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The residential status of an Indian citizen must be determined on a stand-alone basis For each financial year, which may be different for each year. In accordance with the residency requirements under...

The residential status of an Indian citizen must be determined on a stand-alone basis For each financial year, which may be different for each year. In accordance with the residency requirements under the Income Tax Act , if a person is considered to be a non-resident , they are then subject to tax only on earnings earned or accumulated in India. In the case of income received directly or indirectly from India , income will then be deemed to be accrued in India. Up until the financial year 2019-20 NRIs would include individuals of Indian ancestry who spent less than 182 days in India in a given FY. However, Budget 2020 brought the residency period down to 120 days for NRIs with Indian revenue in excess of Rs 15 lakhs.

The 2020 Finance Bill tabled an amendment stipulating that a person of Indian origin will be “deemed to reside in India”, If his income from Indian sources is in excess of Rs 15 lakhs, and the rest of his income is not taxed in another country. They have had their residency period reduced to 120 days. Individuals who are considered “deemed residents” as a result of not being taxed in another country. If their time in India is more than 120 days but less than 182 days, they will be considered “Residents but Not Ordinary Residents”.For RNOR, only income of Indian origin is liable to tax.Income from India also includes income from any company or occupation that is controlled or established in India.People who were receiving the benefit before,they will fall within the scope of these new provisions.So it's important that an Indian citizen does an evaluation of the resident status in advance to determine the tax payable.


  • SALARY INCOME : Earnings from salary received in India or from services performed in India are subject to the taxation laws of India. Therefore, if an NRI is paid for services performed in India, the income is taxable wherever it is received. The tax rate will correspond to the rate of slab applicable to the particular financial year. In the event that the Government of India remits any salary or income of a citizen of India for services performed outside India, it will always be treated as accumulated income in India and will be subject to taxation. Even though the person's status is “non-resident”, according to the residency rules.
  • HOUSE PROPERTY INCOME : The rental income of the home located in India is taxable to a NRI owner of the home. Taxable income from ownership is determined on the same basis as the resident.The advantage of the standard deduction of 30% percent , property tax deductibility paid , and interest on a home loan is also permitted to the non resident indian. Deduction under section 80C for principal repayment , stamp rights and registration fees paid upon purchase may also be claimed. The person who pays the rent to NRI is responsible for deducting the 30 per cent TDS under section 195.The tenant must also complete Form 15CA and submit it online to the income tax department. A certified chartered accountant's Form 15CB is conditionally required where the payment amount details , TDS rate , TDS deduction according to section 195 , and the rules of DTAA are rightfully certified. 
  • INCOME ACQUIRED FROM OTHER SOURCES : Other income from sources such as interest received on savings accounts and fixed deposits in Indian banks is subjected to taxation by the NRI. Interest on NRE and FCNR accounts is not subject to tax in India. But the interest earned on the NRO account is fully liable to taxation. The NRO account is opened in the name of NRI for the purpose of managing income earned in India.
  • INCOME ACQUIRED FROM JOBS AND BUSINESS : Any income earned by an NRI who is not resident in a company established or controlled in India will be considered revenue accrued and thus taxable in India.
  • CAPITAL GAIN INCOME : Capital assets such as real estate, shares and securities and gold that are of Indian origin is liable to tax in India. If an NRI moves a capital asset located in India , he is subject to capital gains tax; the regulations are the same as those for residents.If an NRI sells a property with over 2 years of ownership , then the purchaser has to deduct the TDS at the rate of 20%. If the holdback period is under two years, the TDS deducted will be 30%. NRIs can apply for the capital gains exemption under section 54 through investment in the ownership of the home or in accordance with Article 54 EC by investing in capital gains bonds.For gains on the sale of listed Indian shares and securities, the tax rules are also similar to those for Indian residents. In the case of a holding exceeding 12 months, it will be considered as 10% taxable long-term capital gains in excess of Rs 1 lakh earnings. For a holding period of less than 12 months, a charge of 15% will be due.For loan mutual funds, the interest will be deemed to be 36 months for the treatment as long-term capital gains.And taxed at 20% after indexing while earnings are below 36 months from the holding period will be assessed as a short-term capital gain at the applicable individual slab rate. NRIs are not permitted to adjust their capital gains income from the basic exemption limit of Rs 2.5 lakhs , as may be done by resident citizens for income tax purposes. 
  • DOUBLE TAXATION RELIEF : With respect to INR income tax in both countries ( India and resident country ) , DTAA tax relief , between the two countries it is possible to look for. There are two ways that tax relief under DTAA can be sought. i) exemption method ii) Tax credit method. Under the exemption approach, NRI will be imposed in one country and exempted in another.While in the method of tax credit, where income is taxed in both countries Health Fitness Articles, tax relief may be sought in the current home country.

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