When Is a Person Considered A Non-Resident Indian?
Non-resident Indian' is an individual who is a citizen of India or a person of Indian origin and who is not a resident of India. Thus, in order to determine whether an Individual is a non-resident Indian or not, his residential status is required to be determined under Section 6. As per section 6 of the Income-tax Act, an individual is said to be non-resident in India if he is not a resident in India and an individual is deemed to be resident in India in any previous year if he satisfies any of the following conditions:
Always render more and better service than is expected of you, no matter what your ask may be.
NRI’s taxable income depends on his residential status for the year. In case, the status is ‘resident’, his/her global income is taxable in India. If the status is ‘NRI’, the income which was earned or accrued in India is taxable in India. Some examples of taxable income are listed below:
Determining residential status: The first step is to determine your residential status which has to be determined with respect to a financial year. Thus, in order to determine whether an Individual is a non-resident Indian or not, his residential status is required to be determined under Section 6.
Calculating taxable income: Then, you must calculate your taxable income. If your total gross income (It refers to total income before tax deductions) exceeds Rs 2.5 lakhs, you have to pay taxes in India. This income could be from several sources. It could be in the form of your salary. It could be capital gains on the sale of shares and mutual funds. Interest from deposits in NRO accounts and rental income is also a part of the bracket.
Claiming double taxation treaty benefit: DTAA enables an NRI to avoid paying tax twice on the same income. As per DTAA, an income may either be exempted from tax deduction in one country or taxed at a lower rate in the home country. If you have already paid tax in India. You can then get a tax credit in the country of residence. The credit is available on the tax paid on the same income.
Verify IT returns: Once you have filed IT returns, you need to verify them within 120 days. Otherwise, they are not valid.
No, it is not necessary to be physically present to file and verify your income tax returns. You can file income tax return online from anywhere in the world. You can send signed copy of ITR-V to the CPC Income Tax Department, Bengaluru or e-verify the same within 120 days from the date of filing your ITR.
Specified payments in the nature of rent, professional or technical fees etc made to an NRI requires tax deduction at source by the individual making the payment. The individual must obtain a TAN for himself in order to deduct taxes at source. Further, Form 15CA (to be filed by the person making the payment) and Form 15CB (to be obtained from a Chartered Accountant) are also required for making payments to non-residents.
An NRE account is a bank account opened in India in the name of an NRI, to park his foreign earnings; whereas, an NRO account is a bank account opened in India in the name of an NRI, to manage the income earned by him in India. An NRI can open a joint NRO account with one or more NRIs or Indian citizens.