The top 10 Tax Tips for 2019 for NRI investors

The top 10 Tax Tips for 2019 for NRI investors

by | Mar 20, 2019 | NRI, Tax Extension, Tax Planning, taxes

The top 10 Tax Tips for 2019 for NRI investors

The top 10 Tax Tips for 2019 for NRI investors.While it is no secret that resident Indians have to pay taxes for a fiscal year. However,  all NRI  investors must also pay taxes for a fiscal year if applicable. Irrespective of whether they earned the money directly or indirectly, if they are liable, they must pay taxes on the same. As long as the income is generated in India.

Any income that is generated as a part of their investments or assets or business interests, is liable to taxes. The presence of tax laws means that there are different avenues to save money from tax liabilities as well. If you are an NRI and are looking for tax-related tips, here are some that you might find to be quite useful.

Section 80C

Just like resident Indians, NRIs also can benefit from investing in Section 80C. You can invest as much as INR 1.5 Lacs for a fiscal year in Section 80C as per the Income Tax Act of 1961 and enjoy a reduced tax liability.

Section 80CCD

Apart from the most common and obvious investment mode of Section 80C, there are a few additional ways to save money and taxes as well. You can invest in NPS instrument (Section 80CCD) and save additional money on the top of Section 80C. however, NRIs cannot invest in PPF, National Savings Certificate or any other senior citizen schemes.

Pan Number

Annual income exceeding a certain limit is subject to TDS. Section 206AA governs the taxes that an NRI is liable to pay. An NRI must furnish their Pan card details when they are investing in India. Failing to do so would result in you paying higher TDS amount.

Maintaining Status

The income tax liability of an individual depends on their annual income and residential status. Thus, it is essential to maintain your residential status as NRI. If you have any trips for India, ensure that they do not hamper your NRI status.

Home Loan

NRIs having any home loans in India can use it to claim deductions for their income tax. Under Section 24, NRIs can claim up to INR 2 Lac per year which they pay in interest towards their home loan.

Property Tax

If an NRI is paying any property tax for properties that they own, they can claim the amount as well. Depending on their tax liability they can save taxes.

Selling Property

As an NRI if you wish to sell any properties in India, you would have to pay applicable capital gains tax. It is usually split into short-term and long term capital gains. If you sell your property within 24 months of buying, it is short-term capital gain. And if you sell it after 24 months of buying, it qualifies as long term capital gain.

Health Cover

Most NRIs wish to come back to India to post their retirement. It would be a good idea to buy a health insurance plan. Buying it while being out of the country will help you overcome the waiting period of pre-existing diseases and offer tax cuts.

Mutual Funds

There are several mutual funds which can offer you tax deductions under Section 80C. The lock-in period of mutual funds is lower than other investment instruments as well.

NRE Account

Holding your savings in an NRE account can be beneficial as well. Since the interest earned is tax-free and the benefits would be available for two years after you shift back to India.

The above would help you better plan and manage your taxes.

Help the NRI in the US for global income tax filing

Help the NRI in the US for global income tax filing

by | Mar 12, 2019 | global income tax, NRI, tax filing, Tax Planning, Tax Preparation, taxes

Help the NRI in the US for global income tax filing

The deadline for filing your taxes is approaching fast. For the current assessment year, the deadline is the 15th of April.The deadline of filing your taxes for 2018. The entire income tax filing and return process can be a bit overwhelming for some.

However, if you are aware of the different steps and take a more structured approach, it won’t seem as daunting as it does now. Here are some simple steps and tips to help you get through the tax season.

Global Income

Irrespective of whether you are a US resident or citizen (includes NRI, OCI or PIO), you are liable to pay taxes on your global income.

Salary

US Citizens who earn a part of their income in India are liable to pay the taxes in the USA. If you earn a salary in both the countries, you will have to pay taxes for the country where your current residence is at.

However, if you had earned your salary before moving to the USA and have paid the liable taxes, you can take tax credits and adjust the taxes with your US income. You can use the Form 1040 to declare your salary and Form 1116 for any tax credits.

Freelancing or contracts

For consultants who are working in the USA and earn money in India from their respective company, must pay taxes as well. It doesn’t matter if you have a bank account in India or the USA, you are liable to pay taxes. Such income must be reported in Schedule C of Form 1040.

Rent

For NRIs who have rental properties back home, the income generated from it will be taxed in the USA. But the question arises should you pay taxes in India as well? This is where the DTAA or the Double Taxation Avoidance Agreement comes into the picture. As per the agreement, you will have to pay taxes in India for the income generated in India by renting your house.

You must report the income from renting properties in your Form 1040 and claim for tax credits. The Schedule E of Form 1040 is where this declaration would go. For availing tax credit, you will have to fill up the Form 1116.

Capital gains

The capital gains are applicable to various assets such as shares, mutual funds, lands, selling of properties etc. Any gains that you make on these assets are under the purview of capital gain taxation. It usually is split into short-term capital gains and long-term capital gains.

When it comes to land, property or any other physical assets, if you hold them for three years and then decide to sell, long-term capital gains would be applicable. Should you decide to sell these assets within 3 years of buying them you will have to pay short-term capital gains.

For mutual funds and shares, the holding duration is lower at 1 year. If you plan to sell shares or redeem any mutual fund units post the completion of a year, you will have to pay long term capital gains on them, if the gains exceed INR 1 lac. For instruments sold before that, short-term capital is applicable.

All these incomes should be declared in Schedule D of your Form 1040. And if you have paid any taxes, you can claim for tax credits by filling up Form 1116.

These are some of the major income sources and their implications on your tax filing and returns. Being aware of them will ensure that you can make the most of tax returns.