This article provides a comprehensive guide to Income Tax for Non-Resident Indians (NRIs), covering the rules, exemptions, and deductions applicable to them. It discusses various tax implications on NRI income, such as income from salary, property, investments, and capital gains. Additionally, it explains the different tax treaties and agreements that India has with other countries to avoid double taxation for NRIs. If you are an NRI, this article is a must-read to understand your tax obligations and optimize your tax planning.

Income Tax for NRIs - Rules, Exemptions & Deductions

The taxation system in India is a crucial element of the country's economy. Various taxes are applied to the goods and services that citizens use. Some of the most prevalent types of taxes are income, service, property, and tax deducted at source (TDS).

The fundamentals of the Indian Income Tax Act 1961 apply to both Indian citizens and Non-Resident Indians (NRIs). Accordingly, taxes on capital gains accrued in India from shares, mutual funds, term deposits, and rental income tax for NRI are applicable.

An individual's residential status is established based on how long they have resided in India. The criteria that determine an NRI's residential status are listed below:

A person who spent less than 182 days in India during the financial year

A citizen of India who is working or living abroad for employment/business purposes

NRIs in India only need to pay taxes when the Income Tax Act of 1961 guidelines apply to them. As a result, income tax for NRI is levied if their income from mutual funds, residential property, capital gains, and term deposits exceeds the excluded amount.

NRIs might earn money in India from various sources subject to tax on foreign income India. The following listed are different sources of income earned by a Non-Resident Indian:

If an NRI receives a salary income for services provided in India, their income will be taxable under Income Tax Act 1961.

Any revenue generated from a business/organization established or operated in India by a non-resident Indian will be considered income and subsequently taxed in India.

Income originating from India-based capital goods such as house property, stocks, government bonds, and gold assets are subjected to taxation in India.

An NRI who owns a house or residential property in India must pay taxes on the rental income they receive from the tenant.

NRIs must pay taxes on any other income they receive, such as interest on savings accounts, NRO accounts, and fixed deposits maintained in Indian banks. 

Taxation Rules & Provisions Levied for NRIs

Several provisions and new rules for NRI in India are applicable under the guidelines and regulations of the Income Tax Department. There are several considerations to make, though:

NRI income tax slab rates are based solely on income without considering age, gender, or other factors

The NRIs' earnings are subjected to TDS regardless of the threshold amount.

Tax filing usually is only required if an NRI's income is covered by Section 115G of the Income Tax Act of 1961.

The form 13 income tax for NRI is for lower or NIL rate TDS certificates or certificates exempting taxpayers from paying taxes.

No economic deductions apply to investment incomes (except in certain circumstances)

The following is a list of non-taxable income for non-resident Indians (NRIs):

Receiving interest on Foreign Currency Non-Resident (FCNR) and Non-Resident External (NRE) accounts.

Interest earned on government saving bonds and certificates

Dividends earned from Indian company equities

Capital gains from listed stock shares over the long run

Long-term capital gains from equity-oriented mutual funds 

NRIs are entitled to similar deductions from their gross income as Indian residents do. These taxable deductions that income tax for NRI returning to India are allowed to are discussed below:

Deduction from House Property Income: Tax deductions for interest paid on a home loan for an empty home are allowed up to $2,000 per year.

Deductions under Section 80C: A maximum deduction of ₹1,50,000 is permitted under this section. The clause permits NRIs to deduct expenses such as life insurance premiums, educational costs, investments in ULIPs, etc. 

Deductions under Section 80D: NRIs may deduct the cost of health insurance premiums for themselves and their family/parents in India. For health examinations, a maximum deduction of 5,000 is permitted.

Deductions under Section 80E: The interest paid on student loans for family members for higher education over eight years is applicable for removal.

Deduction under Section 80G: A deduction is applicable if the appropriate donations are highlighted in this section.

Deductions under Section 80TTA: For interest received through a savings account, there is a ₹10,000 maximum deduction limit.

Understanding whether a person qualifies as an NRI under the rules outlined by the Indian Income Tax Act 1961 is vital when evaluating taxable income. To avoid paying too much in taxes at any point, considering eligible exemptions and deductions is necessary.

If you need help filing income tax for NRI, you must opt for the most convenient method of online tax filing. NRIs can file their tax returns online using the online portal of the Indian Income Tax Department after carefully examining specific conditions and rules.

26AS is a comprehensive tax statement that provides a summary of the tax credits and taxes deducted at source from an individual's income. It is essential for filing income tax returns in India. This article will guide you on how to download your 26AS statement from the Income Tax Department's website.

What is 26AS? How to Download 26AS?

