Skip to main content

Exempted Incomes of NRIs

 

 

Some of the common exemptions are as follows:

 

S.No.

Details of income

1

Agricultural income

2

Share from income of HUF

3

Share of profit from firm

4

Minor's income clubbed with individual up to Rs.1,500 per minor child

5

Dividends from Indian companies, income from units of MFs or UTI.

6

Interest, premium on redemption, other payments received from notified securities, bonds (up to notified amounts only)

7

Other exemptions available to residents in respect of salary

8

Interest and capital gains arising on transfer of Provident funds

 

Exemptions as to investment incomes of NRIs:

 

Ø        The entire income accruing or arising to a NRI investing in the units of the Unit Trust of India is free of income tax provided the units purchased by them are out of the amount remitted from abroad or from their Non-resident (External) Account.

Ø        Income arising from investment in notified savings certificates obtained by NRIs is exempt from tax provided the certificates are subscribed to in convertible foreign exchange remitted from a foreign country in accordance with FEMA.

Ø      Income from NRI Bonds 1988 and NRI Bonds (Second Series) purchased by NRIs in foreign exchange is exempt from tax. This exemption continues to be available to a Non-resident Indian even after he becomes resident. This exemption is also available to the nominee or survivor of the NRI and also to the donee, who gets a gift of such bonds from the NRI.

 

Exemptions specifically applicable to non-residents: In order to attract investments from non-residents, certain reliefs and exemptions have been provided with respect to certain incomes earned by NRIs. Chapter XIIA of the IT Act contains special provisions relating to NRIs.

 

These provisions are applicable to non-residents in addition to the other general provisions.

 

Foreign exchange assets:

 

The term 'Foreign Exchange Asset' means any of the following assets acquired, purchased or subscribed to in convertible foreign exchange in accordance with FEMA.

 

Ø        Shares in Indian company

Ø        Debentures issued by a public limited company

Ø        Deposits in a Public Ltd. Co.

Ø        Securities of the Central Government

Ø        Any other notified asset.

 

Tax rates relating to Foreign exchange assets:

 

Ø        a) Dividend income - fully exempt

Ø        b) Long term capital gains arising on transfer - 10%

Ø      c) Other incomes - 20%

 

Other relevant points relating to foreign exchange assets:

 

Ø        No deduction in respect of related expenditure or allowance shall be allowed in respect of such incomes

Ø        Where NRI has income only from such foreign exchange assets and tax has been deducted from such incomes, the assessee need not file his return of income for that previous year.

Ø        The non-resident also has the facility to avail these special rates of tax even after he becomes a resident. To avail this, the assessee has to file a declaration that he wishes to continue availing the special rates of tax, along with his return of income.

Ø      It should be noted that the non-resident has an option of not availing the above mentioned provisions. In such case the non-resident has to file a declaration with his return of income, that that these provisions would not be applicable to him. In such case normal provisions of IT Act would be applicable with respect to the above mentioned investment incomes.

 

Exemption for bank deposit accounts:

 

The accounts which qualify for exemption for all non-residents under this head are:

 

Ø        Foreign currency ordinary non-repatriable account (FCNR)

Ø      Non-Resident external account (NR(E))

 

Exemptions for bonds and deposits:

 

This exemption is applicable on interest from specified savings certificates subscribed by the assessee in 'convertible foreign exchange' remitted from a country outside India, in accordance with the Foreign exchange regulation act The certificates specified by the Central Government are the NSC VI and VII issues.

 

Other exemptions:

 

Tax on royalty or technical fees paid to a foreign company under an agreement approved by the Central Government. This exemption is available only if the payee is a foreign company.

