Here are several exemptions and tax-saving suggestions that non-resident Indians can take advantage of :

You don’t need to to file for tax return if you don’t have any income here. Alternatively, if the income accumulating in India by means of capital gains, rent, dividend or interest is beyond the threshold limit, you will need to file tax returns. Here, at the same time, you can claim certain deductions. So, for 2011-12 , an NRI (male, below 60 years) whose income is greater than 1.8 lakh and a person above 60 years who earns more than 2.5 lakh should file returns in India.

You don’t need to to file for tax return if you don’t have any income here. Alternatively, if the income accumulating in India by means of capital gains, rent, dividend or interest is beyond the threshold limit, you will need to file tax returns. Here, at the same time, you can claim certain deductions. So, for 2011-12 , an NRI (male, below 60 years) whose income is greater than 1.8 lakh and a person above 60 years who earns more than 2.5 lakh should file returns in India.

Investments

If, as a resident, you made some investments and redeemed them after becoming an NRI, these will be dealt with differently . For example, NRIs are not able to extend the tenure of their PPF account. Capital gainslong-term or short-term-will be applicable when you redeem/sell your past investments. If you sell shares that are listed on a recognised stock exchange in India after keeping them for over a year, you will not have to pay tax on the capital gain provided the securities transaction tax has been paid.

Tax-saving tips

NRIs can save on these taxes by investing in pension plans, life insurance policies and tax-saving mutual funds. The reimbursement by an NRI towards principal amount of home loan is eligible for deduction up to 1 lakh, while the interest payment is also allowed as a deduction. NRIs can also buy a health insurance policy here for themselves, their family and dependent parents , and claim deduction up to 35,000 for the annual premium paid. If you have been repaying an education loan, the interest paid can be claimed for deduction . NRIs can put their money in tax-saving bonds too. Capital gains up to 50 lakh earned from selling a capital asset can be invested in bonds of NHAI or REC. Investment income foreign currency bonds, are subject to tax at 20% as against the maximum rate of 30%. NRIs can invest in such assets and benefit from the lower rate. Also, an NRI can avail of lower tax rates on interest income through beneficial treaty provisions.

The largest umbrella organization of overseas Indians has urged the Indian government to remove a proposal to impose tax on non-resident Indians (NRI) staying over 60 days during a visit to the homeland.

It’s going to be detrimental to the interests of NRIs who make contributions considerably to the country’s progression, the Global Organization of People of Indian Origin (GOPIO) stated in a resolution adopted during its biennial conference in Iselin, New Jersey earlier this month.

In various other resolutions, GOPIO made a plea for a mechanism to enable NRIs to voice their issues, nomination of a few prominent NRIs to the Rajya Sabha, initiation of suitable actions to set up fast track courts to deal with the increasing number of property offences aiming for NRIs and steps for quick disposal of cases involving custody of children of NRI parents.

In addition, it urged the government to augment the staff strength of consulates for the ease of NRIs.

While welcoming the establishing of Global Advisory Council, GOPIO looked for representation for diaspora organizations in the council.

Extending all support to the” Know India Program” begun by the government, it wanted a GOPIO-Pravasi member committee to be established to kick-off the programme.

Observing that more and more job hunters from India are falling prey to unscrupulous elements abroad, GOPIO urged the government to have proper actions for the rehabilitation of such victims.

The organisation also urged the Government of India to finish the discriminatory practices against NRIs at archeological sites and hotels.

GOPIO has also expressed special thanks to the authorities in Bahrain to have prompt steps to safeguard the Indian community during the recent disturbances.

In this informative article we look at what an NRI are able to do to claim this lower rate of TDS as well as to have an exemption from TDS. There are two circumstances in which you could be eligible for TDS exemption:

1. If the DTAA between the country of your residence and India permits a lower rate of TDS

2. In case your total earnings are less than the basic exemption limit of Rs 1.6 lakh

Hence the next question for you is: What exactly does an NRI have to do so that you take the advantage of this kind of exemption or reduced rate of tax?

If the DTAA between the country of your residence and India permits a lower rate of TDS

We observed that regarding specified incomes such as interest income or royalty income, the DTAA for US and UK allows a reduced rate of TDS for NRIs. For example, just in case of interest income, while TDS is deducted at 30 percent for NRIs, in which there is a DTAA, the TDS rate is reduced to 15 per cent.

At the same time, you will find there’s complete waiver of TDS in case of fees for professional services. So in case you are an NRI providing services to someone in India and so are receiving payment thereof, you can acquire a waiver of TDS.

On the other hand, if you want to claim the reduced rate of TDS or waiver of TDS under the DTAA, you’ll have to submit a tax residency certification from the country of your respective residence. This is going to certify that you are a tax paying resident in that other country and that tax on that income is being duly paid in that country, confirming absolutely no leakage of tax revenue for either countries.

In the US, the tax residency certificate is called Form 6166 and the application needs to be made to the Internal Revenue Service (IRS) in Form 8802. Complete information of this process are available here.

In the UK you’ll have to get the tax residency certificate from the HM Revenue and Customs.

If your total income is lower than the basic exemption limit of Rs 1.6 lakh

It could happen that your particular total income in India is less than the fundamental exemption limit of Rs 1.6 lakh per financial year. In these cases, you may apply to the Income Tax Officer in your jurisdiction in India, asking for  a waiver of TDS. If the Tax Officer grants you the waiver, you may submit this to the payers such as your bank and claim TDS exemption.

“Approving waiver depends on the discretion of the Tax Officer and may or may not come through easily. So In case you are suffered with such a scenario, it is advisable to file your tax returns and claim a refund of the TDS,” recommends Sandeep Shanbhag, Director – Wonderland Investments and an expert in all NRI financial and taxation matters.

Keep in mind that any claim for reduced rate of TDS or exemption from TDS is going to be accessible so long as you’ve got a Permanent Account Number (PAN), so make sure you have one.