Our Role: We offer Professional Tax Services for NRIs, PIO, OCIs and Companies not registered in India. Indian Income Tax Rules are not a cup of tea for everyone ; a nd if the person concerned is a non-resident, understanding the same is definitely not a cakewalk. For this very reason, we, at N ri I nvest I ndia.com, give you few of the basic, but pivotal, guidelines for filing tax returns online in India if you are a non-resident Indian living abroad and want to learn more about Indian taxation then you have come to the right place.
Before anything else, we would like to tell all our non-resident clients that it is extremely important to quote your PAN for being able to have any financial transaction & file taxes.
At the outset, if you are a resident Indian, about to take up employment abroad, the first task before you is filing for an Income Tax Clearance Certificate (Form 31), as per Section 230 (I) of the Income Tax Act 1961. The Assessing Officer would provide Form 32 authorising the application.
If you are wondering how much of paperwork you need to do before departing, then relax! You have to only fill up Form 31. The IT Department does not require any other information from you. But if you fall in the contrary sector, that is, if you are a non-resident working in India, you HAVE to file tax returns for as per IT rules, any income earned anywhere in the Indian territory is taxable. Please note that non-residents do not have to pay tax IF the same has been deducted at source.
At the same time, if you are a non-resident living in India, but if your income is being earned by you from anywhere OUTSIDE the Indian Territory, you DO NOT need to pay tax. As stated above, only those incomes are taxable that is generated from within the Indian Territory.
Coming to stocks, if you are a non-resident selling stocks you are not chargeable. However a resident Indian has to comply by the tax guidelines and pay tax.
' Do I have to pay tax in GDR and ADR of an Indian Company '. This is a question we often frequent. The answer to this depends on your residential status. GDR and ADR are foreign securities, and so non-residents need not pay tax on the same.
Are you happy that being a non-resident you have so many benefits vis -a - vis payment of tax? If yes, then think again for if you are a non-resident investing in the Indian Share Market,
you NEED to file tax returns, as the income you thus earn is from within the Indian Territory. The same holds true in the case if you are a non-resident working in India (say as a consultant). As your salary is coming from within the Indian Territory, your salary is taxable.
Are you a non-resident coming back to your homeland? And you think you will have to pay tax upon arrival? You can stop thinking in this case. You DO NOT have to pay any kind of tax whatsoever as your savings is from income earned and received abroad. Many countries do not have/share a Double Taxation Agreement with other countries. India is no exception. Thus in such cases, certain deductions are allowed based on proof that tax has been paid in the resident country.
We also get queries from people who are resident Indians but are working abroad on a short-term assignment. They often ask whether they have to pay tax, as they are not non-residents yet their income is not generated from within Indian Territory. Well, all of you, who come in this category, the answer to your question is YES. Since you are a resident Indian, you have to pay tax. For technicians (these include individuals working on construction, manufacturing, mining, power generation etc, agricultural activities, public administration and business management, accountancy, applied sciences, and social sciences) a deduction of 75% is applied within six months at the end of the financial year under Section 80RRA. The rest of the allowance is taxed at a marginal rate.
If you are an Indian deployed outside by your Indian company, your salary/allowance IS taxable. Here too technicians are permitted to facilitate 75% tax deduction benefits under Section 80 RRA, within six months at the end of the financial year. The remaining 25 % income is taxable at a marginal rate.
We would like to conclude at good news J If you are a non-resident returning to India, you DO NOT have to pay tax for seven successive years on money and assets acquired a year before your return to India. To top it, your NRE Account is also exempt from tax in India.
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