Tax on salary income of an NRI

Are you an NRI living outside India for a job? Then your income might be taxable in India under certain cases.

The taxability in India depends upon the residential status of an individual for the financial year. For some clarity, read about the residential status as per the IT Act.

An individual is an NRI (Non-Resident Indian) who is a citizen of India but resides outside India.

Moreover, if a specific number of days have been spent outside India and, consequently, a relative period of absence has been maintained in India, then you’re considered an NRI.

Your salary income is taxable in India in two cases,

Income received in India: If you are an NRI and you receive any salary in India directly into an Indian account, such salary income is taxable in India.

Income accrued in India: If the salary accrued for the services rendered in India, even though you may be an NRI if the salary is paid for services you provide in India, it shall be taxed here.

Example 1: Anyone working in the UK on a project for an Indian company for the last 2 years as a salaried employee. Is income taxable in India as well?

In such a case, salary is taxable in India since the income is accrued in India.

Example 2: You are an NRI, working from the US in a software company and you need to send some money to your family in India for a housing loan and other expenses. Is that salary income taxable in India?

No, the income is not taxable in India, in such cases, the taxes are already paid to the US as income earned and received in the US.

Example 3: You’re an individual, working as an employee in an Australian real estate company, living in India. Will it be taxable in India?

In this case, as you’re a resident individual, earning income sitting in India. Your salary received would be taxable in India itself.

The tax rates applicable to NRIs are the same as those applicable to resident Indians for the relevant financial year.

Tax Rates: Old Regime & New Regime

Which ITR Form should NRI fill out?

NRI receiving income from salary, capital gains, or other sources, other than business or profession is required to file Form ITR-2. The due date for filing such a return is 31st July of the relevant financial year.

Is TDS applicable to NRI on salary income?

It is mandatory for the employer to deduct the TDS before making any payment to an NRI if the gross total income received exceeds Rs 2.5 lakh for any given financial year. Then an NRI can claim a credit for it while filing ITR.