• Home News Income Tax Provision an NRI should know

Income Tax Provision an NRI should know

Posted 20 Jan-2020 06:15 PM by Noora | 16

As per Income tax act, 1961 there are 5 heads of income under which an assessee may have to pay the taxes and this assessee includes the residents and Non-residents. Although, It is normally noticed that a non-resident does not possess such knowledge of the Act by which he, unintentionally, did not the taxes and then have to suffer interest and penalty. Well if you are a Non-resident then this article will help you to identify whether you will be liable to pay the taxes in India as per your income or not.

If you are a resident and went abroad for some time then this article is relevant for you also, because in this article there are some provision has been explained for such persons.

Before understanding the taxation, first, it is necessary whether you are covered under the Non-resident definition under the Income-tax act or not.

As per section 6 of the Income-tax Act, 1961, a person is called a resident who stays in India for 

  • 182 days or more in the current Previous Year or
  • 60 days or more in the current Previous Year and 365 days or more in preceding 4 Previous Years.

Example 1: Mr. A went to Australia for the 1st time for employment on 12th August 2018. He returns to India on 24th April 2019. 

Now, check the above conditions

  • The period from 12.08.2018 To 31.03.2019= 255 Days i.e. more then 182 days hence in FY 18-19, Mr. A shall be an NRI as per this condition.

In simple words, if both the above conditions have been fulfilled then he shall be called Non-Resident and if any one of the conditions or none of the conditions were satisfied then he shall be called a resident and his global income shall be taxable.

Hence, if as per the above definition if you are an NRI then you should know the income tax provision as defined below which treat NRIs differently from resident Indians. By this article, I have tried to explain it in a very simple manner about the tax implications under Income tax act for NRI:

1. For Non-Residents, that income which has been received in India or earned or accrued in India shall be taxable in India.

As per the Income-tax provisions, if you are an NRI as per the above definition, then you shall be liable for the payment of tax in India in respect of that income which has been received in India or earned or accrued in India.

Now let me give you some examples for more clarification:

A foreigner shall be liable for the payment of taxes in India if he received:

  • Salary in India;
  • Services provided in India;
  • Income received from house property in India
  • Capital gain arising from the sale of his property situated in India
  • Income from Investments
  • Interest received from saving bank account.

The above was mentioned about the Non-resident. However, if a person is a resident earning the income in India as well as out of India, he shall be required to pay the taxes on both kinds of income i.e on Indian income and foreign income both. 

While a person is NRI earning the income from outside India and in India he shall be liable for the payment of taxes in India only in respect of income which has been earned in India.

It might be possible that for NRI, there would be some income which is taxable in India as well as his country of residence. In such a case, he can claim the credit of tax from his residence country by double taxation avoidance agreement. This may vary from case to case basis.

If you to know more about double taxation avoidance agreement then you can refer our previous article.

2. NRI cannot avail the benefit of basic exemption if he is having again from the term capital assets in India i.e. having a long term capital gain:

Tax slab rate for a person being an individual aged less than 60 years or a person being Non-resident shall not be required to pay the taxes on the total income up to Rs.2,50,000. It means if the Non-resident is having the total income up to Rs.2,50,000 than he would not be required to file the income tax return. 

However, if he is having a long term capital gain onlythen such a basic exemption limit shall not be available to him.

Note: In case, if his income is more than the basic exemption limit i.e. Rs.2.5 Lakh and the TDS has been deducted on the whole amount of tax amount if

In simple words, a person is having again from long term capital assets shall not be eligible to take the benefit of the slab rate. However, this condition shall be applicable only when he is having the income only from the sale of long term capital assets and does not have any other income in India.

If he is a resident, then he is not required to pay any tax because he can avail the benefit of sab rate since his income is below the exemption limit. However, 

For example, a person being resident has LTCG of INR 4 Lakh then he is liable to pay tax on INR 1.5 Lakh (i.e amount above basic exemption limit) however an NRI has to pay tax on total INR 4 Lakh and he would not take the benefit of basic exemption limit.

Note: Total Income means the income after allowing all the deductions after chapter VI-A

3. An NRI is not eligible to invest in PPF.

As we already know that if a person makes an Investment in any of the schemes as mentioned in section 80C under Chapter VI-A, he shall be eligible for the deduction of maximum up to Rs.1.5 lakhs per annum. Under section 80C, one of the investments is in PPF (Public Provident Fund). Also, if any interest being earned on PPF account and maturity proceeds, both shall be exempted from tax. This investment is one of the best investments for tax purposes. However, an NRI is not eligible for the investment in PPF anymore. Kindly note, if the residential status of a person being a resident is subsequently changed to NRI, the account was allowed to be run till maturity.

