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India has one of many largest diasporas, with greater than 18 million folks dwelling in overseas international locations. Most of the NRIs dwelling abroad have revenue sources in India. Like resident Indians, such NRIs are additionally required to pay revenue tax in India.
Additionally, NRIs are entitled to get pleasure from sure tax deductions and exemptions. Listed below are among the most necessary issues it’s essential to know concerning the tax slabs, exemptions, and deductions for NRIs in FY 2021-22.
1. What are the NRI Revenue Tax Slabs for FY 2021-22?
The NRI tax slabs for FY 2021-22 are as follows:
| Revenue Tax Slabs | Tax Charge |
| As much as Rs. 2.5 lakhs | Nil |
| Rs 2.5 lakhs to Rs 5 lakhs | 5% |
| Rs. 5 lakhs to Rs. 7.5 lakhs | 5% |
| Rs. 7.5 lakhs to Rs. 10 lakhs | 15% |
| Rs. 10 lakhs to Rs. 12.5 lakhs | 20% |
| Rs. 12.5 lakhs to Rs. 15 lakhs | 25% |
| Rs. 15 lakhs and above | 30% |
For resident Indians, the tax slabs fluctuate for people primarily based on their group. Nonetheless, no such guidelines apply to NRIs. The identical tax charges apply to NRIs of all age teams. Whether or not an NRI is 30, 65, or 85 years outdated, the identical tax fee applies to all. Well being and schooling cess @4% of the revenue tax can be relevant.
1. What’s Revenue Tax Surcharge for NRIs?
Like resident Indian taxpayers, NRIs are additionally topic to tax surcharge if their Indian revenue for the monetary yr is above Rs. 50 lakhs. The surcharge is split into slabs primarily based on the revenue degree.
| Revenue | Surcharge Charge |
| Above Rs. 50 lakhs | 10% of the revenue tax |
| Above Rs. 1 crore | 15% of the revenue tax |
| Above Rs. 2 crore | 25% of the revenue tax |
| Above Rs. 5 crore | 37% of the revenue tax |
3. What are the Tax Deductions and Exemptions accessible for NRIs?
Listed below are among the tax deductions NRIs can benefit from for lowering their tax liabilities in India.
- Part 80C: Investments in ELSS, 5-year FD, EPF, ULIPs, premium fee of life insurance coverage, principal reimbursement of dwelling mortgage, and so forth.
- Part 80D: Deduction of as much as Rs. 25,000 on medical health insurance premium.
- Part 80E: Deduction on curiosity paid on schooling mortgage with no higher restrict.
- Part 80TTA: Curiosity revenue of as much as Rs. 10,000.
4. What’s Taxable Revenue for NRIs?
Listed below are varied NRI incomes that come underneath the purview of the tax legal guidelines in India:
- Wage
- Home property
- Rental funds
- Curiosity revenue from FD and financial savings accounts
- Capital beneficial properties
5. Ought to NRIs File Tax Returns?
Any particular person with an revenue of above Rs. 2.5 lakhs ought to mandatorily file tax returns. The rule applies to resident and non-resident Indians. NRIs ought to full their revenue tax submitting course of earlier than thirty first July yearly except the federal government extends it.
Additionally, if the tax legal responsibility of any NRI exceeds Rs. 10,000 in a monetary yr, it’s obligatory for them to pay advance tax. Curiosity penalty underneath Part 234B and 234C is relevant in any other case.
Larger Tax Financial savings with Sensible Investing
Insurance coverage suppliers in India supply an intensive vary of merchandise, like medical health insurance, life insurance coverage, retirement plans, and so forth., eligible for tax deductions underneath totally different sections of the IT Act. NRIs can put money into such merchandise to avoid wasting taxes and construct a financially safe future.