Generally An NRI is a person resident outside India who is a citizen of India or is a person of Indian origin. However there are different definitions of NRI under FEMA and Income Tax Act. We at SGA, help our NRI clients to understand the complex provisions of the definition of Residents, Non Residents, Residents but not Ordinarily Residents & Deemed Residency.
Under the Foreign Exchange Management Act (FEMA), generally, a person is resident outside India if he is in India for less than 182 days during the course of the preceding financial year and also includes any person who stays abroad:
From the FY 2020-21 , an individual is resident in India if he is in India in the financial year for:
Genrally, an individual who does not satisfy the above conditions is a non-resident.
Also from FY 2020-21 , A resident is “not ordinarily resident” in India in any financial year if he:
We at SGA, as a NRI Tax Consultant in Pune, provide various NRI Advisory Services, like Evaluation of NRI Residential Status, Applicability of New Provisions of Deemed Residency applicable from FY 2020-2021 onwards , NRI Income Tax Consultation, NRI Income Tax Returns Filing, NRI Investment Advisory Services, NRI Tax Implications on Sale of Property, 15CA CB Advisory and Certification Services for remittance of funds outside India , etc .
The Finance Bill, 2020 has proposed that an Indian citizen shall be deemed to be resident in India, if he is not liable to be taxed in any country or jurisdiction. This is an anti-abuse provision since it is noticed that some Indian citizens shift their stay in low or no tax jurisdiction to avoid payment of tax in India.
The new provision is not intended to include in tax net those Indian citizens who are bonafide workers in other countries. In some section of the media the new provision is being interpreted to create an impression that those Indians who are bonafide workers in other countries, including in Middle East, and who are not liable to tax in these countries will be taxed in India on the income that they have earned there. This interpretation is not correct.
In order to avoid any misinterpretation, it is clarified that in case of an Indian citizen who becomes deemed resident of India under this proposed provision, income earned outside India by him shall not be taxed in India unless it is derived from an Indian business or profession.
There is one more class that is slightly different from Resident and NRI. They’re called ‘Resident and Not Ordinary Resident'(RNOR). You classify as an RNOR Indian if you satisfy below requirements.
In case of RNOR individuals, the foreign income (i.e., income accrued outside India) shall not be taxable in India. Foreign sources means income which accrues or arises outside India (except income derived from a business controlled in or a profession set up in India).
Your funds in NRE savings accounts are held in convertible rupees – principle and interest are fully repatriable. Interest income is fully exempt from tax in India. The savings account can be opened jointly with a Non-Resident individual.
Fixed deposit in Indian rupees where the principle and interest are fully repatriable. All interest earned is fully exempt from tax in India. The account can also be opened jointly with a non-resident.
Your funds in Non Resident Ordinary (NRO) savings account are held in India, in Indian rupees. The NRO account can be funded through NRI income in India. Only the interest in an NRO account is repatriable. Interest income on this account is liable for Indian Income Taxes. Non-Resident Ordinary [NRO] Rupee fixed account Fixed deposit in Indian rupees where the earnings in India can be deposited. The interest is repatriable [after payment of tax].
The FCNR Deposit is a fully repatriable foreign currency deposit available in major currencies: US Dollars, Pound Sterling, Euros, Australian dollars and Canadian dollars. Your funds in FCNR Deposits are maintained in foreign currency and are fully repatriable, including the interest you earn. All interest earned is fully exempt from tax in India.
Yes, you can remit funds for opening the account in any convertible currency. The NRO / NRE accounts are maintained in rupees and the funds remitted will thus be converted into India rupees at the spot exchange rate. Foreign currency deposits can be maintained in the currency of your choice i.e. USD, GBP, EUR, AUD and CAD etc.
Yes, an NRI can invest in certain Mutual Funds subject to certain conditions. The offer document should clearly state the NRIs could invest in the scheme. Please contact us and we will be glad to assist you.
Currently, Indian citizens who work or do business outside of India are considered non-residents under the country's tax laws. However, if an NRI spends more than 182 days in India in a financial year, he is considered a "resident" of India.
If your taxable income exceeds the basic exemption level, you must file an ITR (i.e. Rs 2.50 Lacs in the case of individuals). ITR filing isn't required if your total taxable income falls under the exemption level (section 139 of the Income Tax Act).
If they are residents in India, all of their worldwide income is subject to taxation. In the case of NRIs, any income generated or accumulated in India is subject to Indian taxation.
Anyone earning more than Rs 2,50,000 per year, NRI or not, must file a tax return. NRIs are solely taxed on income earned or received in India.
Non-resident Indians do not have access to several key deductions that are available to residents.
A PAN Card is needed to do this.
Retain your non-resident Indian status.
Use what you have.
Interest on a Home Loan
NRIs who file ITRs after the end of India's financial year are entitled to TDS refunds. To get a refund on the bank's TDS, an NRI must assess their own income and tax responsibilities.
Your monthly savings of 75% (from 4.5 lakh) amount to 3.375 lakh rupees, which may be invested in one of the following ways: Equity Mutual Funds INR 1,68,750 lakh/month, or 50 percent of the entire investment.
A resident who spends more than 182 days outside India becomes an NRI. A "resident" is someone who has spent more than 60 days in India in the last year and 365 days in the previous four years.