The NRI tax liability only arises if the income has been earned in India from some rental property in India, any salary that has been earned in India from any company that is based in India or from any Indian company that is set up in the country where the NRI is working.

For the purposes of levy of tax, the Income-tax Act in India has classified the status of an

individual assessor into three viz.

• Resident and ordinarily resident (ROR)
• Resident but not ordinarily resident (R but NOR)
• Non-resident (NR)

The residential status of an Individual is determined based on the number of days of stay in India. Financial year (FY) is April to March.

Basic Conditions for a Resident

In India for 182 days or more during previous year

In India for 60 days or more during previous year

365 days or more during 4 preceding previous years.

Some particulars of India NRI tax statistics are listed below:

• Foreign companies are required to pay 20 percent interest rate on borrowing the foreign currency from the Indian government or any other Indian concern
• Non-residents are also liable to pay 20 percent interest on borrowing foreign currency from the Government of India or any other Indian firms.
• NRIs are subjected to pay 10 percent interest while entering into a bond with an Indian company if such bonds are issued under the schemes forwarded by the Central Government. These are called Foreign Currency Convertible Bonds and are usually taken as a conglomeration or demerger.

NRI Income in India
All income earned by NRIs in India is taxable and returns are to be filed every year. Under Section 9 (I) (ii) of the IT Act, salary earned in India is chargeable to tax.

Returning NRI Income Exempted from Tax
A NRI returning to India does not pay tax for 7 successive assessment years after his return to India on money and assets acquired abroad one year before his return to India. His NRE account is also exempt from tax in India.

Tax benefits available to an NRI

Bank Deposits investment in shares, units of Mutual Funds etc. are exempt from wealth tax in India.

Interest earned on NRE and FCNR accounts is completely tax-free.

Gift tax has been abolished for all types of gifts from the 1st October 1998.

However, gifts received on the occasion of marriage or from relative or under will or inheritance would not be subject to tax

To avail benefit of lower rates of tax as per double taxation avoidance treaty entered in by India, NRIs need to submit the Residency Certificate issued by Tax Authorities of the country of his residence.However, even after the simple nature of the tax laws and the concessions offered there is a need to consult field.

Source:- Mindsprings