Understanding Non-Resident Indian & their Taxes


Non-Resident Indian is defined as a person who is not a resident and a tests of residency for different taxpayers are involved. To determine taxability of income earned by such a taxpayer, it is necessary to determine residential status of taxpayer. If the taxpayer is a resident of India all his income would be taxable in India, irrespective of the fact that whether the income is earned or has accumulated to taxpayer outside India or in India. Non-Resident Indian/Person of Indian Origin, Foreign Company and Other Non-Resident Person are defined under Non-Residents.
If the person is a non-resident of India all his income accumulated or arises outside India would not be taxable in India. Income which is accumulates or arises in India or Income which is deemed to receive, accumulate or arise in India is taxable in India. However, Income accruing outside India from a business controlled from India or from a profession set up in India and Income other than above mentioned i.e., income which has no relation with India shall not be taxed in India.
NRI (Non-Resident Indian)
Non-resident Indian’ is a person who is a citizen of India or a person of Indian origin and not a resident of India. As per section 6 of the Income-tax Act, an individual is said to be non-resident in India if he is not a resident in India and an individual is deemed to be resident in India in any previous year and if:
• She/he is in India for a period of 182 days or more during the previous year; or
• She/he is in India for a period of 60 days or more during the previous year and 365 days or more during 4 years immediately continuing the previous year except when an individual being citizen of India or a person of Indian origin, who being outside India, comes on a visit to India during the previous year.

NRI HiGrit
A non-resident Indian (‘NRI’) can apply for PAN by submitting the Form No. 49A along with the requisite documents and prescribed fees at the PAN application center of UTIITSL or NSDL. He can also make an online application through the website of UTIITSL or NSDL.
While applying for PAN, NRI is required to submit the copy of passport alongwith the PAN application Form as the proof of identity. As the proof of address She/He is also required to submit Copy of passport or copy of the bank account statement in country of residence or copy of NRE bank account statement. A foreign address can also be provided as residential and office address by NRIs applicants, if they do not have any Indian address of their own.
A person can’t hold more than one PAN. A penalty of Rs. 10,000 will be imposed for having more than one PAN. If a person has been allotted more than one PAN then he must surrender the additional PAN card(s) immediately.
Income exempt from tax
Following incomes of a Non-resident Indian (NRI) are exempted from tax:-
• Interest on notified savings certificates issued before July 1,2002 by the Central Government if it is subscribed in convertible foreign exchange remitted from a country outside India.
• Interest earned on notified bonds prior to July 01, 2002 purchased in foreign exchange under certain conditions.

Author Name: Omkar