Indian Tax Liability for NRI

Ans. The taxability of income of any person in India is based on his / her Residential Status under the Act and scope of total income determined thereof, which is explained in the ensuing questions (Refer Chapter 12 for details on Determination of Residential Status in case of individuals).

Ans.

Sr.No Particulars Residential Status
ROR RNOR NR
1. Income earned from any source in India is taxable in India. E.g.:
· Interest from Investments in India;
· Capital Gains from investments;
· Income from Immovable Property located in India;
Taxable Taxable Taxable
2. Any other income earned or received in India is taxable in India Taxable Taxable Taxabl
3. Income earned outside India from business controlled or profession set-up in India is taxable in India. Taxabl  Taxabl Not Taxable
4. Income earned outside India Taxable Not Taxable Not Taxable

For the definitions of the terms ‘NR’, ‘RNOR’ and ‘ROR’, please refer Chapter
12: Residential Status.

Ans. NRI can pay taxes in India as under:

i. Advance Tax – The tax liability in India is paid in instalments (at prescribed percentage of tax liability, mentioned in the Act) during the FY on the basis of estimate of taxable income in India;

ii. Tax Deduction at Source (TDS) – When an NRI earns any taxable income in India, the payer is liable to withhold the amount of tax applicable on the said income and pay the balance amount of income to the NRI. The taxes so withheld are paid to the Government of India on behalf of the NRI. A table documenting the TDS applicable in case of income of NRI is explained in ensuing question;

iii. Self-Assessment Taxes (SAT) – After end of the FY, NRI may also pay taxes after undertaking a Self-Assessment of his income along with the interest applicable.

Ans. The following are the TDS applicable to NRIs on income computed in accordance with the provisions of the Act subject to benefits under DTAA, if any, between India and the country of residence of NRI:

Sr. No. Type of Assets TDS Basic Rate of Tax*
1 Interest on Banking a/c
A NRO Savings Bank a/c Taxable 30%
B NRE Bank a/c Exempt Nil
C FCNR Deposit a/c Exempt Nil
2 Immovable Property
A Capital Gains
I LTCG Taxable 20%
II STCG Taxable 30%
B Rental Income Taxable 30%
3 Equity Shares and Units of Mutual Fund
A Capital Gains on equity shares sold after April 1, 2018
1 STT paid on both sale and purchase of shares (Listed)
I LTCG Taxable 10%#
II STCG Taxable 15%
2 STT not paid (not listed on Recognized Stock Exchange.)
I LTCG Taxable 10%
II STCG Taxable 30%
B Capital Gains on Units of Mutual Fund sold after April 1, 2018
1 STT paid on sale (Listed equity oriented Mutual Funds)
I LTCG Taxable 10%#
II STCG Taxable 15%
2 STT not Paid (not listed on Recognized Stock Exchange and Debt oriented Mutual Funds)
I LTCG Taxable 10%
II STCG Taxable 30%
C Dividend Income Exempt Nil
4. Other Securities
a Listed on Recognized Stock Exchange
I LTCG Taxable 20%
II STCG Taxable 30%
b Unlisted
I LTCG Taxable 10%
II STCG Taxable 30%

#The said Capital Gain income is exempt up to an aggregate amount of Rs.1,00,000/- and above that is charged at 10%.

*Rate of taxes shall be increased by applicable rate of surcharge and Health and Education Cess on income tax as given below –

Surcharge: In case of aggregate income paid or likely to be paid is as follows – 10% of income tax
I Exceeds Rs. 50 lakh but upto Rs.1 crore
II Exceeds Rs. 1 crore 15% of income tax
Health and Education Cess on income tax 4% of income tax and surcharge

Ans.

Slab Rates applicable in case of NRI [irrespective of whether being Senior Citizen of India or otherwise] for FY 2018-19 (i.e. 1 April, 2018 to  31 March, 2019)
Total Income
(Aggregate of all the sources of income taxable in India)
Basic Rate of tax**
Upto Rs. 2,50,000/- Nil*
Rs. 2,50,001/- to Rs. 5,00,000/- 5% of the amount by which the income exceeds Rs. 2,50,000/-
Rs. 5,00,001/- to Rs. 10,00,000/- Rs. 12,500/- plus 20% of the amount by which the income exceeds
Rs. 5,00,000/-
Above Rs. 10,00,000/- Rs. 1,12,500/- plus 30 % of the amount by which income exceeds
Rs. 10,00,000/-
*If NRI is having only STCG from Equity shares or Equity oriented Mutual fund (on which STT is paid), there is no benefit of basic exemption available. In such case basic rate of Tax @ 15%** is applicable.

*If NRI is having only LTCG from Equity shares or Equity oriented Mutual fund, there is no benefit available of above basic exemption of Rs. 2,50,000/-. However, such gain is not taxable up to an amount of Rs. 1,00,000/-. In such case, basic rate of Tax @ 10% is applicable on capital gains over and above Rs.1,00,000/-.
**Plus surcharge as applicable at 10%/15% on income tax and Plus Health and Education Cess (at 4%) on income tax and surcharge amount.

Ans. No, there is no change in tax rate applicable to NRI

Ans. It is understood that salary income received in NRE Bank a/c by Mr. A may be regarded as income received in India, which may be liable to be taxed in India. However, it has been clarified by the Government recently that in case of NRI seafarers on board of foreign ship, salary received in NRE Bank a/c in India shall not be included in Total Income taxable in India.

Ans. In the given case, it is seen that there is double taxation of income. In such a situation, taxes paid on such income in the source country (i.e. India, in the present case) may be claimed as credit while paying taxes in the resident country as per DTAA between India and country of residence of NRI and/or as per domestic tax laws of the resident country of NRI.

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