November 27, 2022

What makes NRI Tax Planning Beneficial?

You may have the dubious honor of paying tax twice as a non-resident Indian. Your international income will be taxed in your host country if you live and work there. However, if you still have money-making investments, assets, or business dealings in India, you will have to pay tax on that income in India. It’s only natural that you’d want to take advantage of any tax breaks and allowances available to you.

NRIs (non-resident Indians) must pay tax on all income earned in India. Even though you are not physically residing in India, you may have money-making NRI interests, assets, or business dealings there. You must pay tax to the Indian government on that revenue.

As a non-resident Indian, you must pay tax on all income generated or accrued with the help of NRI tax planning in India. Income that is received, accumulated or accrued in India when the Indian tax authorities consider it to be such.

Following are the benefits of effective Tax Planning by an NRI : 

  • Make the Most of Your Deductions: As a non-resident Indian, you are not entitled to many of the fundamental deductions that resident Indians are. Investing in social schemes such as Public PFs or National Savings Certificates, for example, will not result in tax deductions.

However, you do have access to the National Pension System and the tax benefits that come with it. To promote further investment in the National Pension System, an additional deduction of INR 50 000 is allowed over and above the INR 1.5 lakh deduction limit. To be eligible for this additional deduction, you must have depleted the INR 1.5 lakh limit by making other investments deductible.

  • Can Prevent Tax Frauds: A PAN (Permanent Account Number) is a designation that identifies you as an Indian taxpayer. A Permanent Account Number (PAN) is a number that is used to aid in the prevention of tax fraud. To collect an income tax refund, you’ll need a Permanent Account Number.

Tax Deducted at Source applies to income earned in India beyond a specified threshold. If you invest in India without providing your Permanent Account Number, you will almost certainly be charged a higher Tax Deducted at Source amount. As a result, obtaining your PAN Card will ensure that you pay less Tax Deducted at Source.

  • Taxable Money Calculations: If you live overseas, the income you earn there is not taxable in India. If your non-resident status is in doubt, however, the Indian tax authorities may tax your earnings. Maintain your NRI status if you don’t want your tax problems to become complicated.
  • Pay and Claim Home Loan Interest: As a non-resident Indian, you can deduct interest on your Indian property from your taxes. You can claim a tax deduction if you pay the interest on your home loan or the property tax on your home. As a result, property ownership is a good way for non-residents to invest in India.

Tax planning may prove wonders for NRIs when seen from multi-faceted perspectives. If you are an NRI looking for aid in tax planning, you can search for NRI tax planning firms in India