Tax Assistance FAQs

If an NRI’s total income in India exceeds the basic exemption limit, they must file income tax returns in India. The exemption limit currently is Rs. 2.5 lakh for all NRIs, irrespective of age and gender.

NRIs are generally liable to pay tax in India on income earned or accrued in India, such as salary, rent, capital gains, and interest. 

However, certain types of income, such as income from agriculture or specified investments like tax-free bonds issued by the Indian government, may be exempt from tax for NRIs.

To file an NRI tax return, you need your passport or some other identification proving your residential status in the home country, PAN card for tax identification in India, bank statements, proof of income like salary slips or rental income, TDS certificates (Form 16A), investment proofs, and capital gains details. 

Interest earned on NRE accounts is tax-free, while interest on NRO accounts is taxable.

Short-term capital gains on listed equity investments are taxed at 20% (on par with resident Indians), and long-term gains on the same over Rs. 1.25 lakhs are taxed at a special rate of 12.5%. Capital gains on debt mutual funds are taxed at the applicable slab rates. Dividends and rental income are taxable as per applicable slab rates.

NRIs can claim relief under the Double Taxation Avoidance Agreement (DTAA). However, the benefits and requirements will vary depending on the DTAA agreement with the source country.

NRIs planning to return to India should first understand their residential status, which will determine their tax liability. They should also be aware of how their global income will be taxed once they become residents. 

Utilizing the Double Taxation Avoidance Agreement (DTAA) can help avoid double taxation on income earned abroad. It’s advisable to consult a tax advisor to optimize tax efficiency and ensure compliance with Indian tax laws.

Yes, NRIs can file their income tax returns electronically through the official Income Tax Department’s e-filing portal:  Click here

The process is straightforward and similar to resident filings, but specific benefits and requirements might vary based on the Double Taxation Avoidance Agreement (DTAA) with the source country.

No, it is not mandatory for NRIs to have an Aadhaar card to file income tax returns in India. NRIs can voluntarily obtain an Aadhaar card if they wish, but it is only required if they stay in India for 182 days or more in a financial year.

Yes, an individual can move from resident to NRI status for tax purposes. This change is based on the number of days spent in India during a financial year. To qualify as an NRI for tax purposes, you must spend less than 182 days in India in that year. This change in status impacts your tax liabilities and the requirement to file tax returns in India.

Yes, NRIs are required to report their Tax Identification Number (TIN) of the country of their residence when filing tax returns in India. This helps in establishing the taxpayer’s residency and aids in the implementation of tax treaties between India and the respective country.

Yes, we can assist you in regularizing tax notices. Our team will help you understand the notice, gather the necessary documents, and prepare a response to the Income Tax Department to resolve the issue efficiently.

Yes, we connect you with tax professionals who can assist you in regularizing your tax payments and filing your taxes, subject to certain terms and conditions.

The due date for filing income tax returns in India is typically July 31st of the assessment year. For example, for the financial year 2022-2023, the due date for filing tax returns is July 31, 2023. However, these dates can be extended by the government, so it’s always good to check for any updates.

If your PAN status is marked as Active but Inoperative, it typically means that it is not linked to your Aadhaar card. To rectify this, you need to link your PAN with your Aadhaar card . You can do this online through the Income Tax Department’s e-filing portal or by visiting your nearest PAN service center.

No, NRIs cannot hold a resident savings account in India. Once you become a non-resident, you should convert your resident savings account to a Non-Resident Ordinary (NRO) account.

Yes, an NRI can be a nominee on a bank account in India. The implications are straightforward: in the event of the account holder’s death, the NRI nominee can claim the funds in the account. 

However, the NRI will need to provide the necessary documents, including proof of identity and address, to the bank to facilitate the transfer.

Repatriation of funds from NRI investments is subject to certain rules:

• Investments should be made on a repatriation basis.
• Principal and capital gains can be repatriated after fulfilling the necessary documentation and compliance with tax regulations.
• The repatriation is allowed up to USD 1 million per financial year for all bonafide purposes, including the sale of assets.

The documents required for the repatriation of funds include:

• Form 15CA: Declaration of remittance
• Form 15CB: Certificate from a Chartered Accountant
• Proof of investment (e.g., sale deed, contract note)
• Copy of PAN card
• Bank statement showing the source of funds
• Any other documents as required by the bank

• Form 15CA: This is a declaration of remittance to be submitted online by the person making the remittance. It is a form that provides details of the amount of remittance and the purpose.
• Form 15CB: This is a certificate from a Chartered Accountant. It certifies that the tax has been correctly deducted on the amount being remitted and that it complies with the provisions of the Income Tax Act.

TCS rules do not apply to NRIs.

Yes, NRIs can continue to hold their Public Provident Fund (PPF) and Post Office accounts until maturity, even after their residency status changes. However, new contributions to PPF accounts by NRIs are not allowed. The account will continue to earn interest until maturity, and the balance can be withdrawn upon maturity.

Yes, we assist with the withdrawal process of Employee Provident Fund (EPF) accounts. Withdrawals from EPF are taxable if made before completing five years of continuous service. The amount withdrawn will be taxed as per your applicable income tax slab rates. If the withdrawal is made after five years, it is tax-free.

Yes, NRIs can invest in Capital Gains bonds under Section 54EC of the Income Tax Act to claim exemption from capital gains tax. These bonds are issued by entities such as the National Highway Authority of India (NHAI) and the Rural Electrification Corporation (REC). The investment must be made within six months of the sale of the asset to qualify for the exemption.

Equity Mutual Funds and Stocks:

• Short-term capital gains (holding period less than 12 months): Taxed at 20%.
• Long-term capital gains (holding period more than 12 months): Taxed at 12.5% without the benefit of indexation, for gains exceeding INR 1.25 lakhs.
  

Debt Mutual Funds:

• As per current rules, the capital gains from debt funds are taxed at the applicable slab rates. There is no categorization of short-term vs long-term.

For NRIs, dividend income from mutual funds and equity stocks is subject to a Tax Deducted at Source (TDS) at the rate of 20% under the Income Tax Act, subject to the DTAA with the home country. 

Yes, as an NRI, you must inform your brokerage entity about your NRI status. This is important for compliance with regulatory requirements and to ensure proper tax treatment of your investments. Brokerage units need to maintain separate accounts for resident and non-resident clients.

Yes, as an NRI, you can gift your financial and non-financial assets to any person. In India, there is no gift tax on the donor. However, if the value of the gift exceeds INR 50,000, the recipient may have to pay tax unless they are a close relative as defined under Indian tax laws. Way2Wealth PRAVA can assist you in estate planning to ensure your assets are transferred smoothly and efficiently.

Yes, NRIs can gift money to residents in India. However, if the gift exceeds INR 50,000, the recipient may need to pay tax on the amount, unless they fall under the exempted categories such as close relatives. It’s advisable to consult with a tax professional to understand the tax implications.

Yes, NRIs can donate to NGOs in India. However, the NGO must be registered under the Foreign Contribution Regulation Act (FCRA) to accept donations from foreign sources. It’s important to ensure the NGO’s compliance with FCRA regulations before making a donation.