Income Tax for NRI: Tax Rules for Resident Individual Recently Moved Abroad
Tax Rules for Resident Individual Recently Moved Abroad
When an Indian resident travel to another country for a temporary work assignment, it will be termed as “Resident individual on a temporary foreign assignment”.
For example Prashant travelled to US for a new work assignment. His earnings from US are credited into an Indian NRE account. He is having some FD’s and some money as savings in Indian bank account. He received Form 16 from his Indian employer. Whether he should file tax return in India or not?
Every Individual (whether NRI or not) has to mandatorily file Income tax return in India if his or her income exceeds Rs. 250000 in a Financial year. NRI’s are only taxed for the income earned or collected in India. Hence, Prashant needs to pay tax on the income which he has earned in India including the bank interest he has earned from FD’s and savings accounts.
| Prashant’s income from India | |
| Income from Indian employer | Rs.4,00,000 |
| Interest income from FDs | Rs.20,000 |
| Bank account savings interest | Rs.5500 |
| Gross total income | Rs.4,25,500 |
| Deductions | |
| Section 80C – PPF investments | Rs.30,000 (Claim upto 150000) |
| Section 80TTA exemption | Rs.5,500 (Claim up to 10000) |
| Taxable income | Rs.3,90,000 |
| Tax slab at 5% | Rs.7000 |
| Cess at 3% | Rs.210 |
| TDS deducted by employer | Rs.5000 |
| TDS deducted by bank | Rs.5,500 |
| Tax Refund | Rs.3290 (10500 – 7210) |
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