Taxation is considered to be one of the most important aspects of personal finance whether the individuals are resident Indian or non-resident Indians. So, being clear about the taxation implications and the rules and regulations in this particular area is very much important so that everybody will be on the right track of finding the perfect income tax return without any kind of challenges throughout the process.
An individual will be the resident of India for the taxation purpose if he or she has lived in India for at least 182 days during the financial year or he or she has lived in India for at least 60 days of the year in the previous year and at least 365 days in the preceding four years.
If the individuals satisfy any of the two above-mentioned conditions then they will be the resident Indians else they will be deemed as the non-resident Indians. The taxable income for the non-resident Indians will be depending upon the residential status for the year and the global income will be taxable under the Indian tax laws if the criteria have been paid proper attention throughout the process.
NRI income tax will be depending on the following categories and further having a clear idea about the tax implications for NRIs is very much important for people throughout the process:
- Salary received for the services provided in India will be categorised as the global income
- Capital gains earned for the transfer of assets located in India
- Rental income from the property owned in India
- Revenue from the fixed deposits
- Interest on the bank saving accounts
Following are the basic taxation deductions available for the NRIs which they can avail complete advantage of:
NRIs can always go with the option of availing the tax deductions under section 80 C with the maximum deduction of Rs.1.5,00,00 which will be permissible for the deductions under the said section. The deductions are explained as:
- Life insurance policy premium payment will be a deduction and the premium must be less than 10% of the sum assured for this particular rule.
- Repayment of the principal on loan for the purchase of property is another deduction that will include registration fees, stamp duty and other expenses.
- Children tuition payment to the educational institution for full-time education will be eligible for deduction and this benefit will be applicable for two children at most.
- Investment into the equity-linked savings scheme from mutual funds up to Rs.15,00,00 will be legible for deduction under 80 C.
- Under section 80 D deduction will be easily made available for the premiums paid up to Rs.25,000 on the insurance paid for self, spouse or dependent children and in the cases of senior citizen amount will be 50,000.
Hence, as NRIs need to be very much clear about the income tax implications for NRIs is very much important for people so that there is no chance of any kind of issue and understanding of the basic policies is the key to success in this particular area.