NRIs typically have to pay taxes twice. Taxes are due in the host nation for Indians who are non-residents and live and earn outside of India. They will also be required to pay taxes in India on any income they receive from investments, assets, or business dealings in India.However, there are advantages to paying taxes.Do you make the most of the tax breaks and allowances you have?We will discuss the five ways to reduce the amount of tax NRIs must pay in this article.
In India, there are a number of ways to save money on taxes.Making the most of your deductions, applying for a PAN card, taking deductions off of your home loan, maintaining your NRI status, and taking advantage of the provisions on the sale of foreign assets are among the five ways NRIs can reduce the amount of tax they must pay while living and earning abroad.Before discussing tax-saving strategies, let’s examine the Indian incomes that are subject to taxation for non-resident Indians. Learn more about NRI legal services.
The five ways NRIs can save money on taxes are as follows:
Take advantage of the majority of your deductions As an NRI, you are unable to take advantage of many of the fundamental deductions that are available to Indian residents.Investments in social schemes like PPF (Public Provident Funds) or NSC (National Savings Certificates) are not eligible for NRIs to receive tax deductions.In a similar vein, Non-Resident Indians are ineligible to claim tax deductions for medical benefits and costs.NRIs, on the other hand, can invest in India’s National Pension System (NPS) and get tax breaks for it.Under Section 80CCD (1) of the Income Tax Act, contributions to the NPS made by non-resident aliens are eligible for tax deductions.up to Rs. 1,000 deductionYou can get 1.5 lakh.You are eligible to claim an additional Rs deduction.50,000 additional to the Rs.Limit of 1.5 lakh deductions.You must have exhausted the Rs limit in order to be eligible for this additional deduction.1.5 lakh by putting money into other investments that can be deducted.You can use additional investments in the National Pension System to get an additional Rs. deduction.50,000.
Get a PAN card in India
Taxpayers in India are identified by their PAN, or Permanent Account Number.A PAN is used by income tax agencies to prevent tax fraud.To get their income tax refunds, both non-resident Indians and resident Indians need a Permanent Account Number.
In India, all income above a certain threshold is subject to taxation at the source.If you invest in India without providing your PAN number, you may be required to pay higher tax at the source amount.You can avoid paying more tax at the source if you get a Permanent Account number.
Take advantage of the tax incentives
It is associated with long-term assets purchased in a foreign currency to maximize your tax savings. Non-resident aliens (NRIs)You will either make money or lose money when you sell or transfer foreign assets.Section 115F of the Income Tax Act gives you some exemptions, but you can’t deduct capital gains from the sale or transfer of foreign assets.
The profit from selling foreign assets
It can be put toward the NSC (National Savings Certificate) plan, deposited in an Indian bank, or converted into shares in an Indian company.There are tax provisions that grant exemptions if you reinvent your profit in this manner.You can deduct the interest on your home loan from your taxes if you are an NRI.In India, they can deduct interest and principal on their home loan as well as property taxes.In India, non-resident Indian nationals can also deduct their rental income.Therefore, NRIs can make a profit by investing in Indian real estate.
Profits from the sale of Indian property
It will be subject to capital gains tax for non-resident Indians (NRIs).To remain in a lower tax bracket, it is best to limit the amount of capital gains you make each year.Maintain your NRI status Your tax liability is based on your income and where you live.In India, your tax obligation will also change if your residence status changes.In India, NRIs’ foreign income is not subject to taxation.However, their foreign income may be subject to taxation in India if their residence status is unclear.Therefore, establishing your NRI status is simple if you want to avoid becoming entangled in the web of tax issues.
For this, you need to design your Indian visits such that your NRI status stays clear or you don’t lose your NRI status according to Personal Assessment Act.
Keep these points in mind when planning your taxes to lower the amount of tax you must pay.
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