The Income Tax Act of 1961 defines an NRI or a Non Residential Indian on the basis of the number of days of an individual’s stay within India in a specific financial year. The residential status is usually determined separately for each year.
Employment includes self employment while India applies to the territorial waters of the country as well.
The income of an NRI incurred within India can most definitely be taxed if it exceeds the amount of 250000 INR per year. The global income of an NRI or earnings made on foreign soil is not taxed by the Indian government. How an NRI’s income taxes are filed will largely depend on his stay in the country in one particular financial year.
We make it possible for NRI’s who do not possess a PAN number to avoid a higher TDS in every financial year. To know more about this, a number of important points need to be kept in mind.
The tax liabilities for NRI’s who invest in India are usually the same as the liabilities faced by resident investors. However the tax payments of NRI’s are what is deducted at the source, known also as TDS.
The TDS which is deducted from most investments are deductions that are carried out at a flat rate of interest irrespective of the income slab which is not how it is done for residential Indians. The applicable taxes on financial gains are deducted during the time of maturity or redemption.
If the tax liabilities on investment are lower than the tax amount deducted at the source, NRI’s can file for income tax refunds from the income tax department in India.
TDS payment can be easily Avoided by Opening Specific Bank Accounts
Higher TDS payments can be prevented when NRI’s invest in Indian Mutual Funds
It is possible for NRI’s to save on TDS payments by investing in Indian mutual funds. We therefore strongly encourage our NRI clients to invest in leading Indian mutual funds so as to able to save on a huge TDS payment at the end of the financial year.
In order to be able to start investing in mutual funds in India, NRI’s need to open one of three accounts namely the NRO, FCNR and accounts. We help our customers to get such accounts opened in the most reputed of Indian banks so that the mutual funds investments undertaken are those that are carried out in a flexible and transparent manner. ‘
Complete Exemption or Partial Payment of TDS
Long Term Gains in Capital
The mutual funds investments for NRI’s can also expose them to long term appreciation of money in India. There are many NRI’s who often choose to stay back and carry on earning income in India once they start investing in mutual funds and witness the huge returns in terms of capital that they are able to make while they are here.
Useful Investment Procedures to opt for like SIPs
Although NRI’s are able to invest a lot more money than most residential Indians, the minimum amount that they need to invest in mutual funds in India remains 5000 INR which is the same for locals. NRI’s are also allowed to opt for the Systematic Investment Plan or SIP when they start investing in mutual funds in India which really streamlines the investment procedure and makes it much more comfortable and flexible than it would otherwise have been.
Short Term Capital Gains from Mutual Funds Investments for NRI’s
Category of Units |
Tax Rates under the Act |
TDS Rates under the Act |
Units of Non Equity Oriented Scheme |
Taxable at Normal Rates of taxes applicable to assesse |
30% for Non Resident Individuals |
Units of a Scheme that is Equity Oriented |
Fifteen percent on recovery of parts where STT is to be paid on release (u/s 111A) |
15% |
Long Term Capital Gains from Mutual Funds Investments for NRI’s
Category of Units |
Tax Rates under the Act |
TDS Rates under the Act |
Listed Units of a Non Equity Oriented Scheme |
Ten percent without Indexation or twenty percent with indexation, whichever is lesser (u/s 112) |
Twenty percent for Non Resident Individuals (u/s 195) |
Unlisted Units of a Non Equity Oriented Scheme |
Ten percent with no indexation |
Ten percent for Non Resident Individuals (u/s 115 E/112) |
Units of a Scheme that is Equity Oriented |
Exempt in case of release of units where STT is to be paid on release (u/s 10 (38)) |
Exempt in case of release of units where STT is to be paid on release (u/s 10 (38)) |
Thus, there are quite a number of ways by which NRI’s without PAN can save on TDS or pay it at a far lower rate than usual.