Income Tax Rules That Apply to NRIs

A person with Indian nationality who leaves the country for job or business and spends less than 182 days in India in a year is considered a Non-Resident Indian or NRI.

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The following are some of the income tax rules that apply to NRIs:

1. Any form of income generated, accrued, or received in India by an NRI is taxable. So, an NRI has to pay income tax on rental income, salary received in India, or income generated from fixed deposits, etc. If the combined income is higher than the exemption limit, they are also liable to file income tax returns.
2. If an NRI comes back to India and converts to Ordinary Resident Indian then they have to disclose all their foreigns income and foreign assets. Non-compliance can attract serious repercussions as per new Undisclosed Foreign Income and Assets Bill, 2015. As per this bill, a 30% tax rate will be charged on the undisclosed incomes and assets. Moreover, the guilty person also has to pay a fine of 90% of the undisclosed income.
3. For a long time, NRIs who didn’t have PAN had to pay a higher TDS of 20%. However, as per the new rules if an NRI can furnish alternative documents to PAN then they can pay the tax at a standard applicable rate.
4. NRIs are not allowed to open PPF accounts. However, if they already have one such account, then they can operate it, although only until maturity.

So, these were some of the most important rules regarding taxes that NRIs should be aware of. It really pays to realize their implications and liabilities.