Popular posts from this blog

Stocks with a high dividend yield

Buy Gold Mutual Funds Invest Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Call 0 94 8300 8300 (India) Stocks with a high-dividend yield can provide investors additional cash flow. More importantly, it is tax-free   With April 2011 just over, the 'earnings season' is well and truly here. This is the time most companies pay out a portion of their profits as dividends to shareholders. Since dividends are tax-free, they are an attractive income source with a select class of investors, who depend on these for additional cash flow. SIGNIFICANCE A company doing well and generating profits will usually be in a position to declare dividends regularly. Hence, a key parameter one should look at whilst investing in a stock is whether the company has a good dividend record. Typically, dividend yield stocks are large-caps and generally not capital-intensive. This is suggestive of the fact that the downside risk on...

Mutual Fund Review: Religare Tax Plan

Tax Plan is one of the better performing schemes from Religare Asset Management. Existing investors can redeem their investment after three years. But given the scheme's performance, they can continue to stay invested   Given the mandated lock-in period of three years, tax saving schemes give the fund manager the leeway to invest in ideas that may take time to nurture. Religare Tax Plan's investment ideas revolve around 'High Growth', which the fund manager has aimed to achieve by digging out promising stories/businesses in the mid-cap segment. Within the space, consumer staples has been the centre of attention for the last couple of years and can be seen as one of the key reasons for the scheme's outperformance as compared to the broader market. It has, however, tweaked its focus and reduced exposure in midcaps as they were commanding a high premium. The strategy seems to have worked as it returned a 22% gain last year. Religare Tax Plan has outperformed BSE 100...

Systematic withdrawal plan

  Start Systematic withdrawal plan Online Although an SWP gives you regular income and saves on taxes in the long term, you cannot open an SWP on a scheme where you have an ongoing SIP   iStockPhoto If you are planning to take a sabbatical from work or are retiring soon, you may be looking at different investment options that give a regular income. Usually, a lump sum is invested to get regular fixed amounts later. Popular products include post office monthly income scheme, Senior Citizens' Savings Scheme and monthly income plans (MIPs). A lesser known option is the systematic withdrawal plan (SWP) in mutual funds. Recently, some funds have even removed the exit load on SWPs if you were to withdraw up to 15-20% in the first year, to encourage people who want to start investing in this instrument. Here is a look at what an SWP is. WHAT IS SWP? Many of us would be familiar with a systematic investment plan (SIP ), where a corpus ...

Mutual Fund Review: Tata Balanced

  It underperformed severely at first, but Tata Balanced has shown its mettle in the past five years… After five years of severe underperformance, the fund began to pull up its socks in 2002 and delivered a brilliant performance in 2003. Such a top quartile performance was repeated only in 2007 and 2009. By and large, this fund is not known for its outstanding returns, but over a long-period of time, its investors won't be unhappy. Over the past five years ended May 31, 2011 it has delivered an annualized return of 14 per cent (category average: 11%).   In 2008, it was the high exposure to Metals and Capital Goods that hit the fund hard. Towards the end of that year, exposure to both the sectors was reduced significantly while that to FMCG was increased. Once the market began to rally in 2009, the fund manager immediately reduced allocation to FMCG from 16 per cent (March 2009) to 4 per cent (May 2009) and exposure to Technology began to increase. These moves helped the fund...

JP Morgan launches Emerging Markets Opportunities Equity Offshore Fund

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300 JP Morgan launches Emerging Markets Opportunities Equity Offshore Fund    The new fund offer opens for subscription on 16 th June and closes on 30 th June. JP Morgan Mutual Fund today announced the launch of its open end fund of fund called Emerging Markets Opportunities Equity Offshore Fund. The fund will invest in an aggressively managed portfolio of emerging market companies in the underlying fund - JPMorgan Funds - Emerging Markets Opportunities Fund, says a JP Morgan press release. Noriko Kuroki, Client Portfolio Manager, Global Emerging Markets Team (Singapore), JPMAM said, "Emerging markets have been out of favour for several years, as growth decelerated and earnings struggled. However, in a world of globalisation, we believe that EM will eventually re-couple with DM, leading to the long-aw...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now