what is the tax treatment in india for nri? who becomes nri?

Answer 1

NRIs have special tax rates for certain incomes under Chapter XII-A of the Income-tax Act.

Income must be from foreign exchange asset which means any specified asset which the assessee has acquired or purchased with, or subscribed to in, convertible foreign exchange.

Specified asset means any of the following assets, namely :

(i) shares in an Indian company;

(ii) debentures issued by an Indian company which is not a private company38 as defined in the Companies Act, 1956 (1 of 1956);

(iii) deposits with an Indian company which is not a private company38 as defined in the Companies Act, 1956 (1 of 1956);

(iv) any security of the Central Government as defined in clause (2) of section 239 of the Public Debt Act, 1944 (18 of 1944);

(v) such other assets as the Central Government may specify in this behalf by notification in the Official Gazette.

Incomes and rates are:

(i) Investment income from specified assets-20%
(ii) long term capital gains from specified assets-10%

If any specified asset is sold and gain is invested in another specified asset, then the gain is tax exempt. If NI becomes resident of India, same treatment for the income from specified asset continues.

Non-resident Indian means an individual, being a citizen of India or a person of Indian origin who is not a resident

Other than this NRI is treated as any other individual. On returning to India, he can get NOR(not ordinarily resident) status for two years and his global income will not be taxed. After two years he will be treated as a resident and is taxed on his global income.