International Taxation for NRI
India is a home of 5,986 Ultra High Net Wirth Individuals (UHNWIs), that is, people having net worth above USD 30 million and this number is expected to reach to be doubled (almost 😅) by 2024 to 10, 354. This is 12th highest in the entire face of Earth! Further, the number of billionaires will also witness 9 new names in 2024.
Most of these individuals are directors in giant corporate houses and invest bankers who are generally NRIs and thus have income sources outside India as well. With these international earnings comes the international tax, understanding and striding through which is crucial for all NRIs having an overseas income.
Taxes Applicable for Individuals in India
- Income Tax: It’s rate depends in which tax slab your income falls
- Taxes on royalties (for writers, music composers, etc)
- Property tax: The real estate owned by you
- Capital gain tax: On the appreciated value of real estate, shares, stocks, etc at the time of selling
- Gift tax: If a specific category of people gifts you goods worth above INR 50k, you have to pay Gift tax.
- Wealth tax: It is levied upon the net wealth of the person, also applicable on Joint Hindu Family
NRI Taxation w.r.t. International Tax
The residential status of an individual determines his/her tax liability in that country. In the case of Non-Residential Indians (NRIs), the income received or deemed to have been received within Indian jurisdiction is taxable in India. Further, the income which accrues or arises or is deemed to have accrued or arisen in India is subject to Indian taxes, even though it might have accrued arisen outside India. Ex: Income from any real estate or any other asset in India, capital gains on transfer assets situated in India, salary earned with respect to services provided in India. An exhaustive list has been envisaged in Section 9 of the Income Tax Act, 1961 (IT Act).
TDS on Remittances to NRI
People who are responsible for making payment to NRIs to have to furnish some requisite information pertaining to such payments in prescribed forms. Thus, under the rule 37BB in the IT Act, it is prescribed that for the purpose of remittances to NRIs, Form 15CA and Form 15CB have to be filed. Please note that Form No. 15CB isn’t required if the sum of such remittances doesn’t exceed INR 5,00,000 in a financial year.
NRIs Pay Double Taxes?
No, that is where the Double Taxation Avoidance Agreement (DTAA) kicks in. DTAA is an agreement signed between two nations in order to resolve the issues of taxation of international income and increase the transparency of the process to curtail tax evasion.
TDS Rates on NRIs
- Income generated from investments: 20%
- Income generated from long-term capital gains (Section 115E): 10%
- Income generated from long-term capital gains: 10%
- Short-term capital gains (Section 111A): 15%
- Other sorts of income generated via long-term capital gains: 20%
- Interest on the borrowed sum in foreign currency: 20%
- Royalty payable by the Government or an Indian citizen: 10%
- Royalty other than what is payable by the Government or an Indian citizen: 10%
- Technical services’ fees to be paid by the Government or an Indian citizen: 10%
- For any other source of income: 30%
We are a confluence of Chartered Accountants (CAs) and Company Secretaries (CSes) with more than 10+ years of experience in the arena of managing finances and taxation issues of some remarkable HNWIs/ UHNWIs including actors and top-notch corporate executives from Blackstone Group, NVidia, Macquarie, CVC Capital and so on. We have a dedicated team for individual taxation issues, comprising experts for every kind of tax problem which can arise on various stages of filings and compliances.
The taxation and regulatory framework is dynamic in India and internationally adding even more complexities to the already complicated and uncertain tax environment. But our team of experts make sure that you never ever have to worry about the words like “tax”, “permissions”, “documentation” and “compliances” again and you can monomaniacally focus on words like “business development”, “expansion” and “profits” by providing you one-stop solution for all your financial needs. Thus, we provide all kinds of tax filing services, to name a few:
- Foreign Assets Reporting filing
- Overseas income reporting
- Foreign Tax Credit issues
- AL reporting
- Derivative and F&O reporting
We take care of your international taxation, along with providing a range of other services to take full accountability as your virtual CFO.
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