NRI's Income Tax Up to 30% .....

WHO IS AN NRI ? An Indian abroad is popularly known as Non-Resident Indian (NRI). The NRI status is legally defined under the  Foreign Exchange Management Act, 1999 and the Income Tax Act, 1961 for applicability of respective laws.He is not in India for 182 days or more during the relevant previous year. NON - RESIDENT STATUS UNDER THE INCOME TAX / WEALTH TAX ACT The term non-resident is negatively defined under section 6 of the Income-tax Act. An individual who is not a resident under the Income-tax Act is a non-resident (generally, termed NRI). Thus, one should know the definition of a resident and if he is not a resident then he is a non-resident. The status of a person as a resident or non-resident depends on his period of stay in India. The period of stay is counted in number of days for each financial year beginning from 1st April to 31st March (known as previous year under the Income-tax Act). The definition is explained in simple terms as under. If an individual who satisfies understated both the conditions of section 6 of the Income-tax Act, then he becomes a Non-Resident. I am a non-resident Indian (NRI) and I have earned interest income from a bank in India on which tax deducted at source (TDS) was applicable. Could you tell me how I can claim the refund of TDS? Since you are an NRI, you are liable to pay income tax in India on your income which has accrued, arisen or been received in India. Hence the interest income from the bank in India is liable to be taxed in India. The bank would have deducted TDS at 30%; however your income tax liability is likely to be lower in view of the threshold exemption and the lower slab rates of tax applicable to an individual. The tax year in India is the financial year—1 April to 31 March—of the following year. The threshold exemption limits and the slab rates for the financial year ended 31 March 2013 are as follows: up to Rs.2 lakh the tax liability is nil, for Rs.2 lakh to Rs.5 lakh it is 10% of the amount exceeding Rs.2 lakh, for Rs.5 lakh to Rs.10 lakh it is Rs.30,000 plus 20% of the amount exceeding Rs.5 lakh, above Rs.10 lakh it is Rs.1.3 lakh plus 30% of the amount exceeding Rs.10 lakh. The income tax computed above will be increased by a cess of 3% of tax. You may also keep in mind the provisions of the double tax avoidance agreement (DTAA), if any, between India and the country of which you are a tax resident. This may provide for a lower rate of tax on interest. To claim the DTAA benefit, you need the tax residency certificate of the country in which you are a tax resident. You may use the normal rates of tax or the rates as per the DTAA, whichever is more beneficial. The due date for filing your return of income for the year ended 31 March 2013 is 31 July 2013. You can file your return of income manually (paper return) with your assessing officer showing the interest income and the taxes paid or deducted at source and accordingly claim the refund. Alternatively you could file your return of income electronically and thereafter submit the verification duly signed in income-tax return V form to the Central Processing Cell, Bangalore. You have the option to claim the refund through direct credit in your bank account or through a paper cheque which has to be mentioned in the return filed. Once the return of income is processed, refund will be granted as per the mode selected by you. I have income in India through long-term capital gains and investments.  I have to file an income-tax return since I am a non-resident Indian (NRI)? According to the provisions of the domestic tax laws in India, income from long-term capital gains and income from investments accruing or arising in India are taxable irrespective of residential status. Since you are an NRI, tax is liable to be withheld at source on your investment income and the capital gains income earned in India. The domestic tax laws have exempted NRIs having only investment income and/or income from long-term capital gains if tax has been deducted at source. Hence, you are not liable to file your income tax returns in India if the taxes are deducted and paid. I have been an NRI for the past 11 years and I have not paid income tax in India as I have not had any income from there. Last year, I purchased a property worth Rs. 40 lakh. The full amount was paid through my non-resident external (NRE) bank account. I have given this property on rent . I do not have any other source of income. Do I have to pay any income tax? I will be receiving a second property as a gift deed from my father this month worth Rs. 70 lakh. The rent income that you receive is liable for income-tax in India as “income from house property”. You are entitled to a deduction of taxes levied by the local authority paid by you during the year and a further deduction of 30%. You are liable to file your income-tax return if your taxable income exceeds the threshold limit for the financial year. Since you are an NRI, tax is liable to be withheld at source by the tenant at the rate of 30.9%. The withheld amount may exceed your tax liability. In such a case, even though you may not be liable to file your tax return, you may do so to claim the refund. You may also note that if the fair rent which the property is expected to fetch exceeds the actual rent received, it is the amount of fair rent that is liable for taxation under “income from house property”. Now coming to your second property. Since this is received from your father as a gift, it is exempt from income tax, as gifts from relatives are not liable to tax. However, the property should be either a residential or a commercial property. Agricultural land, plantation property or a farm house in India cannot be acquired by an NRI by way of gift. They can, however, be inherited. You may also keep the provisions of wealth tax in mind. Wealth tax is an annual levy. One residential house is exempt from wealth tax. Further, if a house property is let out for more than 300 days, it is exempt from wealth tax. There is a threshold exemption limit of Rs.30 lakh beyond which there is a wealth tax of 1%. Prepared & Collection by: M.Ajmal Khan.