Nri Taxation: A Few Essentials

NRI Taxation refers to the process in which the Non Resident population of India goes through the process of paying taxes in the subcontinent

. There are various nuances associated with the entire procedure and it does well to be aware of at least an important few so that the right process may at least be initialized. Most NRIs tend to hire the services of tax professionals to guide them through the entire process as they are usually quite busy with their affairs overseas and find it inconvenient to follow the procedures back home in India. Even so it never does hurt to have some knowledge regarding the process and knowing what its all about.

In many cases, Non Resident Indians, even when they cease to take up residence in the country, either permanently or temporarily, often have income sources in the Indian subcontinent. This means that when the Income thus obtained is taxable, this population is also obliged to pay taxes to the Government of India on the income that they have thus earned. This process is completed through the Income Tax Department of India and is known as the Filing of Income Tax Returns. NRI Taxation involves a few more procedural steps in their routine of the filing of taxes as compared to the one laid out for others and the knowledge of a few crucial factors usually help NRIs in saving a lot of time and effort.

The first factor that is extremely essential is the resident status of the individual. There are two laws that govern this criterion and these are the Income Tax Act, 1961, and the Foreign Exchange Management Act, 1999. The general guidelines suggest that those who are residing outside the country for a period of more than a hundred and eighty two days are declared to be Non Resident Indians and are required to file Income Tax as per the guidelines laid down for them. Other than this general rule any individual who seeks employment outside India and is not aware of how long he is to be employed abroad is considered to be an NRI as soon as he leaves for the said destination.

The NRI, once declared one, is obligated to pay taxes in India if there is any income gained through sources in the country and the general guideline states that the income should be above the basic exemption limit. The Exemption Limit of course changes from time to time and the NRI needs to take of this. There is also another rule related to capital gains earned, even if the total amount is less than the amount mentioned under the Exemption Limit. Most NRIs prefer to leave the entire process to professionals or tax consultant agencies that specialize in NRI taxation services.

by: Aarya Kamble

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