Q1. Who is treated as an NRI under the Income Tax Act, 1961?
An individual is treated as a Non-Resident Indian (NRI) if he does not satisfy the residential status conditions prescribed under the Income Tax Act for a particular financial year.
Q2. How is residential status determined under Income Tax?
Residential status is determined every financial year based on the number of days stayed in India during the relevant year and preceding years.
Q3. Is residential status the same as citizenship?
No. Citizenship and residential status are different. Even an Indian citizen can be treated as an NRI for tax purposes.
Q4. What income of an NRI is taxable in India?
Only income which is received, accrued or deemed to accrue in India is taxable in India for an NRI.
Q5. Is foreign income of an NRI taxable in India?
No. Foreign income earned and received outside India is not taxable in India for an NRI.
Q6. Is salary income earned abroad taxable in India?
Salary earned for services rendered outside India is not taxable in India, even if credited to an Indian bank account.
Q7. Is salary received in India taxable for an NRI?
Yes. Salary received in India or for services rendered in India is taxable in India.
Q8. Is income from house property in India taxable for an NRI?
Yes. Rental income from property situated in India is taxable in India, irrespective of the residential status.
Q9. Is capital gains from sale of property in India taxable for an NRI?
Yes. Capital gains arising from the sale of property located in India are taxable in India.
Q10. Is interest on NRE and NRO accounts taxable?
- Interest on NRE account – Exempt from tax
- Interest on NRO account – Taxable in India
Q11. Is interest on savings or fixed deposits taxable for NRIs?
Interest on Indian bank deposits (except NRE) is taxable in India.
Q12. Is an NRI required to file Income Tax Return in India?
Yes, an NRI must file return if:
- Total taxable income in India exceeds the basic exemption limit, or
- Tax refund is claimed, or
- Capital gains or TDS credit is involved.
Q13. What is the basic exemption limit for NRIs?
The basic exemption limit applicable to residents also applies to NRIs, except for certain senior citizen benefits.
Q14. Can an NRI claim deductions under Chapter VI-A?
Yes, NRIs can claim deductions such as:
- Section 80C (specified investments)
- Section 80D (medical insurance)
- Section 80TTA (interest on savings account – subject to conditions)
Certain deductions like 80EEA, 80TTB are not available to NRIs.
Q15. Is TDS applicable on income earned by NRIs?
Yes. TDS is mandatory on most payments made to NRIs, such as:
- Rent
- Interest
- Capital gains
TDS rates are generally higher for NRIs.
Q16. Can excess TDS deducted from NRI income be refunded?
Yes. NRIs can claim refund of excess TDS by filing Income Tax Return in India.
Q17. Can an NRI avail benefits of Double Taxation Avoidance Agreement (DTAA)?
Yes. NRIs can claim DTAA benefits to avoid double taxation, subject to submission of:
- Tax Residency Certificate (TRC)
- Form 10F
Q18. Is advance tax applicable to NRIs?
Yes. If total tax liability exceeds the prescribed limit, advance tax provisions apply to NRIs as well.
Q19. Can an NRI invest in India and what are the tax implications?
Yes. NRIs can invest in:
- Shares
- Mutual funds
- Property
Income and capital gains from such investments are taxable in India as per applicable provisions.
Q20. Is PAN mandatory for NRIs?
Yes. PAN is mandatory if an NRI:
- Files income tax return
- Makes investments
- Claims refund
- Enters taxable transactions in India
Q21. Can an NRI appoint someone to file returns in India?
Yes. An NRI can appoint an authorised representative or Chartered Accountant to handle tax compliance.
Q22. Is penalty applicable for non-filing of return by an NRI?
Yes. Penalty, interest and late fees may apply for non-filing or delayed filing of returns.
Q23. Is FEMA compliance different from Income Tax for NRIs?
Yes. Income Tax Act and FEMA are separate laws. Compliance under one does not mean compliance under the other.
Q24. Does residential status change automatically every year?
Yes. Residential status is determined separately for each financial year based on stay in India.