Tax Planning for NRIs in India

/, Income Tax, Latest News/Tax Planning for NRIs in India

Tax Planning for NRIs in India

The term ‘Tax Planning for NRIs in India’ is very important. First off, you must understand that tax planning isn’t tax evasion or tax avoidance. Whereas the in the first option a person illegally refuses to pay tax, in the later a person so arranges his tax affairs that he employs make-believe and sham devices or artifice to avoid tax liability within the law thereby, defeating legislature’s basic intent backing the statute. Tax planning, on the other hand, involves maximally using benefits like exemptions, deductions, rebates and so on to decrease tax liability. In India, tax planning is a bit different for NRIs. This article features vital information to help you out.


About Indian NRIs

  • An Indian is an NRI if he has resided in India for below 182 days of the present financial year.
  • Has been in India for below 60 days in the present financial year.
  • Has been in India for below 365 days in the recent past 4 years.

India’s taxation rules also differ a bit. Here are laws that must be understood for better NRI tax planning.


Taxable NRI Income

  • Yet to be earned or accrued, and earned or accrued income from salaries in India.
  • Capital gains income or interest earned from securities and short-term investments.
  • Capital gains believed to have been accrued or received from transferring real estate/properties or any other capital investment.


Non-Taxable NRI Income

  • Earned NRE accounts interests.
  • Long-term capital gains from selling equity fund units or equity shares (but such dealings are conditional on securities dealings).
  • Incentives or allowances paid to an NRI by the Indian government for services he rendered outside India.
  • Interest from particular certificates, savings, and bonds connected to foreign exchange usage.

The DTAA (Double Taxation Avoidance Agreement) is an agreement meant to prevent individuals from paying tax multiple times on the same earned income. It’s meant to prevent your earnings from abroad and India from being individually taxed if you’re qualified to be an NRI. Here are, tax planning tips for NRIs in India to ensure that you don’t pay multiple taxes.


Tips for Tax Planning for NRIs in India

  1. Tax Filing: You must file tax returns if your annual income exceeds Rs 250,000. You should select NRI as your residential status in the ITR form. You can then use all the benefits mentioned at the beginning of this article when filing your tax return. You can download form 26AS form which provides details of all tax collections to check taxes that are deductable from source. You can be fined or penalized for failing to file for income tax returns.
  2. Coming Back: Consider getting a resident status but not RNOR (ordinary resident) if, as an NRI, you plan on moving back to India. You enjoy 2 years NRI exemptions after your return before resident tax laws start applying to you.
  3. Property-Linked Tax Affairs: You can buy, sell, or own foreign assets without paying tax once you purchase them as an NRI. You can also inherit with the same implications as an NRI. To better plan your taxes, you might be better off selling such properties as an NRI.

These are the tips that concern tax planning for NRIs in India. Use this information and you will certainly be using legal tax benefits like exemptions, deductions, and rebates to lower tax liability instead of, illegally avoiding or totally evading what should be the right of your motherland.

By | 2018-03-16T18:00:11+00:00 January 15th, 2018|How To, Income Tax, Latest News|Comments Off on Tax Planning for NRIs in India

About the Author:

CA Lukesh Sethi is owner and founder of, Having more than 5 years experience in taxation and corporate laws serving many clinets in practice. Can be reached at
Free Email Updates

Get the latest content first.

We respect your privacy.
Scroll Up
%d bloggers like this: