REMEMBER THESE EXEMPTIONS!:

Indian Tax Laws have provided certain exemptions by virtue of which the following income is exempted for NRIs :

  1. Interest on NRE/FCNR/NRNR accounts with Banks in India.
  2. Interest on National Defence Loan, 1968 and 1972.
  3. Income from Units of Unit Trust of India if they are acquired out of inward remittances or NRE / FCNR accounts.
  4. Dividend income on company shares
  5. Interest on NRI Bonds ( I&II series ) and Resurgent India Bonds floated by State Bank of India.
  6. Interest on RFC accounts till such time the account holder continues to be "Resident but Not Ordinarily Resident".

[NOTE: Please refer to our feature on types of NRI accounts and explanations pertaining to "Non-Resident but not ordinarily resident"]

CONCESSIONAL TAX:

As an NRI, if you have investment income from the specified assets mentioned below, you will be required to pay tax @ 20% only. However, these specified assets should have been acquired out of Foreign exchange remittance / NRE or FCNR accounts.

The Specified assets are:

  1. Shares in Indian Companies.
  2. Deposits with Indian Public Limited Company
  3. Debentures in Public Limited Company
  4. Any security of the Central Government
  5. Any other assets notified.
  • Long Term Capital Gains (LTCG) on sale of these aforesaid assets too would be subjected to a tax @10% only. However, NRI will not get any deduction in respect of any expenditure allowance once he/she chooses for the concessional tax treatment.

  • The concessional tax treatment can be availed by the NRI even after his return to India. The treatment can be availed in case of all assets, with the exception of shares in an Indian Company.

    The NRI has to give a declaration alongwith the Income Tax return.

  • The choice to opt out of these provisions rests solely with the NRI. It can be exercised with a simple declaration in the Income Tax Return.