Taxation Laws for NRIs in India
(i) (a) International Taxation has set of provisions in India which primary different from legal provisions in countries located outside India
(b) International Taxation required to cover tax aspects on cross border transactions for direct taxes like Income tax + also Indirect tax like GST (both).
(ii) (a) International taxation required to study for taxation beyond National boundaries (in other countries outside India).
(b) International taxation required to study for taxation in India + also taxation outside India simultaneously for determining taxation against international transactions in India (both).
Income Tax on Income actual received by NRs in India
(i) (a) Residential status of tax resident in India based on physical stay in every financial year (from April 01 to March 31).
(b) Total global taxable incomes of tax resident in India be 100% liable for income tax in India.
(c) Tax resident in India permitted to avail Foreign Tax Credit (FTC) against income tax paid + also income tax deducted at source (TDS) outside India (both).
(ii) Tax resident in India’s incomes received + Incomes deemed received by himself + received on his behalf + incomes accrues + arises + deemed accrue + also deemed arising taxable (all) in India.
Income Tax on Income Deemed received by NRs in India
Certain deemed incomes earned by NRs be liable for income tax in India beside actually earned by him outside India specified under section 9 of ITA 1961 like:
(i) Deemed incomes through business’s connection existed in India.
(ii) Deemed incomes through property + asset + also source located in India (all).
(iii) Deemed capital gains through transfer of capital asset located in India.
(iv) Deemed incomes through salaries earned in India + services rendered in India (both).
(v) (a) Deemed incomes through salaries paid by India’s govt. to Indian Citizen beside services rendered outside India.
(b) Perquisites + also allowances not taxable in India beside paid by India’s govt. (both).
(c) Incomes through salaries taxable in India but perquisites + also allowances not taxable in India beside paid by India’s govt. (both).
(vi) Deemed incomes through dividends paid by Indian company.
(vii) Deemed incomes through interests (subject to satisfaction of certain conditions)
(viii) Deemed incomes through royalties (subject to satisfaction of certain conditions)
(ix) Deemed incomes through Fee for Technical Services (FTS) (subject to satisfaction of certain conditions)
Income Tax on Investments + Capital gains for NRIs in India
NRIs not required to file Income Tax Return (ITR) in India in following cases:
(i) When taxable incomes in India consisting from investments + also from Long Term Capital Gains (LTCG) both
(ii) When Income tax in India already deducted through TDS mechanism against investments + also on LTCG (both)
Income Tax on notified tax free certificates + etc. for NRIs in India
NRIs not required to file Income Tax Return (ITR) in India in following cases:
(i) When income in India earned on notified tax free Saving Certificate + also etc. (both)
(ii) When income in India earned on notified tax free Non Resident (Non repatriable) [NRNR] deposits issued by banks in India.
Banks in India not permitted to accept fresh NRNR deposits from April 1st 2002. However Interest on NRNR deposits + also principal at time of maturity to be transferred to NRE account of NRI in India (both).
Income Tax on interest on FCNR (B) deposites + etc. for NRIs in India
NRIs not required to file Income Tax Return (ITR) in India in following cases:
(i) When income in India earned on FCNR (B) deposits where interest income already exempted under section 10(4)
(ii) of ITA 1961
(ii) (a) When income earned on tax free dividends from Indian Public Limited Company + Private Limited Company + Indian Mutual Fund + also Unit Trust of India (all) .
(b) However income earned on dividends from Indian public limited company + also etc. not exempted under section 10(34) of ITA, 1961 from Assessment year 2021-22 (both).
(iii) When income in India earned on tax free LTCG against transfer of equity shares traded on recognized Stock Exchange + units of equity schemes of Mutual Fund + also income exempted under ITA, 1961 (all).
(iv) When income in India earned on tax free remuneration + fee received for rendering technical consultancy in India under approved programme of Govt. + also income exempted under ITA, 1961 (all).
(v) When income in India earned on tax free notified bonds issued by Govt. + also income exempted under ITA, 1961 (both).
Tax Deducted at Source (TDS) for payments to NRs in India
Payer for making any payment to non-resident in India required to deduct TDS from April 01, 2008 + to file 15CA + also 15CB (all) before remitting outside India under section 195 (6) of ITA, 1961
Briefs on of Double Taxation Avoidance Agreement (DTAA) with other countries
(i) Several DTAAs already executed between Govt. of India and Govt. outside India for resolving matters for taxing incomes in India + outside India + to increase transparency in tax systems + to avoid tax evasion by tax resident in India + also tax resident outside India (all).
(ii) (a) DTAAs required because each country has own taxation system to determine for taxing of incomes in own country + also to allow Foreign Tax Credit (FTC) in tax resident’s country (both).
(b) DTAAs required to avoid effect of double taxation on NRs against their incomes liable to income tax in country of source of incomes + also in country of residency through allowing FTC in tax resident’s country (both).
Advantages (benefits) of DTAAs for NRs in India
(i) To take benefit of tax credit + tax relief (both) for tax resident in India
(ii) To avoid double taxation for tax resident in India
(iii) To prevent tax discrimination for tax resident in India
(iv) To certain for tax treatment to investors in India
(v) To exchange of information’s with India
(vi) To ease in recovery of liability of Income tax for tax resident in India
(vii) To promote investments + mutual relation (both) in India
(viii) To prevent fiscal evasion in India
Computation of Income of NRIs under section 115D of ITA 1961
Govt. already inserted section 115D as special provisions for computation of total taxable incomes of NRIs in India like:-
(i) NRI not permitted to claim any expenditure + also any allowance for computing taxable income on investments made by NRIs in India (both)
(ii) NRI not permitted to claim any deduction under section 80C to 80U of Chapter VIA + also section 48 of ITA 1961 (both).
Income Tax of NRIs on Investment’s Incomes + LTCG – sec 115E of ITA 1961
(i) Income Tax @ 20% be levied on investment’s incomes of NRIs in India.
(ii) Income Tax @ 10% be levied on LTCGs of NRIs in India.
Capital gains on transfer of foreign exchange assets of NRIs – Sec. 115F
(i) NRI permitted to invest against LTCGs received on transfer of Foreign exchange assets in not exceeding 6 month from date of transfer + investment be in specified assets + saving certificates already notified under section 10(4B) to avail income tax exemption on LTCGs specified under section 45 of ITA, 1961
(ii) List of Specified Assets
(a) Eligible equity shares of Indian company
(b) Eligible debentures + also deposits of Indian public limited company (both)
(c) Notified security issued by Govt.
(d) Other notified assets issued by Govt.
Benefits for NRIs after becoming residents in India –Sec 115H
(i) NRIs required to apply in writing to Assessing Officer (AO) for informing about becoming resident in India + also required to file ITR under section 139(1) of ITA, 1961 (both).
(ii) NRIs required to fulfil certain terms + also conditions for availing benefits after becoming resident in India (both).
Difference between International Taxation Law & Indian Taxation Law
(i) India has no separate taxation laws for studying for international taxation + also for Indian taxation (both).
(ii) India has no separate judicial courts for appearing for international taxation + also for Indian taxation (both).
(iii) India has specific Income tax provisions for taxation of international transactions in India under ITA Act, 1961.
(iv) India has general Income tax provisions for taxation of international (cross border) transactions for direct tax under ITA Act, 1961.