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Income tax for NRIs in 2023: Tax rebates, limits and eligibility

Summary: NRI taxation rules in India are somewhat different from the ones applicable for resident Indians. Read the article below to learn about the tax rebate available for NRIs in India, the eligibility criteria for availing of this rebate and the tax filing process.

28 Jun 2023 by Team FinFIRST
Understanding NRI tax rebate
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In India, all citizens with an annual income of more than Rs 2.5 lakhs are required to pay an income tax. However, to provide some relief to taxpayers, the government announced a new income tax regime in 2023, wherein they were allowed a full tax rebate under Section 87A of the Income Tax Act 1961 if their annual income was below Rs 7 lakhs. 

But what if the taxpayer is a Non-Resident Indian (NRI)? Will they be eligible to claim the same tax rebate while filing their income tax return? Let’s find out.

Can NRIs claim a tax rebate under the new income tax regime?
 

Unfortunately, the tax rebate under Section 87A of the Income Tax Act is only available for resident Indians. As an NRI, you are not allowed to claim this tax rebate even if you have opted for the new income tax regime. You can use it to increase your basic tax exemption limit to Rs 3 lakhs for a financial year. But if your annual income in India exceeds Rs 2.5 lakhs, you will have to file your Income Tax Return (ITR) and pay the dues. 

Also read - New regime is the new future: Know all the income tax announcements made in Union Budget 2023

READ MORE

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Other tax rebates available for NRIs
 

Although you are not allowed to claim a tax rebate under Section 87A, you can avail of certain tax deductions under Sections 80C, 80D, 80E, 80G, and 80TTA of the Income Tax Act. You can claim these deductions while filing your ITR.

The table below depicts the maximum tax deduction allowed under these sections in a financial year.

Section

Maximum tax deduction

Section 80C

Rs 1.5 lakhs

Section 80D

Rs 50,000

Section 80G

No limit (conditions apply)

Section 80E

No limit

Section 80TTA

Rs 10,000


How to file your ITR?

Filing ITR for NRIs is a bit different than for resident Indians. Here’s what you need to do -

Step 1
 

Determine your residency status. As per Section 6 of the Income Tax Act, you can file your ITR as an NRI only if you have spent more than 182 days in a foreign country during the previous financial year or if you haven’t spent more than 60 days in India in the current financial year and more than 365 days during 4 years immediately preceding the current financial year.

Step 2

Calculate your taxable income. Consider incomes from all sources, including property rent, salary, business, interest, capital gains from investments, etc. 

Step 3

Fill out Form 2 on the income tax website to file your ITR. You will need an Indian PAN card and an NRI bank account to complete the process. The last date for ITR filing for NRIs is 31 July unless extended by the government.

Also read - TDS deductions for NRIs – everything you should know

Conclusion

NRI taxation rules in India are quite different from those for resident Indians. Apart from the income tax slabs and rates, the tax rebate structure also varies for them. Therefore, you must understand the guidelines for NRI tax in India before filing your ITR.

To make your task easier, you can open an Metra Trust NRI Savings Account. It allows you to earn tax-exempt income on your foreign earnings and transfer unlimited funds anytime and from anywhere.



 

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject Metra Trust or its affiliates to any licensing or registration requirements. Metra Trust shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.

The features, benefits and offers mentioned in the article are applicable as on the day of publication of this blog and is subject to change without notice. The contents herein are also subject to other product specific terms and conditions and any third party terms and conditions, as applicable. Please refer our website www.metratrust.com for latest updates.

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