Tax Exemption for NRIs/ Overseas Indians
Chapters VII to X of the Income Tax Act list the exemptions granted to non-resident
Indians on their income in India.
Calculating the NRI income
By laying down the rate of tax to be applied on gross
i. Tax on dividend (other than dividend from domestic companies),
interest, royalty, fee for technical services and income from
By laying down a percentage to be applied on gross receipts
to determine the net income
The scheme of Advance Ruling has been introduced in Chapter XIX-B
in the Income Tax Act, which enables non-residents entering into
a transaction with residents or non-residents to obtain, in advance,
a binding ruling from the Authority for Advance Rulings on issues
which could arise in determining their tax liabilities.
Tax Exemptions from Property InvestmentsIncome from House Property
Income from House Property is the annual value of House Property, of which the assessee is the owner. House property consists of buildings or land. The land may be in the form of a compound housing the building. Any rent received from standalone vacant plot is not assessable as "Income from House Property".
One self-occupied House Property or part of such property owned by an individual and used for personal use, but not let out, in the previous year, will not be taxable.
From the assessment year 2002-03, Income from House property is classified as: Let out Property (L.O.P.), and Self Occupied Property (S.O.P.)
The following two deductions are available from the income under the head "Income from house property" under the Income tax Act, 1961.
Standard Deduction: 30% of net annual value is deductible irrespective of any expenditure incurred by the taxpayer.
Interest on Borrowed capital: Interest on borrowed capital is permitted as deduction if capital is borrowed for the purpose of purchase, construction, repair, renewal or reconstruction of the house property.
When more than one property is occupied for own residential purposes: Where the person has occupied more than one house for his own residential purposes, only one house (according to his choice) is treated, as self-occupied and all other houses will be "deemed to be let out".
Tax Exemptions from Other Assets and InvestmentsDividend Income All dividends, received from domestic companies are exempt from tax under the I.T. Act, 1961. Income received in respect of units of specified Mutual Funds and the Unit Trust of India is exempt from tax.
GiftsAny sum of money received, in excess of Rs.25, 000/- from a person would be taxed in the hands of the recipient. However, gifts received on the occasion of the marriage or from a relative or under a will or by way of inheritance or in contemplation of death of the payer, would not be subject to tax.