Are you aware of the importance of Form 26AS? It’s a document that provides a comprehensive summary of all the taxes deducted on your behalf and deposited with the government. It serves as a statement of tax credits and is generated annually for taxpayers in India. This document includes details such as TDS, TCS, Advance Tax, and Self-Assessment Tax, among others.

But why is Form 26AS so essential? It is a document verified by the income tax department and considered proof of taxes you paid. Therefore, any discrepancies in this form can result in tax notices and penalties. Moreover, this form is also required while filing income tax returns, and it acts as a reliable source for validating the tax paid against your PAN card.

As Form 26 AS is such a crucial aspect of Income Tax filing, we will help you by guiding you on how to download the form. So, please continue reading to find out a step-by-step process in which we have explained the procedure to download form 26 AS. 

Form 26AS is an essential document that comprehensively summarizes your income tax transactions. To access this document, you have multiple options that are quick, easy, and free of charge. Here are the ways you can view your Form 26AS:

Log in to the TRACES website to easily view and download your Form 26AS. The step-by-step process is straightforward and user-friendly. (Refer to the next section of the article to understand the entire process of downloading Form 26 AS.) 

Your bank can also help you access Form 26AS with their Net Banking Services. If you hold a PAN card and have a Net Banking account, accessing your Form 26AS has never been more convenient. So trust your bank to provide you with a hassle-free experience.

Ensure your PAN card is linked to your bank account to access your Form 26AS. It’s an accessible facility, and your bank will not charge additional fees for this service. So take advantage of this feature to stay informed and aware of your tax transactions.

Don’t underestimate the importance of your Form 26AS. Take charge of your financials and make informed decisions by accessing them regularly. These options are available to make your life easier, and we encourage you to use them to your advantage.

Step 1: Log in to the Income tax portal with PAN and password

Step 1 involves logging into your account using your PAN details and password. If you do not want to use your PAN number to log in to the e-filling portal, you can use your AADHAR details or Net Banking to log in. 

Once you have successfully logged in using your User ID and Password, the following screen will appear. Next, you need to go to the e-file section. 

In the e-file section, click on the Income Tax Returns section. 

Here, you will have the option of ‘View Form 26AS’ in the drop-down menu. Select the option. 

Step 5: Press confirm to take to the TRACES website

Once you have selected the option, a Disclaimer Pop-up box will appear; you must click ‘Confirm’ to be redirected to the TRACES website. 

Step 6: Put a tick mark in the box and click proceed

Once you are on the TRACES (TDS-CPC) website, continue by ticking the box on the screen to ‘Proceed’ to the next step. 

Step 7: Press on View tax credit (For 26 AS)

To View Tax Credit, click on the link at the bottom section of the page to gain access to your Form 26A. 

In this step, choose the Assessment Year. For example, if you want the form to display the details of AY 23-24, select the following information and move on to the next step. 

This step will help you select the Format type in which you would want to view Form 26 AS. If you wish to view the form online, keep the settings in HTML Format. 

You can select the download option to download Form 26AS in PDF format. 

Once you have selected the option of PDF Download, you need to enter the Verification Code and click on the Download/View Button. Your document will be exported as PDF to your desktop. After downloading the form, you can view it by opening it.

Downloading Form 26AS is crucial for individuals to stay on top of their tax obligations and ensure their tax filings are accurate. By following each step correctly, as outlined in this guide, you can easily download your Form 26AS from the TRACES website and gain access to all the necessary information to file your taxes correctly. 

Learn how to calculate capital gains tax on your cryptocurrency investments with this comprehensive guide. Discover the key factors that affect your tax liability, such as holding period, cost basis, and tax rates, and explore the different methods for calculating and reporting your gains to the IRS. Whether you're a seasoned crypto investor or just starting out, this article will provide you with the essential information you need to stay compliant and minimize your tax burden.

How to Calculate Capital Gains Tax on Crypto Investments?

As the popularity of cryptocurrencies continues to surge, many investors are taking the plunge into the world of digital assets in India. However, while the potential for high returns is undoubtedly a draw, it’s important to adhere to applicable regulations and undertake tax compliances according to the same. 

In India, capital gains tax is levied on the profits from selling capital assets. Cryptocurrencies, like Bitcoin and Ethereum,(also referred to as Virtual Digital Assets or VDAs) fall under the definition of capital assets and are, therefore, subject to capital gains tax. However, calculating capital gains tax on crypto investments in India can be a complex process, but it’s essential to understand the same in order to remain compliant with tax laws. 

and type of capital gains (short-term or long-term). Short-term/ long-term gain is immaterial to capital gain taxation for VDAs. You can remove this.

Capital Gain Tax is imposed on the profits generated from the sale of an asset. This tax applies when a capital asset is transferred from one owner to another. Unlike other capital gains, crypto/ VDAs do not have a separate rule for short-term or long-term capital gains. 

