Taxes and Residential Status of an Individual in India

Taxes and Residential Status of an Individual in India[edit]

Status INDIAN INCOME Foreign income Resident and ordinarily resident

                   Taxable                         Taxable

Resident and not ordinarily resident

                   Taxable                         Not Taxable

Non Resident

                   Taxable                         Not Taxable
  • A person who is Resident of India has to pay income tax on his Indian Income as well as his overseas income from all sources.
  • A Non Resident Indian does not have to pay income tax on his overseas income and he shall be liable to pay tax on his Indian Income.

Income of Non Resident Indians

  • When the Income of an NRI consists only of Investment income from long-term capital gains, the tax payable is at the rate of 20%.
  • Capital gains on transfer of assets acquired in foreign exchange are not taxable in certain cases.
  • Non Resident Indians are not required to file a tax return if their income consists of only interest and dividends, provided taxes due on such income are deducted at source.
  • The tax rate on such income is 20 percent .
  • It is possible for Non Resident Indians to avail of these special provisions even after becoming residents by following certain procedures laid down by Income Tax Act.

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