Who is a Non-Resident Indian as per the Income Tax Act 1961?

According to the Income Tax Act 1961, a non-resident Indian (NRI) refers to a person who is of Indian origin or holds an Indian passport but has not resided in India for a specified period. The Act defines the criteria for determining the residential status of a person for income tax purposes.

Residential status for income tax purposes

The Income Tax Act classifies individuals into three residential status categories: resident, non-resident, and resident but not ordinarily resident (RNOR). – A person is considered resident if he has stayed in India for at least 182 days in a financial year, or has stayed in India for at least 60 days in a financial year and 365 days or more in the preceding four years. – If a person does not fulfill the above criteria then he is considered non-resident. – An individual is considered resident but not ordinarily resident (RNOR) if he has been non-resident in India for nine out of the last ten financial years, or in India for 729 days or less in the last seven financial years Used to be. ,

Who is a Person of Origin?

A Person of Indian Origin means a citizen of any country (other than Bangladesh or Pakistan), if:

  1. He at any time held an Indian passport; or
  2. He or either of his parents or grandparents was a citizen of India; or
  3. He is a spouse of an Indian citizen, or of a person referred to in (I) or (II) above

Tax implications for NRIs

The tax implications of NRIs are different compared to residents of India. They are taxed on income earned or earned in India, while their foreign income is generally not taxed in India. NRIs may also be eligible for certain tax benefits and exemptions depending on their income sources and investments. It is important for NRIs to understand their residential status and comply with tax laws to avoid any legal complications. Taking professional advice from a tax consultant or chartered accountant can help NRIs navigate the complexities of the Income Tax Act and ensure compliance with the applicable tax rules.