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Income tax exemptions for NRIs
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Incomes of NRIs are exempt from income tax interest on various specified securities or bonds. NRIs enjoy tax exemptions from property investment and other assets including dividend income, interest income, and even gifts! Read on and find out what tax exemptions you could enjoy as an NRI.
 
Did you know that your NRI status can help you with exemption in income earned or received by you outside the country? Apart from tax deductions (including a standard deduction of 30% of net annual value and interest on borrowed capital), your NRI status confers tax exemptions from other assets and investments such as:
  • All the dividends that you receive from domestic companies

  • Income arising on any of your deposits at banks – this income will be treated as interest income which would be chargeable under ‘Income from other sources’

  • Money exceeding Rs. 25,000 (US$ 625), even if received as a gift, is liable to be taxed to the recipient, except in cases of gifts received on occasions like weddings or inheritances
 
Wondering if you will be taxed on your remittances?
Since income earned outside India falls outside the purview of the IT Act, you cannot be taxed on remittances to India. So you can send money to your own accounts in India without any fear of attracting tax! And what’s great is that you can utilize the money for any purpose you like.
When you are remitting money to India, you will not be taxed unless the transfer is compensation received against services in the country which then results in the amount being chargeable to tax for the recipient.
 
As an NRI, your tax exemptions include:
  • Income from interest on National Saving Certificate VI/VII issue and notified bonds purchased by you in foreign exchange

  • Income from interest on your funds in NRE/FCNR accounts

  • Interest on notified securities or bonds and even premium on redemption of such securities

  • Interest paid by scheduled banks on RBI approved foreign currency deposits, to an NRE or NRO
NRIs enjoy special exemptions with respect to investment income! NRI tax concessions have been accorded primarily to attract NRI investment in the country – Do you agree? Were you aware of these exemptions? Do you know of any others?
 
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