An NRI’s income taxes in India are based upon his or her residential status for the year. If your status, let’s say, is resident, your global income is certainly taxable in India. If you hold an ‘NRI’ status, your income which is accrued or earned in India is taxable. Salary that is received in India or salary for services offered in India, capital gains on asset transfer located in India, income from a house property located in India, income that is derived from interests on saving bank account or fixed deposits are other types of income accrued or earned in India. The aforementioned income types are taxable in India, whereas that which is earned outside of India is non-taxable in India. Interest that is earned on a FCNR and an NRE account is not taxable. Interest on NRO account is also subject to taxation for NRIs.
Whether you’re an NRI or non-NRI, if your income exceeds INR 2,50,000, you must file an income tax return in India. The last date for NRIs to file income tax return in India is July 31st. If you’re an NRI, do you need to pay an advance tax? If your tax liability is more than INR 10,000 in a financial year, you’ll be required to pay an advance tax. Interest under Section 234B and Section 234C comes into action when you fail to pay your advance tax.
Under Section 234B, the taxpayer, an NRI or non-NRI, must pay at least 90 percent of the tax which is due payment at the end of the financial year. In the event of the delay of the advance tax, subsequently, a charge at the rate of 1 percent of the outstanding amount will be imposed on the taxpayer in the form of a penalty. There is income tax benefit for NRIs as the advance tax can also be paid quarterly in a financial year. Under Section 243C, a penalty is imposed in the event of the delay of the tax payment. Please note that the rate of Income tax for NRIs is subject to revision even as we compile this blog.