Tax, TDS & Return Filing Benefits of NRI Investment In India
India has shown potential to grow exponentially. Now, the non-resident diaspora is also turning its head towards this country. It’s just because of the leverages and tax benefits on the NRI investment services in India. If you look at the country’s fiscal policy, this community, including OCIs (Overseas Citizens of India) and PIOs (Persons of Indian Origin), can delve into the non-repatriable investment. It offers an amazing opportunity to save millions of currencies.
If you have any ifs or buts regarding tax policy, consult them with a reputed S2NRI’s NRI investment services or any other one in India.
Interesting Facts about NRI investments in India:
You should come across some interesting facts. The Indian govt. has been treating NRI’s non-repatriable investment as a domestic investment since 2015. Moreover, it doesn’t segment this investment under the foreign direct investment caps. Even, if any non-resident chooses an Indian bank to save his money in the NRE account, he doesn’t need to pay tax on the interest earned on that deposit. Besides, he can completely repatriate that amount.
I bet that you’re feeling awe after reading the foregone facts. Let’s have a rundown of some more benefits that the NRIs can have if they invest in the domestic market.
- NRI Status:
This fact is the foremost one that you should know about. Your status (either resident or non-resident) defines what treatment you would get from the tax department. You’re a resident of this country, if you have stayed 182 or more days in a fiscal year. This is what the Income Tax law prescribes.
- Taxable Income for NRIs:
The tax is levied on the income of the residents. The non-residents are kept away of such a taxable crew, if they don’t have income from Indian resources. Simply put, if you have income that you have earned abroad, you’re exempt from paying income tax.
On the flip side, the NRIs may have to pay tax here on provided that they have accrued income in India. There is probability to pay because they should have enough accrued income that is grouped under the tax slab. Now, the question is which income is taxable. To name a few, they can be any salary received in India, income from property like rental income, capital gains from the transfer of an asset in India and the interest earned on bank deposits.
- Tax Deduction at Source (TDS):
Every income, be it from stocks, equities, mutual funds, property or gold, is worth to TDS. However, the tax rate is relatively higher for the non-residents than that of the local residents. But, there is a loop that leads to a cue that directs them to reduce the burden of TDS. They can become a third party by joining hands with a native investor. It will ensure them to choose the joint investments. Let’s look into the TDS percent on NRIs’ diverse income sources. But, this percentage is a subject matter of changes to revised fiscal policies.
- Income from technical fees- 30 percent+3 percent education cess
- Income from royalty- 10 percent+3 percent education cess
- Income from professional services-10 percent+ 3 percent education cess
- Income from rent- 30 percent+3 percent education cess
- Income from short term capital gains via Mutual Funds- 15 percent+3 percent education cess
- Dividend earned from the Mutual Funds and equities- Zero
- Interest earned on NRE or FCNR account deposits-Zero
- Interest earned on NRO account-30 percent
- Income above INR 10 lakh-10 percent surcharge
- Investment options for NRI income:
As for the recent period, the PPF investment scheme is open for the NRIs. This scheme invites investors for at least 15 years to invest, which is relatively considered as a long term investment. On the flip side, the door for short term investments is not open for them. Besides, you should have these arrangements for the savings and investments:
- You should have an NRO account to manage it from anywhere in the world.
- If you have stocks or equities like MF, open a SIP account and undergo the KYC with the selected bank.
- Inform the bank and the brokerage about the opted-out investment plans. Thereby, the bank authority will update you regarding the selected investment plan.
- If you’re going to transfer the foreign currency for NRI investment, open an NRE account.
- Income Tax Returns Filing: As aforesaid, you (the NRIs) are liable to pay tax if your income has a definitive size for NRIs according to the tax slab. The income tax returns filing helps them to compute what amount of tax they have to pay off.
For this financial year, you should have the income beyond INR 2.5 lakh to become eligible for tax payment.
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