SBI releases booklet on NRI Taxation [Download Book]

The State Bank of India(SBI) has released the booklet on NRI Taxation and FEMA.

“SBI is well aware of the vital contributions made by its Global Citizens to the financial, social and economic sectors in the growth story of our Country. You are important to us, and we are committed to providing you with an unparalleled customer service and innovative products. Our 434 specialized/intensive NRI Branches in India, Foreign Offices in 29 Countries, 45 Exchange Houses and five banks in the Middle East work hard to facilitate NRI services and serve as our extended arms to reach you.

We strive to be available to you 24/7 through our hassle-free digital offerings like YONO and Internet banking platforms. We have also set up a Global NRI Centre (GNC) at Ernakulam, to render a one-stop solution for all your non-financial service requirements. We further acknowledge the significant contribution of the NRI community to the growth of our nation.

The investments made by you in your motherland are governed by the Foreign Exchange Management Act (FEMA) and taxation laws that may sometimes appear confusing and daunting. In an effort to demystify these laws and empower our NRI customers, we have compiled this information booklet.

This handbook will serve as a reference guide and help you to make informed decisions while investing in India. We hope that this handbook will enrich you with the necessary and relevant information you may need while investing your hard-earned money. We have made a sincere effort to cover all relevant and important topics which will serve as a guide to better manage and understand your financial responsibilities. However, this book is not a substitute for professional advice.”

– Dinesh Khara, Chairman of SBI

NRI TAXATION

Introduction

Taxation has always been a vexing topic for many – be it resident or non-resident. A multitude of portals on the web steaming out analysis of various tax provisions have considerably aided the layman.

THE MYTH – I am a non-resident, PIO Card Holder, OCI Card Holder, Green Card Holder, and US Citizen so I don’t have to pay tax in India since I am paying tax on the same income in my country of residence. The reality is generally the opposite.

ALWAYS remember that if you are earning any income from a source or an asset in India, the Indian government has the sovereign right to tax you. Probably due to tax treaties, you may get some relief or exemption. Even the domestic tax laws may give you some relief or exemptions.

The tax discussion in the following pages is solely limited to NRIs earning income in India, such as interest, dividends, pensions, rentals, capital gains, and so on. To simplify and shorten the book, commercial transaction provisions were intentionally left out.

Taxation being such a debatable topic entangled in litigation issues, this book is not a substitute for professional advice. It is only an attempt to give a broad overview of the taxation for non-residents like you and to prepare you for the TRUTH – you are taxable for most of the income earned in India just like me as a resident.

Important for NRIs

As per Rule 12AB, new additional conditions are imposed due to which residents and NRIs will have to file an Income Tax Return even if their taxable income is less than Rs.2,50,000. The conditions inter alia are:

(a) If the aggregate of tax deducted at source /tax collected at source is twenty-five thousand rupees or more; or

(b) The deposit in one or more savings bank accounts of the person, in aggregate, is rupees fifty lakh or more during the previous year.

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