The income of an NRI earned in India is taxable. How the income gets taxed depends on its source and the residential status in India. And his residential status is determined by the number of days he stays outside India and visits India for each financial year. Depending on the total number of days he stays in India on his visit, he will be classified as a non-resident Indian (NRI). If he stayed in India for less than 182 days and earned from India less than Rs 15 lakh or physical presence was less than 120 days but the income exceeded ₹15 lakh during a financial year, he would be qualified as an NRI and his income in India will be subject to tax.
According to the residency rules laid down in the Income Tax Act, an NRI is liable to pay tax only on the income earned or accrued in India.
NRIs are liable to pay taxes in India if they have below mentioned incomes:
Salary Source from India
If you have a salary source from India or receive a salary towards services rendered in India, your income will be taxed irrespective of the place of receipt. Your payable tax rate will be computed as per the slab rate decided by the government of India (GOI) in the particular financial year.
If your salary or income is remitted by the GOI towards services rendered outside India, it will still be considered as income accrued in India and you will be subject to tax even if your residential status is ‘non-resident’.
Property Income
Your property income such as rental income from the house located in India is taxable. The taxes of your income from house property or related shall be on similar lines as that of the Indian residents. You shall enjoy a standard deduction of 30% under Section 80C of the Income Tax Act while filing your tax on your property income. Your house property income tax is also decided as per the slab rates.
Notably, your tenant who is paying you monthly rents is responsible for a TDS deduction of 30% under Section 195. To avail of this deduction, the tenant has to fill in the 15CA form and submit it to the income tax department online. Form 15CB from a chartered accountant (CA) is required to guide through the amount of payment, TDS rate, TDS deduction as per Section 195, rules of Double Tax Avoidance Agreement (DTAA).
Other Sources of Income
Other sources of income such as interest received in your saving account and fixed deposits opened in Indian banks are taxable. Although interest earned in the Non-Resident Ordinary (NRO) account is fully taxable, interest in your Non-Resident External (NRE) account will not come under taxable income in India.
