NRI Income Tax: Moved out of India for job? Check if you will have to pay taxes
Section NRI Taxation under the Indian Income Tax Act, 1961, applies to individuals earning outside India. The income tax rules and perks to them are different from those applicable to Indian residents.
Government collects taxes from citizens of the country to run nation's economy. But, what if you are no more a resident of India or moved out? Do you still need to pay taxes in India? Well, section NRI Taxation under the Indian Income Tax Act, 1961, applies to individuals earning outside India. The income tax rules and perks to them are different from those applicable to Indian residents.
The official website of Income Tax India says that, ''It is essential to determine residential status of taxpayer to determine taxability of income earned by such taxpayer. In case of resident taxpayer all his income would be taxable in India, irrespective of the fact that income is earned or has accrued to taxpayer outside India. However, in case of non-resident all income which accrues or arises outside India would not be taxable in India.''
Some examples of income earned or accrued in India:
1. A salary received in India or salary for service provided in India.
2. Income from a house property situated in India.
3. Capital gains on transfer of asset situated in India.
4. Income from fixed deposits or interest on savings bank account.
These incomes are taxable, even the one is an NRI. The income which is earned outside India, is not taxable in India as per the IT norms. Also the interest earned on an NRE account and FCNR account is tax-free. The interest on NRO account is taxable for an NRI.
How to determine the residential status?
The person is considered as an Indian resident for a financial year:
1. If he/she is in India for at least 6 months (182 days to be exact) during the financial year.
2. If he/she is in India for 2 months (60 days) for the year in the previous year and have lived for one whole year (365 days) in the last four years.
3. If he/she is an Indian citizen working abroad or a member of a crew on an Indian ship, one is a resident if spends at least 182 days in India.
4 If a Person of Indian Origin (PIO) who is on a visit to India (whose parents, or any of his grandparents were born in undivided India), is a resident if spends at least 182 days in India.
For more information on the taxation norms for an NRI, you can visit the official website link of Income Tax India, i.e - incometaxindia.gov.in.