Introduction to NRI Taxation
- Non-Resident Indian (NRI) taxation is a critical aspect for individuals living abroad but maintaining financial or property interests in India.
- Understanding tax obligations, exemptions, and compliance requirements can help optimize tax liabilities and avoid legal complications.
Who Are NRIs?
- NRI stands for Non-Resident Indian, which refers to an individual who is both a Non-Resident (NR) and an Indian Citizen or a Person of Indian Origin (PIO).
- A Person of Indian Origin means that the individual, or either of their parents or grandparents, were born in undivided India.
Legal Framework?
Relevant Laws and Regulations:
- Foreign Exchange Management Act (FEMA), 1999: Governs foreign exchange transactions.
- Income Tax Act, 1961: Provides guidelines on tax implications for NRIs.
- Companies Act, 2013: Governs company-related investments.
Key Government Bodies:
- Reserve Bank of India (RBI): Regulates foreign exchange and oversees NRI investments.
- Securities and Exchange Board of India (SEBI): Regulates stock market investments.
- Ministry of External Affairs: Handles NRI affairs.
Who Qualifies as an NRI?
- The Residential Status Test helps determine whether an individual qualifies as a non-resident
- An individual is considered an NRI based on their residential status, determined under Section 6 of the Income Tax Act, 1961: