must take taxes in many nations, requiring work, consideration, and tax law expertise.
If you’re not confident handling it on your own, you may seek the assistance of a tax consultant for NRI in India. You could even decide to perform it yourself once you’re comfortable.