Taxation for NRIs

The definition of NRI (Non-Resident Indian) is given by two laws: the Income Tax Act and the Foreign Exchange Management Act. According to the IT Act, an NRI is defined as an individual who stays in India for less than 182 days in the current financial year, or someone who stays in India for less than 60 days in that year and less than 365 days in the previous four financial years. And according to FEMA, a person is considered to be an NRI if he/she is staying in a foreign country intending to stay there indefinitely. 

How Residential Status Affects Taxation

The taxable income in India is determined by residential status. It is listed below according to the status of residence: 

• NRI(Non-Resident Indian): Taxed on the income that is earned or received only in India. It is known as the NRI taxation in India. 
• RNOR(Resident but Not Ordinarily Resident): Taxed on the income in India as well as in a foreign country that arose from a business or professional setup in India. 
• ROR(Resident and Ordinarily Resident): Taxed on the income earned globally in a foreign country, which includes salary or capital gains. 

Taxable Income Sources for NRIs in India

It is very important to know about the income sources that are applicable for taxation for NRIs in India. NRI taxation is only applicable to the income that is earned or received in India, and the foreign income is excluded unless it is directly received in India. The income that comes from a salary is applicable for taxation for NRI only if the services are rendered within India. If you have rented some property in India, then the rental income is applicable for NRI taxation in India under the Income from House Property Act.