A citizen living outside the country and earning incomes outside of India may still be liable to pay Income tax in India under the Income Tax Act,1961. The taxability for Non-Resident Individuals is different from those who are tax residents in India. Non-Residents are liable to pay tax for all the monetary gains earned / received in India (excluding their income outside India).

If an NRI has a monetary gain of above INR 250,000 in a financial year / tax year, they are liable to pay income tax.

If they have a monetary gain of fewer than 250,000, their income is exempted from tax. However, considering their reporting requirement, they may still be required to file a tax return form with the Income Tax Department in India.
Further, Non- Residents having short or long term capital gains from any sale of assets in India are liable to pay taxes in India under the Income Tax Act, 1961.

Up to March 31, 2020, NRIs who visited and stayed in India can stay up to 181 days can still maintain their status as NRI. Starting from year 2020, this staying period was reduced to 120 days for all NRIs. However, this reduced period of 120 days will be applied only in cases where the total Indian income of the visiting individual (NRI) is more than INR 15 lakhs (INR 1.5 million) in that financial year.

Residing in another country, it may be tough for an individual to keep an eye on every new amendment made in India about NRIs. We as consultants try to make life easy by giving advice timely to our clients, when needed, helping our clients to make correct decisions about investments and compliances in India.

If you are someone who stays abroad and cannot follow up on all the procedures for NRI taxation in India, you should consider our wide service offerings and consultancy. IndiaBiz Assist helps with ITR filing, advance tax, capital gain tax, etc. they also provide legal advice to refund claims and real estate consulting.

Do NRIs have to pay tax in India?

The rules and regulations regarding income tax for NRIs differ from those who are resident Indians. The residential status of the NRI decides the income tax in India. 

If a person’s status is resident, their total income will be taxable in India. However, if their status is ‘NRI,’ their income accrued or earned in India will be taxable in India. Some examples of income accrued or earned in India are as follows-

• Income from house property located in India
• Income from interest on a savings Bank account or fixed deposit
• Capital gain on transfer of asset located in India 

These incomes will be taxable for NRI income earned outside of India and aren’t taxable in India. The interest earned on FCNR Or NRE account is tax-free. Interest earned on an NRO account will be taxable for an NRI.  

Is filing required for NRIs? 

Yes, filing is required for NRIs if they have taxable income in India. For instance, an NRI who has a house property in India and earns rental income must file an income tax return. 

There is a little confusion related to NRI tax implications when they sell a house property situated in India. You can seek help from a professional NRI consultant to know more about TDS deductible and TDS payable in the case of an NRI who wants to sell a property in India.

TDS deductible and implication

While selling a property in India by an NRI, the buyer is liable to deduct 20% TDS (cess and surcharge additional). A TDS of 30% is applicable for a property sold before two years.