NRI & Foreign Income

Whether the income-tax department in India has any claim on a particular slice of your income depends on a single threshold question -- what is your residential status for the year. Get it wrong, and either you over-pay tax in India on income that was never India's to t…

An Indian citizen earning a generous package in Dubai, Abu Dhabi, Manama, Doha or Riyadh has, for decades, treated his or her income-tax obligations to India as essentially limited to whatever Indian-source income arose -- bank interest on a Non-Resident Ordinary accoun…

Every Non-Resident Indian opens a Non-Resident Ordinary or Non-Resident External (or both) account on becoming Non-Resident -- but the tax treatment of the two could not be more different. Interest on a Non-Resident External account is fully exempt from Indian income-ta…

The year you leave India to take up employment abroad is administratively the most complex year of your tax life. For part of it, you were Resident; for part of it, you were not. Your Resident Indian salary credited until the day of departure, the foreign salary credite…

Every Non-Resident Indian we advise asks the same question at some point -- can I send money to my parents in India? Will it be taxable for me? For them? The answer, given correctly, is reassuring. Money sent by a Non-Resident Indian to a Resident parent, spouse, brothe…

When a Non-Resident Indian rents out a flat in India, the tenant is required by section 195 of the Income-tax Act, 1961 to deduct Tax Deducted at Source on every rent payment at 30%, plus surcharge, plus the 4% Health and Education Cess -- an effective rate of 31.2% in …

Selling Indian property as a Non-Resident Indian is a far more complex transaction than selling as a Resident. Section 195 of the Income-tax Act, 1961 imposes Tax Deducted at Source on the sale consideration, not on the capital gain -- meaning the buyer typically deduct…

Indian mutual funds are open to Non-Resident Indian investment subject to a Know-Your-Customer-plus-Foreign Account Tax Compliance Act-and-Common Reporting Standard layer that the asset management companies enforce on registration. The Non-Resident Indian invests throug…

Inheritance is a common but emotionally and legally fraught moment for the Non-Resident Indian and the foreign citizen with Indian roots. The good news -- India does not levy any inheritance tax. Estate Duty was abolished by the Estate Duty (Abolition) Act, 1985, and cl…

Section 195 of the Income-tax Act, 1961 imposes a withholding obligation on every Indian-source payment to a Non-Resident -- without exception. The default rates in the First Schedule to the Finance Act are typically high; the Double Taxation Avoidance Agreement that In…

A Double Taxation Avoidance Agreement is a bilateral treaty between India and a foreign country that allocates taxing rights over each category of cross-border income to one or both of the two countries. Section 90 of the Income-tax Act, 1961 directs that where the cent…

A Tax Residency Certificate is a document issued by the foreign country's tax authority confirming that the holder is a tax resident of that country for the period stated. Sub-section (4) of section 90 of the Income-tax Act, 1961, read with Rule 21AB of the Income-tax R…

Every outward remittance from India to any non-resident -- including a Non-Resident Indian repatriating Non-Resident Ordinary funds, an Indian company paying royalty to a foreign holding entity, an Indian importer paying for goods, or a remitter sending funds to a relat…

Restricted Stock Units and Employee Stock Option Plans of multinational companies routinely follow employees across countries -- granted while the employee is in India, vested while abroad, exercised after returning, sold years later. Each event has a distinct tax treat…

Where a Non-Resident Indian or any other assessee can demonstrate that the income-tax payable on a particular receipt is nil -- whether because of a capital loss, a Long-Term Capital Gain below the section 112A threshold, a Double Taxation Avoidance Agreement exemption,…

An entrepreneurial Non-Resident Indian who advises a few clients in India over Zoom, signs a small consulting agreement in Bangalore, or visits Mumbai for two weeks every quarter to meet a customer is unlikely to think of himself or herself as having a 'Permanent Establ…

Where a Non-Resident Indian holds shares in a foreign company -- a Cayman Islands operating company, a Delaware limited liability company, a Singapore holding company -- or is the karta of a Hindu Undivided Family with members spread across India and abroad, the questio…

Non-Resident Indians who maintain Indian assets while abroad face dual disclosure obligations. The Indian side -- the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 -- targets undisclosed foreign assets of Indian Residents (and certa…

Selling a Mumbai apartment for ₹15 crore as a Non-Resident Indian is straightforward in tax terms (NRI-07) but creates a Foreign Exchange Management Act repatriation challenge. The proceeds, after Tax Deducted at Source compliance, sit in the seller's Non-Resident Ordin…

Finance Act, 2024 (No. 2) introduced section 44BBC -- a presumptive taxation framework for non-resident cruise ship operators. With Indian coastal cruise tourism growing post the COVID-19 pandemic, this provides simplification for foreign cruise operators sailing from /…

Buying immovable property from a non-resident Indian? The tax-deducted-at-source framework is COMPLETELY DIFFERENT from buying from a resident seller. Section 195 -- not section 194-IA -- applies. The buyer must deduct AT THE NON-RESIDENT INDIAN's TAX RATE (often 20% or…

This decision tree converts the residency framework of NRI-01, the deemed-resident overlay of NRI-02, the income-source rules in section 9 of the Income-tax Act, 1961, and the income-head architecture of the Income Tax Return schedules into a single decision-by-decision…

Sending money abroad to a son or daughter studying in the United States, Canada, or the United Kingdom is no longer just a banking transaction. It involves the Reserve Bank of India's Liberalised Remittance Scheme cap, the income-tax Tax Collected at Source under sub-se…