Nri Services

You are considered an Indian resident for a financial year if you satisfy any of the conditions below:

• When you are in India for at least 182 days during the financial year
• You have been in India for 60 days in the previous year and have lived for 365 days in the last four years

If you are an Indian citizen working abroad or a crew member on an Indian ship, only the first condition is available to you.

If you do not meet any of the above conditions, you are a Non-Resident Indian.

Resident but Not-Ordinary Resident (RNOR) definition amended

Individuals will be considered as RNOR for the year if they meet the following conditions:

• If you’ve been a non-resident in India for 9 years out of 10 previous years preceding the year of consideration, or
• If you have stayed in India for 729 days or less during 7 previous years preceding the year of consideration

The Finance Act 2020 has amended the residency provisions to include Indian Citizen/Person of Indian Origin, who comes to visit India shall now be considered as RNOR subject to the following conditions:

• Total income other than foreign income is Rs 15 lakh or more,
• The individual has stayed in India for more than 120 days but less than 182 days in the previous year, or
• The individual has stayed in India for 365 days or more in four years preceding the previous year

Before this amendment, such individuals were classified as non-residents. Due to the amendment mentioned above, the individual’s residential status may be classified as RNOR, which will lead to loss of DTAA benefits, increased scope of total income for taxability, loss of various exemptions allowed, etc.

It is to be further noted that in the above amendment, an individual staying for more than 182 days shall be classified as a resident irrespective of the level of income in the previous year.

Deemed residency status introduced in Finance Act 2020

Finance Act 2020 introduced the concept of ‘Deemed residency’. According to this, Citizens of India earning more than Rs 15 lakh from Indian sources shall be deemed a resident of India if they are not liable for payment of taxes in any other country.

The deemed residents shall be classified as RNOR with effect from the financial year 2020-21. This amendment was brought in force to tax the incomes of the Indian citizens who are not liable to pay tax in any country.

An NRI’s income taxes in India will depend upon his residential status for the year as per the income tax rules mentioned above.

If your status is ‘resident’, your global income is taxable in India.

If your status is ‘NRI,’ your income earned or accrued in India is taxable in India.

When an NRI receives the amount in India, your salary income is taxable, or someone does it on your behalf. Therefore, if you are an NRI and receive your salary directly to an Indian account, it will be subject to Indian tax laws. This income is taxed at the slab rate you belong to.

Income from salary will be considered to arise in India if your services are rendered in India.

So even though you may be an NRI, if your salary is paid towards services you provide in India, it shall be taxed in India immaterial of the place where you are receiving the income.

Income from a House property that is situated in India is taxable in the hands of an NRI.

A tenant who pays rent to an NRI? owner must remember to deduct TDS at 30% while paying rent.

The income can be received to an account in India or the NRI’s account in the country they are currently residing in.

Income from other sources like interest income from fixed deposits and savings accounts held in Indian bank accounts is taxable in India. Interest on NRE and FCNR accounts is tax-free. Interest on NRO accounts is fully taxable.

Any business income earned by an NRI from a business controlled or set up in India is taxable to the NRI.

Any capital gain on transfer of capital asset which is situated in India shall be taxable in India.

Capital gains on investments in Indian shares, securities shall also be taxable in India. If you sell a house property and have a long-term capital gain, the buyer shall deduct TDS at 20%. However, you can claim capital gains exemption by investing in a house property as per Section 54 or investing in capital gain bonds as per Section 54EC.

When NRIs invest in certain Indian assets, they are taxed at 20% on the income earned. If the special investment income is the only income the NRI has during the financial year and TDS has been deducted, then such an NRI is not required to file an income tax return.

Similar to residents, NRIs are also entitled to claim various deductions and exemptions from their total income. Most of the deductions under Section 80 are also available to NRIs as available to residents.

NRI or not, any individual whose income exceeds Rs 2,50,000 is required to file an income tax return in India and the last date is 31 july.

Original Source – Cleartax