4. An NRI is not eligible for taking the deduction under section 80DD and 80DDB which relates to expenditure incurred in respect of the medical treatment of self or dependent (handicapped/person of disability/suffering from the specified disease).

It means if an NRI has incurred expenditure in respect of the medical treatment of self or dependent as mentioned in section 80DD and 80DDB, such NRI cannot claim any deduction. Although if the said expenditure is being incurred by a resident, he can claim the deduction.

Kindly note that the above disallowance for NRI is not made under section 80D i.e, deduction under section 80D, the amount paid for medical insurance or medical expenditure which has been incurred on the health of self or family shall be available for resident and non-resident both.

5. As per Finance Act, 2019, the benefit of Nil tax on the total income up to Rs.5 lakhs, is not available to Non-resident Individual under section 87A.

As many of us know that in the finance budget 2019, the government has given very beautiful benefits to all the individual resident person under which it states that if the total income of a person being a resident Indian is up to Rs.5 Lakhs then he is not required to pay the taxes. Let me explain it with an example: if a person is having a total income of Rs.5 Lakhs then after giving the slab rate benefit his total tax liability would be Rs.12,500 and as per section 87A, the government has increased the limit for deduction under section 87A from Rs.2,500 to Rs.12,500. In simple words, a resident individual is not required to pay the tax if his income is up to Rs.5 Lakhs. However, his income is exceeded by even a single rupee then he shall not be eligible for taking such deduction and liable for the payment of taxes by applying the normal tax slab rates.

Unfortunately, the said benefit of deduction under section 87A is not applicable to a Non-resident person

6. NRI is having a different TDS rate as a comparison to resident Indians. 

TDS means Tax Deducted at Source/Withholding tax. TDS rates are different where the deductee is non-resident and where a deductee is a resident person, Let me tell you with an example: A non-resident is selling its property in India to a resident person in such a case, the buyer shall be required to deduct the TDS under section 195 at the rate as prescribed under this section which may vary from long term or short term capital assets. However, if the seller is a resident person, then in such a case, the property buyer shall be liable to deduct the TDS under section 194IA at the rate 1% on the consideration value where the sale value has exceeded Rs.50 Lakhs.

TDS Certificate

7. Senior citizens being NRI is not eligible to take the benefit of slab rates which is available for senior citizen resident individuals. 

As per Income tax act, different slab rates has been defined for the different age group. For A.Y 2020-21, where a person is individual resident is aged between 60 years to 80 years, he shall be considered as a senior citizen and his income up to INR 3 Lakh will be exempt from income tax. If a person having an age of more than 80 years, he shall be considered as a super senior citizen and his basic exemption limit is increased to Rs.5 lakh. However, this benefit is also not available to a person being Non-resident. In other words, an NRI, even he is a senior citizen or super senior citizen, his basic exemption limit shall be the same i.e. Rs.2.5 Lakhs and he shall be liable for the payment of income tax as per the normal slab rate.

8. Deduction of Rs.50,000 on interest on deposits under section 80TTB is not available.

As per section 80TTA, a person being a resident individual aged less than 60 years and a Non-resident, is having an income from interest on deposits from Banks or post office than they shall be legible for the deduction up to Rs.10,000 or the amount of income whichever is lower. However, if the said person has aged is 60 years or more is a resident individual, the deduction amount shall be increased to Rs.50,000 under section 80TTB. In simple words, the benefit of Section 80TTB is not available to Non-resident persons. 

9. NRI person does not require to have an Aadhaar number

As per Section 139AA of the Income-tax Act, 1961, it is compulsory for the assessee to quote the aadhar number at the time of filing of his income tax return however there are some exceptions are also specified in this section which includes Non-citizen of India. Hence, a person being NRIs are not required to quote aadhaar number while filing an income tax return

Company Information

Company Name Contact Person Contact Number Email Id Website
AKT Associates Noora Khan 8080809061 [email protected] https://aktassociates.com/

Latest News

Edinburgh Letting Agent Celebrates Strongest Year to Date Excluive

Clan Gordon, founded by brothers Andrew and Jonathan Gordon in 2008, has seen its properties under management grow by three per week on average, with ...Read More


