The Many Ways To Save On Nri Taxation

Payment of income tax is a must by every Indian citizen and the filing of income tax returns must be done before July 30th every year. It is not just necessary to file income tax returns if you reside in the country, but also if you are a Nonresident Indian. As a NRI, you have to pay the taxes applicable for your income according to the Indian Ministry of Finance and Income Tax Law.

What Is The Income Applicable For Taxation For NRIs?

An NRI is not going to be taxed on the income that he or she has earned while living abroad. There s no need to pay taxes on their external NRE account or their foreign currency nonresident (FCNR) account. They have to pay taxes on the income that they get in the form of capital gains, rent, dividend, and interest. Here also the Nri Taxation is applicable only if the income that is gained from such sources is beyond a particular limit. They are also eligible for claim deductions. In 2011-2012, filing of tax returns was applicable for NRIs whose income exceeded 1.8 lakhs and for those above the age 60 with an income of 2.5 lakhs.

Options to Save on Nri Taxation

In order to file tax returns they have to take up the services of an auditor who manages the tax filing requirements of NRIs. NRIs have a lot of advantages with income tax and there are so many ways in which they can save on taxes. These options give them assistance in saving considerably on the amount owed as taxes. They can invest in life insurance policies, mutual funds or pension plans all of which will reduce their taxable income. They can invest in health insurance for themselves as well as members of their family and parents who depend on them through which they are eligible for deductions of up to Rs35.000. AN NRI who has taken a home loan can get deduction of up to one lakh on the loan. The interest that they pay is also eligible for deductions. In addition to such tax saving options there are lots more.

An NRI can invest in tax saving bonds. If they were to sell a capital asset, the capital gains accrued from the sale of up to 50 lakhs can be invested in bonds of NHAI and REC. They can also get lower tax rates on interest income by taking up treaty provisions. While consulting with their auditor on payment of Nri taxation amount, they should ask them specific advice and options on how to save on tax amount so that they pay their taxes correctly as well as enjoy the many advantages open to them for saving on tax.

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