NRI/International taxation


Under the income tax Act, section NRI taxation applies to those earning outside the home country and those staying outside India but having income source within the India with rental. If NRI income exceeds Rs 2,50,000 in the preceding year, then it needs to file income tax return. Income earned outside India is not taxable in India. Rules of taxation for NRI :

  • Tax rate slab for NRIs as Individual
  • For TDS, all the earnings of NRIs are levied careless of threshold value.
  • Tax filing is not usually needed for an NRI if his/her income is liable to clauses u/s 115G of the IT act 1961.
  • No economical deductions are relevant to investment incomes except under certain conditions.

Under section 115D, of the Income tax Act includes special provisions for calculation of tax:

  1. This section does not allow the investment income calculation of an NRI.
  2. No tax deduction is permitted on the gross total Income which includes the only earnings from long term capital gains and investment, in case the assessee is a non- resident India.
  3. If the income from Long term capital gains and investment form only a portion of the gross total Income, this kind of income will be deducted and the rest of the amount might qualify to avail tax deduction under the Chapter VI-A.

Last date to file income tax return in India for NRI is 31st July.

In a financial year, if tax liability exceeds Rs 10,000 then tax payers are required to pay advance tax. If advance tax is not paid by tax payer, then interest under section 234B and 234C is applicable.

List of documents and other details required for the filing of ITR by NRIs:-

In case of DTAA between India and foreign country is signed, following documents are required:

  1. FORM 16
  2. Salary Slips of 12 months
  3. Foreign salary slip
  4. W2 Form

In all other Cases following documents required:-

  1. In the foreign country, supporting documents for monthly income details earned
  2. Details of TDS deducted outside India
  3. Copy of ITR filed outside India
  4. Details of Living allowance
  5. Other income details in India
  6. TDS details deducted in India besides the salary.

NRI Mutual Funds Taxation:

For NRI investors, mutual funds units are subject to tax. For tax on equity oriented mutual funds, the definition of long term refers to more than 1 year and otherwise it is short term. LTCG for equity mutual funds held by NRIs is 10 per cent ( exceeding Rs 1lakh in one financial year, provided such units are subject to STT) and STCG tax is 15 per cent.

For Debt fund , long term refers to more than 3 years for taxation and otherwise it is short term. With Indexation benefit, LTCG is 20% and STCG is 30%.

International Taxation in India:

Study of taxation beyond the national level, is known as International Taxation. Who wants to study all aspects of International Taxation this can be a doubt in the mind of anybody. So let me clarify it:

  • There is no different law for studying international taxation
  • There is no separate courts for the matters related to international taxation
  • The IT act, specifies certain separate provisions for the taxability of foreign transactions
  • The Provisions of Domestics law are applied to handle Cross border.