Heart diseases are extremely common all over the world; but, the rising of disease statistics is a cause for anxiety. Each and every heart condition i...Read More

JC Howell Teams with WWII Soldier James Dorris to Examine the Purpose of Life Excluive

A Dachau liberator’s tale told by an expert storyteller will reignite readers’ search for personal meaning in today’s world.DALLAS, Tex. — Wor...Read More

Cleaning Supplies For Businesses: What You Need to Know Excluive

Looking for cleaning supplies for your business online, it can be hard to determine what provider to use. There are some characteristics of companies ...Read More

Discovery Map's Sam and Ann Douglass celebrate 25 years of Making Maps, Friends and Memories Excluive

Laconia, NH, Camden, ME, Rockland, ME, Hampton Beach, NH, Kennebunkport, ME, Wells, ME, York, ME, Ogunquit, ME, and Waitsfield, VT, Feb 15, 2020 -- In...Read More

Boost your sales by Choosing the Best ecommerce seller support service Excluive

When all is said in done, online business is characterized as the offer of items and services utilizing system associations gave by the web, including...Read More

Choose Rhino Pressure Cleaning for your High Pressure Cleaning Roof Tiles Excluive

If you are looking for services which would help you in maintaining your home and your commercial space without doing anything, then going for Rhino...Read More

Warm, Wet Winter Means More Bugs. Go-Forth Pest Control Anticipates Heavier Insect Pressure this Spring Excluive

Go-Forth Pest Control anticipates heavier insect pressure this Spring. This winter has been especially warm and wet. This means homeowners should be p...Read More

Altius Technologies Ready to Network at Digital 1to1 Barcelona Excluive

What would be a better opportunity to connect with industry experts than getting a chance to interact with them on a personalized one-on-one level? Th...Read More

Gong Cha Announces A New Store In Brooklyn With 15% Off On All Purchases Excluive

New York, USA - The long wait is finally over. Gong Cha, manufacturer of the best bubble tea in the world, is opening a new franchise in Brooklyn, New...Read More

StoneFly Announced Disruption-Free Live VMware VM Migration DTDs Excluive

StoneFly, Inc. the original innovator of the iSCSI protocol and a recognized leader in the data storage, hyperconverged, and backup and disaster rec...Read More

Agadir, An Integrated Economic Hub and Locomotive for the Entire Region Excluive

In the framework of the Industrial Acceleration Plan launched in 2018, the King of Morocco inaugurated the City of Innovation and launched the Agadir ...Read More

US Capital Global Business Credit Income Fund Launches Capital Raise in Fourth Year of Performance Excluive

Private investment fund providing direct loans to highly promising businesses publishes performance figures over the past three years and initiates ca...Read More

Gong Cha Grand Opening Of Lotte Plaza Market Store Excluive

New York, USA - Gong Cha, the best bubble tea manufacturer in the United States and all over the world has now opened a new franchise in the Lotte pla...Read More

Buy Branded Food From Online Grocery Shopping Site Basketor in Faridabad Excluive

Faridabad,Haryana,India – February 11, 2020 Basketor have collection of three thousand imported products from US, UK, Thailand, Taiwan and West ...Read More

How to Combat Dead Skin Issues During Winter Excluive

Winter is a time when the health of our skin is tested. We often find ourselves itching and battling against dry and dead skin that causes irritation....Read More

Angelo Sferrazza Talks About Why In the Year 2020 is a Good Time to Start a Business Excluive

With the corona-virus affecting a lot of the stocks in the stock market this makes a good opportunity to get good deals on buying businesses.Cincinnat...Read More

Altius Technologies Ready to Attend the Big Show Muscat 2020 Excluive

The Big Show Muscat 2020 is a large platform specially organized for networking of global leaders from the building and real estate industry. This is ...Read More

Cannabis Therapy South Africa Launches in Europe and America Excluive

Cannabis Therapy South Africa an established medical cannabis supplier  recently announced that their products are now available in Europe and Am...Read More

Learn to Be an Advocate and Recreate Your Privacy Excluive

KIRKLAND, Wash. – Spiders may be as common as grass, but according to Sheila Dean, we shouldn’t overlook them. Spiders are courageous, tenacious a...Read More

Boost your e-commerce sales revenue at Exclusively Electricals Trade Show 2020 Excluive

Exclusively Electrical Trade Show 2020 brings key suppliers of Electricals & Electronics together to attract buyers from all sectors of the small ...Read More

Recent Releases