It’s important to note that the Income Tax Act excludes capital assets received under inheritance or gifts received from immediate family members from the levy of capital gain in the hands of the recipient. However, if the inheritor decides to sell the capital asset, they will be required to pay capital gains tax on the total value of the consideration received. The same principle extends to inheriting VDAs 

When calculating capital gains tax on cryptocurrencies, there are some unique considerations to keep in mind. Let’s find them out. 

The 2022 Budget Update on Cryptocurrency Taxation:

In the 2022 budget, Finance Minister Mrs Nirmala Sitharaman has classified cryptocurrency as a virtual asset, which includes popular digital currencies like Bitcoin, Ethereum, and NFTs. However, while discussions on this classification continue, the Indian government has yet to assign these virtual digital assets to asset classes like stocks, bonds, or real estate.

Regarding the taxation of cryptocurrency, here are a few essential points to keep in mind:

Any income generated from the transfer of virtual digital assets, including crypto and NFTs, will be taxed at a flat rate of 30% at the end of each fiscal year.

Deductions cannot be claimed except for the cost of acquisition when reporting income from transferring these digital assets.

Losses incurred from these digital assets cannot be offset against any other income.

The tax will be levied on the recipient if a digital asset is gifted.

Losses incurred from one digital currency cannot be offset by another virtual digital asset.

A 1% TDS will also be imposed on all transactions of virtual digital assets.

In summary, the Indian government has classified cryptocurrency as a virtual asset and is in the process of determining its assignment to an asset class. Accordingly, income generated from the transfer of these virtual digital assets will be taxed at a flat rate of 30%, and no deductions can be claimed except for the cost of acquisition. In addition, losses incurred from these digital assets cannot be offset against any other income, and there will be a 1% TDS on all transactions (to be deducted by the buyer or the crypto exchange as the case may be).

How is the 30% Crypto Tax being Calculated in India?

Individuals who invest in or trade cryptocurrency and those who transfer virtual assets in a given financial year are subject to a flat income tax rate. Unlike other asset classes, there is no differentiation between short-term and long-term gains. Any profits resulting from the transfer of virtual assets will be subject to a 30% tax rate, which applies regardless of the nature of the income.

When Crypto profits are classified under Capital Gains

When crypto-related transactions are classified as investments, any profits earned from such transactions will be considered capital gains for tax purposes in India. However, in the event of a loss incurred from these transactions, there are currently no clear and specific tax regulations introduced by the Indian government.

When Crypto profits are classified as Business Income

If a person’s crypto transactions are considered part of their business income, it is important to examine the Goods and Services Tax (GST) implications. According to GST regulations, anything other than Goods, Securities, and Money is classified as a ‘Service.’ This also includes activities that involve using money or converting it via cash or any other mode, for which a separate fee is charged. Based on this definition, the buying and selling of crypto tokens would be subject to GST, either as a supply of Goods or Services. Exchanges charge commissions for buying and telling on their platforms for cryptocurrency.

In such cases, If both buyer and seller are located in India or the seller is in India, GST liability arises if any  is done by exchanges. If both parties are located outside India or the transaction is made on international foreign exchanges, GST liability is not attracted as a place of supply is outside India.

No GST liability is raised on the receipt of tokens as a result of mining. However, on sale there might be GST attracted unless sold outside India.

As of now there are still no major clarifications on GST applicability for the sale of crypto, It is expected to give clarifications in the coming future.

When Crypto profits are classified as Other Sources of Income

Although crypto assets may be considered a form of income, the IT department has yet to clarify whether they should be classified as “Other Sources.” As a result, you need to file your income tax return and ensure that you pay taxes on any gains you may have earned from Virtual Digital Assets (VDAs).

Despite the disclosure as “Capital Gain” or “Income From Other Sources” or “Business Income”, the taxation of VDAs is governed by the provisions of Section 115BBH, and not as per the provisions under which the heads of income are disclosed.

Accurately calculating capital gains tax on cryptocurrency investments can be a complex process, but ensuring compliance with tax laws and regulations is crucial. Keep a detailed record of all crypto transactions and understand the tax rates and rules that apply to your VDA investments. 

Remember that paying taxes on time is not only a legal obligation but also a responsible and ethical practice that contributes to the betterment of society. Furthermore, you can manage your crypto investments with confidence and peace of mind by staying informed and proactive.

This is a detailed article regarding the new tax regime. Which also explains how to calculate your Income Tax for each income tax slab with examples.

How to calculate income tax in AY 2023-24? Find the best tax regime

With the recent budget session, the finance minister has introduced a set of new tax rules with more tax slabs and regulations along with keeping the old regime intact. As a result, taxpayers are now contemplating whether to opt for the new or old regime.

