NRI Income Tax Help Center

'Non-resident Indian' is an individual who is a citizen of India or a person of Indian origin (PIO) and who is not a resident of India. The incidence of tax on any assessee depends upon his residential status. The residential status of an assessee must be ascertained with reference to each year.

An individual is said to be non-resident in India if taxpayer is not a resident in India and an individual is deemed to be resident in India in any previous year if taxpayer satisfies any of the following conditions:

1. If a taxpayer has been in India for a period of 182 days or more during the previous year; or
2. If taxpayer has been in India for a period of 60 days or more during the previous year and 365 days or more during 4 years immediately preceding the previous year.

Exceptions: The following categories of individuals will be treated as residents only if the period of their stay during the relevant previous year amounts to 182 days.

1. Indian Citizens who leave India in any previous as a member of the crew of an Indian ship (Seafarer) or for purposes of employment outside India.
2. Indian Citizen or person of Indian origin (PIO) engaged outside India in an employment or a business or profession or in any other vocation, who comes on a visit to India in any previous year.
3. A person shall be deemed to be of Indian origin if taxpayer, or either of his parents or any of taxpayer grand-parents, was born in undivided India.

Refer    Latest Tax Residency Calculator    with the updated rules for AY 2023-24 (FY 2022-23).

A resident individual will be treated as resident and ordinarily resident in India during the year if taxpayer satisfies both the following conditions:

1. Taxpayer is resident in India for at least 2 years out of 10 years immediately preceding the relevant year.
2. Taxpayer stay in India is for 730 days or more during 7 years immediately preceding the relevant year.

A resident individual who does not satisfy any of the above-mentioned conditions or satisfies only one of the above-mentioned conditions will be treated as Resident but Not Ordinarily Resident.

1. If the individual satisfies any one or both the conditions specified at step 1 and satisfy none or one condition specified at step 2, then he will become resident but not ordinarily resident in India.
2. If the individual satisfies none of the conditions specified at step one, then he will become non-resident.

Incomes which are charged to tax in India:

1. Interest credited to recognised provident fund account of an employee in excess of 9.5% per annum.
2. Employer’s contribution to recognised provident fund in excess of 12%.
3. Transferred balance in case of reorganisation of unrecognised provident fund.
4. Contribution by the Central Government or other employer to the account of the employee in case of notified pension scheme referred to in section 80CCD.

1. Capital gain arising on transfer of property situated in India.
2. Income from business connection in India.
3. Income from salary in respect of services rendered in India.
4. Salary received by an Indian national from Government of India in respect of service rendered outside India. However, allowances and perquisites are exempt in this case.
5. Income from any property, asset or other source of income located in India.
6. Dividend paid by an Indian company.
7. Interest received from Government of India.
8. Interest received from a resident is treated as income deemed to accrue or arise in India in all cases, except where such interest is earned in respect of funds borrowed by the resident and is used for carrying on business/profession outside India or is in respect of funds borrowed by the resident and is used for earning income from any source outside India.
9. Interest received from a non-resident is treated as income deemed to accrue or arise in India if such interest is earned in respect of funds borrowed by the non- resident for carrying on any business/profession in India.
10. Royalty/fees for technical services received from Government of India.
11. Royalty/fees for technical services received from resident is treated as income deemed to accrue or arise in India in all cases, except where such royalty/fees relates to business/profession/other source of income carried on by the payer outside India.
12. Royalty/fees for technical services received from non-resident is treated as income deemed to accrue or arise in India if such royalty/fees is received for business/profession/other source of income carried on by the payer in India.

In case of non-resident, being a person engaged in business of banking any interest payable by the permanent establishment in India of such non-resident to the head- office or any permanent establishment or any other part of such non-resident outside India shall be deemed to accrue or arise in India.

Section 10 of the Income Tax Act exempts various incomes from tax in the hands of non-resident.

1. Interest on notified securities and bonds issued to non-residents
2. Interest on specified savings certificates to non-residents
3. Remuneration received by officials of Embassies etc of foreign states
   

   Example: Mr Frank, an Irish citizen but currently the resident of USA was appointed as a senior official of the US Embassy in India. He earned a remuneration of Rs 10 lakhs in the current FY. Such remuneration is exempt in the hands of Mr Frank in India

4. The remuneration received for services rendered in India by a foreign national employed by foreign enterprise is exempt from tax
5. Salary received by a non-citizen for services rendered in connection with employment in foreign ship
6. Remuneration received by foreign government employees during their stay in India for specified training

Tax on Long term Capital Gains arising to non-resident Individual

• Long term capital gains arising from the transfer of a capital asset being unlisted shares of a company in which public are not substantially interested is taxed @ 10% without indexation
• In respect of other long term capital gains, the applicable rate of tax is 20%

1. Non Resident Indians (NRI's) cannot open an new Public Provident Fund (PPF) account
2. If the PPF account was opened during the resident period, NRI can invest money in PPF until its maturity on Non-repatriation basis
3. NRI's cannot extend the PPF account after its maturity