October 18, 2024

Income Tax exemptions applicable to NRIs

This is a guide to the Income tax exemptions applicable to NRIs to plan their savings in a systematic manner understanding the intricacies of the applicable income tax provisions. NRIs can claim a few income tax exemptions and explore some of the investment opportunities, which can helps in tax savings as well. We have elucidated the exemptions and the applicability of the same for a detailed understanding.

  • Interest on bonds or securities notified before 01-06-2002 by the Central Government including premium on redemption of such bonds. (Section-10(4)(i)).
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Income Tax exemption applicability-Non resident Indian

  • Interest on money standing to the credit in a Non-resident (External) account in India. (Section-10(4)(ii)).

Income Tax exemption applicability – Person resident outside India (under FEMA Act) and person who has been permitted to maintain said account by RBI.

  • Interest on notified savings certificates issued before 01-06-2002 by the Central Government and subscribed to in convertible foreign exchange. (Section-10(4B)).

Income Tax exemptions applicability – Individual, being a citizen of India or a person of Indian Origin, who is a non resident.

  • Remuneration received by Foreign Diplomats/Consulate and their staff (Subject to conditions) (Section-10(6)(ii)).

Income Tax exemption applicability – Individual (not being a citizen of India)

  • Remuneration received by non-Indian citizen as employee of a foreign enterprise for services rendered by him during his stay in India, if:
  • Foreign enterprise is not engaged in any trade or business in India
    • His stay in India does not exceed in aggregate a period of 90 days in such previous year
    • Such remuneration is not liable to be deducted from the income of employer chargeable under this Act  (Section-10(6)(vi))

Income Tax exemptions applicability – Individual – Salaried Employee (not being a citizen of India)

  • Salary received by a non-resident, for services rendered in connection with his employment on a foreign ship if his total stay in India does not exceed 90 days in the previous year. (Section-10(6)(viii))

Income Tax exemption applicability -Non-resident Individual – Salaried Employee (not being a citizen of India)

  • Remuneration received by an Individual, who is not a citizen of India, as an employee of the Government of a foreign state during his stay in India in connection with his training in any Government Office/Statutory Undertaking, etc. . (Section-10(6)(xi))

Income Tax exemption applicability –Individual-Salaried Employee (not being a citizen of India)

  • Tax paid by Government or Indian concern under terms of agreement entered into before 1-6-2002 by Central Government with Government of foreign State or international organization on income derived from Government or Indian concern, other than income by way of salary, royalty or fees for technical services. (Section-10(6B))

Income Tax exemptions applicability – Non-resident

  • Income by way of royalty or FTS for services rendered in or outside India to the National Technical Research Organization. (Section-10(6D))

Income Tax exemption applicability – Non-resident

  • Foreign income and remuneration received by consultant (agreement relating to his engagement must be approved) out of funds made available to an international organization (agency) under a technical assistance grant agreement between that agency and the Government of a foreign State (Subject to certain conditions). (Section-10(8A))
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Income Tax exemptions applicability – Individual, being a:

  • A non-resident engaged by the agency for rendering technical services in India;Non-Indian citizen; orIndian citizen who is not ordinarily resident in India
  • Foreign income and remuneration received by an employee of the consultant as referred to in Section 10(8A) (contract of service must be approved by the prescribed authority before commencement of service). (Section-10(8B))

Income Tax exemptions applicability – Individual, being a

  • Non-Indian citizen; orIndian citizen who is not ordinarily resident in India
  • Interest on notified bonds (notified prior to 01-06-2002) purchased in foreign exchange (subject to certain conditions) (Section-10(15)(iid))

Income Tax exemptions applicability – Individual, being a:

  • NRI or nominee or survivor of NRI;Individual to whom bonds have been gifted by NRI.
  • Interest payable by scheduled bank on deposits in foreign currency where RBI duly approves acceptance of such deposit by the bank. (Section-10(15)(iv)(fa))

Income Tax exemptions applicability –

        a) Non-resident

        b) Individual or HUF being a resident but not ordinary resident

  • Interest on deposit made on or after 01.04.2005 in an offshore Banking Unit referred to in Section 2(u) of the Special Economic Zones Act, 2005. (Section-10(15)(viii))

Income Tax exemptions applicability – Person who is a non-resident or not ordinarily resident

  • Receipt of income on Mutual Fund units (Section 10(33))

Income Tax exemptions applicability -Non-Resident Indian

  • Dividend to be exempt in the hands of the shareholders  (Section 10(34))

Income Tax exemptions applicability -Non-Resident Indian

  • Income received from mutual fund units specified under section (23D) (Section 10(35))

Income Tax exemptions applicability -Non-Resident Indian