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Ramalingam Kalirajan |10881 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on May 12, 2024

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more

Question by Sunil on May 12, 2024Hindi

Thanks for replying. Also, I found below that if my income in india i.e by bank deposits,shares,MF , PPF etc in my case exceeds 2.5L ,only then I will be taxed. Is this correct , sir! "The basic exemption limit for NRIs is INR 2.5 lakhs. If an NRI's taxable income in India during the financial year exceeds this limit, they are required to file an income tax return in India." Thanks

Ans: The statement you found is mostly correct. Here's a breakdown of tax implications for NRIs in India:

Basic Exemption Limit:

Yes, NRIs are eligible for a basic exemption limit of ?2.5 lakhs on their total taxable income earned in India during a financial year. This means if your income from Indian sources (including bank deposits, shares, mutual funds, but excluding PPF interest) is less than ?2.5 lakhs, you generally don't need to pay taxes or file an income tax return in India.
Taxable Income for NRIs:

Interest income earned on NRO accounts is taxable in India.
Dividend income from Indian companies is generally taxable in India at a rate of 20% (plus surcharge and cess if applicable).
Capital gains from selling shares or equity mutual funds in India are taxable depending on the type and holding period of the investment.
Rental income from property in India is taxable.
NRIs and PPF:

NRIs cannot open new PPF accounts, but they can continue to contribute to existing PPF accounts opened while they were resident Indians.
The good news is that interest income earned on PPF and the maturity amount are completely tax-free for everyone, regardless of residential status.
Filing Income Tax Returns:

Even if your total income is below ?2.5 lakhs, you might still need to file an income tax return in India if you want to claim a tax refund on TDS (Tax Deducted at Source) deducted from your income, such as on interest from NRO accounts.
NRIs are advised to consult with a qualified tax advisor or chartered accountant familiar with NRI taxation to determine their filing requirements and tax liabilities.
In summary, while the ?2.5 lakh limit is a general guideline, it's important to consider all your income sources in India and the specific tax treatment of each to determine your tax filing obligations.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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