14 Oct

The income tax rate for NRIs Non Residential Indians

The income tax rate for NRIs (Non-Residential Indians)

The Income-tax Act, 1961 makes special provisions for non-resident Indians to pay tax on income earned from certain properties. These provisions are optional for such appraisers, i.e., they may pay tax at the rate fixed in this chapter or at the normal rate applicable to them. This option can be changed every year.

Who are NRIs?

NRIs are:

Individuals are citizens of India; Or

Individuals of Indian descent (i.e. himself or his parents or grandparents were born in undivided India)


Absence of residents earning income from such specific property in the previous year.

What are the specified assets?

This chapter contains assets specified for taxation at a specific rate:

1. Shares of an Indian company;

2. Debentures of Indian public companies;

3. Deposits with Indian public companies;

4. Central Government Bonds; And

5. Any other property should have been notified by the Central Government

Which are acquired/purchased/subscribed in convertible foreign currency.

What is the income from the specified asset?

Any investment income or long-term capital gain in a specified asset.

Non-Resident Indian Income Tax Rate:

Income from specified assets:

1. Investment income: 20% taxable

2. Long Term Capital Profit: Taxable% 10%

Other income: Taxable The rates applicable under the general provisions of the Act

In addition, surcharges and HEC @ 4% will be included to meet the final tax obligation

Once the assessee selects the special provisions of this chapter,

Expenses No deductions will be allowed for any costs;

No deductions will be allowed under Chapter VIA; And

Basic concessions cannot be limited to such income

If long-term capital is received, he can claim the cost of the transfer, but he will not benefit from the indexing.

Further, the assessee may seek exemption from such long-term capital gains as per Act 115F, if the net sale has preceded such a transfer if it has been invested in another foreign exchange asset or within 6 months from the date of transfer / 10 (4B) in the certificates notified to us. The property should be in possession for at least 3 years from the date of acquisition. Otherwise, the claimed benefit will be taxable in the year of transfer.


Further, if such determination does not require filing a return of income:

1. There is no taxable tax other than the income mentioned in this chapter; And

2. TDS on such income is properly deducted

However, if the assessee has been residing in India in the previous year, by default, the general provisions of the Act will be drawn. But the assessee may opt for these special rates if he finds these provisions to be more beneficial. In such a case he can apply to A.O. Selecting the option of special provision for that assessment year and filing its ROI accordingly.



Santosh Patil

Founder & Director

Alliance Tax Experts


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