With this comprehensive guide, you can pick the suitable option to maximize the benefits.

A brief understanding of the new taxation rules

The recent changes in the tax laws have been a significant overhaul aimed at simplifying the tax code. The notion here is to make it simpler for individuals as well as businesses to comply with their tax obligations. Some of the fundamental changes introduced in this FY 23-24 are:

Basic exemption limit increased from INR 2.5 lakh to INR 3 lakh

Rebate under section 87A increased from INR 5 lakh to INR 7 lakh

New income tax slab structure:
undefinedundefinedundefinedundefinedundefinedundefined

Standard deduction up to ₹50,000 for salaried employees, pensioners, and family pensioners.

The good news is that this change allows taxpayers to choose between two tax regimes. The new tax regime is the default tax regime. However, if you prefer, you can continue with the previous tax regime instead of switching to the new one. 

The old regime allows taxpayers to claim tax exemptions under nearly 70 deductions available under various sections of the income tax laws. However, the new rule features fixed tax rates lower than the old regime but with fewer deductions. Taxpayers can choose the regime that best suits their financial needs.

If you are salaried, here is how you need to calculate your taxes:

Typically, your income salary will comprise various components:

Transport Allowance and some additional allowances

You can find the details on your Form 16, which will be provided by your employer. However, the income tax calculation need not include specific allowances like telephone bill reimbursements and leave travel allowances. Also, if you receive HRA and live in a rented space, you can avail yourself of tax exemptions on HRA. 

In addition to the existing exemptions, the 2018 budget introduced a standard deduction of Rs 40,000. This was later increased to Rs 50,000 in the 2019 budget and Budget 2023. The new tax regime also offers a standard deduction of Rs 50,000.

Let us understand income tax under the old tax slabs and new tax slabs as an example. 

Mr X, a salaried individual provides the following information

(In case you earn from multiple sources, you need to include all the earning details while filing your ITR. Such as your capital gains, earnings from rental properties, income from self-employment or business)

During the year, Mr. X has made the following investments eligible for deduction under the Old Regime-

How Gross Taxable Income is calculated in the Old Regime:

How Gross Taxable Income is calculated in the New Regime:

How to determine which tax regime is best for you?

Here is how you can determine which tax regime works best for you:

Evaluate your current income and investments: Consider your current sources of income and the investments you have made. This is crucial in determining your tax liability under both regimes.

Review the new tax regime: Study its provisions and understand the tax laws' changes and the exemptions and deductions available under it.

Compare the exemptions and deductions under both regimes: Compare the exemptions and deductions available under both regimes and determine which one is more beneficial to you.

Consider the tax rate under both regimes: The tax rate under the new regime is lower than that under the old regime. However, it also eliminates certain exemptions and deductions. Evaluate whether the lower tax rate will compensate for the loss of exemptions and deductions.

Consider your long-term financial goals: Consider your long-term financial objectives and how the choice of tax regime will impact them. For example, if you plan to invest in tax-free bonds, the new regime may not be as beneficial for you.

Seek professional advice: If you are unsure about the effects of the new tax regime on your finances, seek professional advice from a tax consultant or financial advisor.

Considering these points, you can determine which tax regime is more suitable for your financial situation.

The break-even salary for tax purposes is estimated to be around Rs. 7.5 lakhs. Under the old tax regime, if a person earns Rs. 7.5 lakhs and claims all possible deductions and exemptions, they can reduce their taxable income to Rs. 5 lakhs, resulting in zero tax liability. On the other hand, if the same individual opts for the new tax regime, they can claim a standard deduction of Rs. 50,000 and a rebate for income up to 7 lakhs, resulting in zero tax liability. 

For individuals with an income of Rs. 10 lakhs, both regimes are tax-neutral if they claim deductions and exemptions of up to Rs. 3 lakhs. However, if the deductions claimed are less than Rs. 3 lakhs, the new tax regime is more advantageous. 

Similarly, for a gross income of Rs. 12.5 lakhs, a deduction amount (Eg - 80C, 80D, Housing loan etc.)) of Rs. 3,62,500 is required to make the old tax regime more beneficial. For an income of Rs. 15 lakhs, the exemption claims must be at least Rs. 4,08,332; for an income over Rs. 20 lakhs, the exemptions must be over Rs. 4,25,000 to make the old regime more favourable. 

Consider the pros and cons of both tax regimes to choose the one suitable for you. 

ITR Filing

Income Tax for NRIs - Rules, Exemptions & Deductions

What is 26AS? How to Download 26AS?

How to Calculate Capital Gains Tax on Crypto Investments?

How to calculate income tax in AY 2023-24? Find the best tax regime