Introduction to NRI Income Tax
Tax collection is the right of every government and we have to respect it. Government aims to improve the Indian economy on the basis of tax collection. Taxation is the most important aspect of personal finance and it is applicable on both residents and Non-residents. Individuals working and earning outside the home country are named as NRI’s under Income tax act, 1961. The Income tax rules and perks allowed to NRI’s are different from what allowed to Indian residents. NRI also qualify to pay income tax in certain situations and they are also covered under income tax act, 1961. NRI taxation act provides you details about the taxes applicable on an NRI and how they have to deal with it. It also covers aspects like property tax and wealth tax.
NRI Taxation System in India
It is important for an NRI to understand the income tax and other taxes in detail to file their return correctly in India. An individual is referred to as NRI, if he or she spends a certain number of days abroad and does not qualify the condition of being an Indian resident.
The income earned by an NRI abroad is exempted from tax in India. If an NRI is earning from sources like mutual funds, term deposits, property rental or investment in shares and exceeding the limit specified in the Income tax act, 1961, he has to mandatorily file the income tax return in India.