Question 1

How do I determine my residential status for tax purposes?

Accepted Answer

Residential status is decided by a two-step test under Section 6 of the Income Tax Act:

• Resident: 182 or more days in India during the financial year, or 60 days in the financial year combined with 365 days in the preceding four years.
• Resident and Ordinarily Resident (ROR): resident in India for at least 2 out of the last 10 years, and physically present for 730 days or more in the last 7 years.
• Not Ordinarily Resident (RNOR): resident but not meeting the ROR conditions.
• Non-Resident (NRI): doesn't meet the resident tests.

Additionally, an Indian citizen with Indian-source income above ₹15 lakh who is not liable to tax in any other country is deemed a resident. We compute this each year based on travel records and prior-year status.

Question 2

As an NRI with only NRE interest in India, do I need to file an ITR?

Accepted Answer

NRE and FCNR interest is tax-exempt for NRIs. NRO interest is fully taxable. ITR filing becomes necessary in any of these cases:

• Total Indian income (other than exempt NRE / FCNR) exceeds ₹2,50,000.
• You have refundable TDS, for example on NRO interest deducted at 30%.
• You sold property, shares, or mutual funds during the year.
• You want to carry forward capital losses to set off against future gains.

Question 3

How is rental income from my Indian property taxed?

Accepted Answer

Rental income from Indian property is taxable in India regardless of where you reside. The computation allows:

• A standard 30% deduction on net annual value.
• Municipal taxes actually paid.
• Home loan interest under Section 24(b).

The tenant is required to deduct TDS at 30% under Section 195 before paying rent to an NRI landlord. We help set up a lower-deduction certificate under Section 197 where the actual tax liability is lower than 30%.

Question 4

Can I claim DTAA benefits and how?

Accepted Answer

Yes. If you are a tax resident of a country with which India has a Double Tax Avoidance Agreement, you can claim treaty benefits to either pay tax in one country only or claim credit for tax paid abroad. To claim DTAA:

• Obtain a Tax Residency Certificate (TRC) from the tax authority of your country of residence.
• File Form 10F on the Income Tax portal.
• Submit a self-declaration to the person responsible for deducting tax in India.

The TRC should carry name, status, nationality, residential status, period of applicability, address, and tax identification number.

Question 5

I'm selling my property in India. How is TDS handled?

Accepted Answer

When property is purchased from an NRI, TDS is deducted under Section 195 (not Section 194-IA, which only applies to resident sellers). Key points:

• TDS is deducted on the capital gain amount, not the sale price, but typically at the gross rate first.
• Long-term capital gains: 20% (with indexation, where applicable). Short-term: at slab rates.
• The buyer needs a TAN to deduct TDS.
• We help obtain a lower or nil TDS deduction certificate under Section 197, which reduces working capital lock-up significantly.

Question 6

What types of Indian income are taxable for an NRI?

Accepted Answer

An NRI is taxed in India only on income that accrues or is received in India. Common heads:

• Salary: taxable in India if services are rendered in India, regardless of where the salary is paid.
• House property: rental from Indian property is fully taxable, with 30% standard deduction, municipal taxes, and home loan interest allowed.
• Business or profession: income from an India-based or India-controlled business is taxable.
• Other sources: NRO bank interest and Indian FD interest are taxable. NRE and FCNR account interest is fully exempt.
• Capital gains: on assets situated in India, including property, listed and unlisted shares, mutual funds, and debentures.

Foreign-source income is not taxable in India for an NRI, unlike for a Resident and Ordinarily Resident.

NRI Taxation Consultancy

Our Process

Residential Status Analysis

Income Mapping

Optimisation & Filing

Ongoing Support

Features

Salary Income

House Property

Business / Profession

Other Sources

Capital Gains

Key Points

Frequently Asked Questions

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