Mention Tax deductions available for NRIS? in English

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Mention Tax deductions available for NRIS?

NRIs can avail of the tax deductions under Section 80C. Currently, a maximum deduction of up to Rs 1.5 lakh is permissible for tax deductions under the said section.

Deductions under Section 80C

Life insurance premium payment: You can claim tax deductions on your Life Insurance premium payments, provided the policy is in your name, your spouse’s or child’s name. In addition, the premium must be less than 10% of the sum assured for this deduction.

(ii) Repayment of principal on loan for the purchase of property: Repayment of an EMI on a loan taken for acquisition or construction of a residential property is eligible for deduction. This includes registration fees, stamp duty and other expenses.

(iii) Children’s tuition payment: Tuition fees paid to an educational institution such as a school, college or university for full-time education for your children are eligible for deductions. This benefit is applicable for two children at most.

(iv) Investment in ELSS: Investments in Equity Linked Savings Scheme (ELSS) from Mutual Funds up to Rs 1.50 lakh are eligible for deduction under Section 80C.

(v) Deductions under Section 80D : As an NRI, you can also claim a deduction on premium paid for Health Insurance under Section 80D of the Income Tax Act, 1961. This is available for premiums paid up to Rs 25,000 on insurance paid for self, spouse and dependent children. In case of senior citizens, this amount increases to Rs 50,000.

How to avoid double taxation?

Double taxation occurs when income tax is paid twice on the same source of income. It is not uncommon for NRIs to earn income in two countries. However, NRIs have to pay taxes on the same income in two countries: the country where they draw the revenue, and the country where they hold the citizenship. India has signed a Double Tax Avoidance Agreement (DTAA) with various countries to help NRIs avoid this problem. Nevertheless, to avail this benefit, you need to gather all the necessary documents of tax, paid in India, as proof.

To sum up : As an NRI, you may want to err on the side of caution when it comes to NRI taxation. The rules for you are slightly different compared to Resident Indians, and in some cases, you may end up paying double tax if you are unaware of the rules. It would be a good idea to understand tax policies and make the most of the tax benefits available to you.

*The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. You are recommended to obtain specific professional advice from before you take any/refrain from any action. Tax benefits are subject to changes in tax laws. Please contact your tax consultant for an exact calculation of your tax liabilities.

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