Non resident Taxation | NRI Taxation Service in Delhi

Scope Of Today’s Discussions

Non-resident
individuals

Persons
Indian of
origin
Citizen of India

Provisions
concessionsrelating to Non-residents
are available to citizens of are relevant
India, for NRIs.
certain others Certain
to PIO
 Non-resident Indian (NRI)
Under the Income Tax Act

Non-Resident Indian ( Sec 115(C)

(e)
∙ An individual
∙ Being a citizen of India or a person of Indian origin(PIO)
∙ who is not a ―Resident

Person of Indian
Origin
∙ A personor
parents shall
anybe
of deemed
his grandtoparents,
be of Indian origininifundivided
was born he, or either of his
India.

Indian Citizen

∙ Holder of Indian passport

 Residential Status under the IT Act
Relevant Criteria

Staytax
in India
year in a

Purpose of Length of stay in

coming to India India in the
previous 10 tax
years

Intention
leaving of
India
Citizenship
 SCOPE OF INCOME TAXABLE-NRI

Nature of Income Whether Taxable for an NR

Taxable
I ncome earned in India – accrued or
i arising
n India
Income deemed to accrue or arise in India Taxable

Income earned outside India, but Taxable

received in India

Income accrued or arising outside Not taxable

India, and received outside India

Section 5(2) (relevant extracts)

Subject to the provisions of this Act, the total income of a person who is a non-
resident includes all income which is received or deemed to be received in India or
accrues or arises or is deemed to accrue or arise to him in India during such year
 Incomes Of NRI that are taxed in India
• SALARY
The income received or deemed to be received in India on his behalf, and Income
which accrues or arises or is deemed to accrue or arise in India during the previous
year.
• HOUSE PROPERTY
Where the NRI owns a house property in India, the same is subject to tax in India.
Regular computation provisions will apply. One property
( where no benefit is derived) may be considered as self occupied property.
Rental property eligible for deductions in respect to Municipal tax, repairs (30%) and
mortgage interest.

• CAPITAL GAINS
When there is a capital gain arising in India (Asset’s location is India), then the
Taxability will arise in India.
• OTHER SOURCES
Special provisions applicableto
resident Indians Non-

Investment income ( Section

115E)
∙ Investment income is taxed at a preferential rate of tax of 20% (plus
applicable cess), as against the maximum marginal rate of 30% (plus
applicable cess). No deductions however are permitted from income earned
on investments (e.g. Chapter VIA deductions)

Long term capital

gains
∙ Where
tax ratelong
willterm capital
be 10% (plusgains arise from
applicable cess)transfer of specified
on net capital gains.assets, the applicable
∙ From gains on such transfers, only expenses incurred in connection with the transfer
are allowed as a deduction to determine net capital gain. The valuation under these
provisions is not in foreign currency.
∙ Therefore, exchange-rate fluctuations are not considered.

Applicable

∙ To investment income from specified assets and other long term capital
• gains. Applicable to foreign exchange assets
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LimitedDeloitte Touche Tohmatsu India Private
Special provisions applicable to Non-resident Indians
Chapter XIIA

Foreign Exchange asset

∙ ―foreign
purchased exchange
with,meansasset‖ means
or subscribed any
to in, specified asset
convertible which
foreign the assessee has acquired or
exchange;
∙ Specified asset
∙ Shares in an Indian company;

∙ Debentures issued by an Indian company which is not a private

∙ Deposits with an Indian company which is not a private

∙ Any security of the Central Government

∙ Other assets as the Central Government may specify in this behalf by notification in
the Official Gazette

Capital gains from Foreign exchange asset – Sec 115F

∙ Capital gains arising on the transfer of foreign exchange assets are exempt from tax if
∙ The asset transferred must be long-term capital assets

∙ Net consideration must be invested in specified assets

∙ Investment should be made within six months of the transfer

∙ Where only a portion of net consideration is reinvested, exemption is proportionate.

Transfer of such new asset within 3 years

∙ Where
as thewould
above new asset is transferred
be considered to bewithin a 3long
taxable yearterm
period the long
capital gainsterm capital
in the gain
year of exempt
such
transfer.
 NRI- SPECIFIC CHALLENGES
Tax residency certificates
❖ Regulations for issue by the
overseas country.
❖ Mismatch in financial years
❖ No clarity on when the
❖ document is to be produced.

Travel to Non-treaty countries

● NRI deputed to Hong Kong, paid salary in India

for services rendered in Hong Kong.
● Subject to tax withholding in India since salary
paid in India.
● Subject to tax in Hong Kong since services are
rendered in Hong Kong.
● Mitigation of Double Taxation?
 Contact Info

Company Name: Ajay Sawhney & Associates

Contact Person: Ajay Sawhney

Contact Us THANK YOU.

Address: Ramesh Nagar, New Delhi-110015

Mobile: +91-98999-37999, +971 52 898 7771

Email: sawhneyaj@hotmail.com,

Website: http://www.nonresidents.in