Tips to optimize tax savings for NRIs earning abroad

 Non-Resident Indian life comes with its own sets of challenges. While they do have many perks, they also have to deal with problems like double taxation. Non-Resident Indians earning abroad are taxed on their foreign income by their resident country. They are taxed for investments, properties, or any income that they may have in India as well. It’s natural to want to make the most out of your earnings in India and use tax deductions and provisions made available for NRIs. There are many ways in which an NRI can optimize taxes in India while earning abroad.

Before we get into tax optimization tips, it’s important to identify which NRIs are supposed to pay taxes in India. If you are an NRI with active business transactions, investments, and assets from which you make money in India, you are liable to pay taxes to the Indian tax authorities.


As an NRI you have to pay taxes on the following:

●  All income accrued in India

●  Direct or indirect income received in India

●  Income received, accrued, or accumulated in India when deemed as such by the Indian tax authorities.

 

NRIs who do not have any of the above incomes are exempt from paying taxes in India. If you fall under any of the above categories, here are some tax optimization tips that will come in handy.



Deductions

Non-Resident Indians do not enjoy many tax deductions that resident Indians enjoy, such as investing in social schemes like Public Provident Funds or the National Savings Certificates. However, NRIs can invest in the National Pensions System and avail tax deductions of up to Rs. 1.5 lakh attached with it. An additional deduction of Rs. 50,000 is also allowed above the Rs. 1.5 lakh limit to encourage more NRIs to invest in the scheme.

Get a PAN Card

Most NRIs who have moved abroad have a PAN card, but if you don’t have one, getting one made would save you a lot of money. Individuals with a Personal Account Number (PAN) can claim an income tax refund. Income in India beyond a certain point is subject to Tax Deducted at Source. If you don’t have a Permanent Account Number, you might have to pay a higher TDS amount.


Maintain NRI Status

NRIs do not have to pay taxes for income accrued abroad in India. However, if you have lost your NRI status, then you might have to pay taxes on your income to the Indian tax services. In order to avoid losing your NRI status, you need to plan your visits to India carefully since your tax liability in India changes with your residential status.

Provisions

As an NRI, you can take advantage of the tax provisions for long-term assets purchased in foreign currency. When you sell or transfer your foreign assets, you cannot deduct for capital gains received but you can get exemptions under Section 115F of the Income Tax Act.

Claim home loan interest

Many Non-resident Indians invest in properties in India. If you are one of them and have applied for a home loan, you can claim tax deductions. Once you’ve paid the interest on your home loan or the property tax, you are eligible for a tax deduction. If at all you decide to sell your property, you will have to pay capital gains tax, and hence recommended to limit the number of capital gains made in a year to stay in the lower tax bracket.

While you can use the above methods to optimize taxes in India, it would be best to take expert opinion in this matter. After all, every individual's corpus and investment portfolio is different, and hence, with expert advice, you can maximize your tax savings with the right guidance. SBM Bank India provides a range of banking and investment solutions to Non-Resident Indians. From NRE Savings Accounts, NRO Savings Accounts, FCNR Deposits, home loans to premium privileges, extraordinary experiences, wealth management solutions with expert assistance and so much more, SBM Bank India brings NRIs a world-class banking experience. Their banking experts will not only help you put together an impressive investment portfolio but will also help you optimize tax savings efficiently.

Comments

Post a Comment

Popular posts from this blog

Why is India a Good Destination for Investment

Image
India continues to be an attractive destination for the investors, and form a huge part of the world’s fastest-growing economies. Indian residents and Non-Resident Indians(NRIs) are actively looking to earn money by Investing in India. Also, if the investments are made by NRIs then it is treated as ‘foreign investments’ as per the Indian foreign exchange regulations, making India one of the top recipients of  foreign remittances   from its diaspora. Here are some reason why India is a good place for investment:- Indian economy is one of the world's fastest-growing economies According to the Department of Promotion of Industry and Internal Trade, India has crossed the $70 Bn mark in the Fiscal Year 2019-20 and recorded a total FDI inflow of $73.45 Bn, ranking amongst the top countries for investments by leading investors. Indian infrastructure story More than $1.5 trillion investments have been planned for Indian infrastructure for the next two decades across the key government...
Read more

All you need to know about an FCNR Account.

Image
  Providing NRIs with lucrative returns without much hassle was the main objective with which the FCNR account was first introduced. This primary objective still holds.  What is an FCNR Account? FCNR stands for Foreign Currency Non-Resident Account. It is a term deposit account popularly known as an FCNR deposit . These fixed deposit accounts are opened for depositing foreign currency income earned overseas. The account is maintained in the same foreign currency as deposited.  NRIs (Non-Resident Indians) and PIOs (Person of Indian Origin) are eligible to open an FCNR account with an authorized bank or dealer.   FCNR account is more beneficial to those NRIs who are sure to repatriate their funds from the account on maturity. Also, FCNR deposits are a good option for NRIs who are looking for a secure hassle-free fund deposit option in India. You can book your FCNR Account in  US Dollars Canadian Dollars Australian Dollars Pound Sterling Swiss Franc Euro Japan...
Read more

What are the benefits of opening an NRI account?

Image
NRI account s can be opened by Non-Resident Indian who reside outside the geographic territory of India. This account facilitates account holders to manage transactions in the currency of their country of residence. There are types of NRI saving account one can opt to open: NRE Account NRO Account NRE Account: NRE (Non-Resident External) account is accessible to deposit overseas savings as rupee dominated. It is an account opened in India in the name of NRI. One can open a joint account between two Non-Resident Indians or a Person of Indian Origin with the SBM NRE savings account . Benefits of NRE account: Interest 6% p.a. with monthly payout of interest Tax-free returns Fully repatriable Competitive forex rates Dedicated Relationship manager Preferential pricing on a host of products and service Premium privileges with Personal concierge NRO Account: NRO (Non-Resident Ordinary Rupee) is an account opened in India by the name of NRI to manage the income earned in India. That earning c...
Read more