Are you an NRI and finding difficult to manage your finances as well as taxes in India? Maybe you have opted for better tax planning and saving methods but still there is a lack of something which is hampering your finances in the country. Due to distance as well as less connectivity with Indian markets, most of the NRIs are not aware of new tax rules, changes in saving account rules or other tax planning methods. So NRIs read this blog and find easy tips for Tax planning and Better Savings.
Know your Taxes
Before entering into planning, it is mandatory to have prior knowledge of what taxes apply to you and what not, so that easy decisions can be made. The taxes that NRI has to pay are completely different from that of Indian Residents.
Applicable Taxes on NRI
- All the Income earned as salary via India.
- Capital gains related to real estate or other investments in India.
- Interest earned from capital investments or securities and other such short-term investments in India.
Non-Applicable Taxes on NRI
- Interest accumulated from Non-Resident External Account (NRE) account.
- Any allowance paid by the Government for your services abroad.
- Any interest earned on bonds and saving certificates that were subscribed via foreign exchange.
- Long-term gains from any sale of equity
How to File Tax Returns?
As an NRI, if your income source is more than Rs 2, 50,000 in India, then you must have to file a tax return. The source of income can be from anything, maybe rent, and interest earned or capital gains. You can also claim deduction on the same just like any other Indian Resident.
On the other hand, while filing tax return in the currently residing country, check in advance that they must have DTAA (Double Tax Avoidance Agreement) with India. It means that you can opt for tax credit paid in India. In case, you have invested in mutual funds or fixed deposits, then the deductions are automatically claimed.
Tips to Save Taxes
- If you want to save on your Tax deductions, then covert the Non-Resident Ordinary (NRO) account to Non-Resident External Account (NRE) account. This is a much better way to save taxes if you don’t want to return to India. Keep in mind to transfer all your money beforehand before converting the account.
- You may have invested in various places but getting not able to save enough of tax then what’s the point of such investment? Invest in those areas where you can earn and save better.
- You can also opt for portfolio management services. These experts will help you in saving on your money in India either by directly or indirectly through advice.
- Last but not least, the most favourable way to save on your taxes is through investing in Real Estate. This method is quite popular among NRIs to yield better returns as well as saving more money. You can also hire a caretaker to keep a direct check on your purchased property.