with rules changing every year it's no wonder things can get confusing but fear not I'm here to guide you through it all welcome to grow NRI I'm caruna and in this video we will discuss who is an NRI what is taxable income for nris eligible tax exemptions for nris tax deductions for nris and as a bonus I will also discuss NRI tax forms deductions nris cannot claim and bdaa but before we get into the details of 2024 NRI taxation let's discuss a bit about the residency status so who's an NRI while calculating your Indian tax determine your residential status by answering two questions were you in India for at least 182 days during the financial year or were you in India for 60 days in the previous year and have lived in India for 365 days in the last 4 years if your answer to any of these questions is yes you are a resident Indian if your answer to both is no you're an NRI simple right well not really because NRI status is is governed by two laws the income tax act 1961 and the FEMA act if you're curious to learn more about how NRI status is determined by these laws check out this video all right now that we've sorted out your tax status let's jump into the next segment and find out what is taxable income you might be wondering why are we placing our focus on understanding NRI status that's because as an Indian resident your Global income is taxable in India but if you're an NRI you only pay taxes on income earned in India before we proceed let's clarify the terms earned and acru in India earned in India refers to income that you've received or gained through your efforts or Investments while in India it includes salaries wages profits and other forms of compensation earned within the country on the other hand a cruise in India refers to income that is due but has not yet been received it could be interest on investments rent from Properties or dividends from stocks that have accumulated but have not been paid out yet you you can check this table for better Clarity on which source of income from India is taxable now let's zoom in on the first taxable income for nris the income that arises from house property when you own a property in India whether renting it out or lying empty any income you make from it is subject to taxes in India even if the money goes straight to your bank account outside India or into your NRE account it is still considered taxable income in India here's the good news just like residents NRI can claim 30% deductions on property taxes and the interest on any Home Loans you took and remember those big loan payments you made every year right the ones that are part interest and part principle you can claim the principal part of those payments as a deduction under Section ATC even the stamp Duty and registration charges you paid when you bought the property can also be counted towards this deduction oh and one more thing to remember when you're renting your property the tenant has to deduct a TDS of 30% before transferring money to your account so when a resident makes any payment to an NRI they must submit form 15ca or 15 CB online to the income tax department there are still other sources where one can receive income but what can that be let's discuss this in our next section income from other sources other sources of income can include Bank deposits business income and investment earnings here's what you need to know first taxation of Bank deposits I'll keep it simple the interest you are making from your fds or savings account all of this is taxable however if you're earning interest from NRE or fcnr accounts consider it taxfree but do not forget that the interest from your nro account is fully taxable second taxation of business income when it comes to your business ventures any cash flow coming in is taxable that's why keep your earnings in check and stay ahead of taxes third taxation of investment income under this nris are subject to a 20% tax on income earned from specific Investments and one interesting fact if investment income is your sole income for the year and TDS has been deducted you may not need to file an income tax return there is one more way to earn income and that is from capital gains but how are they tax in India let us check it out in the next part when you sell something valuable like property or Investments any profit you make from it is called a capital gain and in India it's taxable when you sell a property the tax rules factor in two scenarios first long-term capital gains if you sell an asset after holding it for a perod longer than 24 months you are liable to pay an ltcg tax at a rate of 20% second for short-term capital gains 30% taxes deducted if you sell an asset within a holding period of 24 months from acquiring it you will face stcg tax of 30% now that we know which income gets taxed for nris the next step is to understand which ITR form you should pay under income tax loss the tax form you use depends on how you earn money in India since FY 201718 non-resident Indians are required to use use it2 for filing returns in all instances except when reporting business income for non-resident Indians receiving business income the income tax return to file is it3 you know what we've talked a lot about paying taxes now let's shift to our next topic which is about saving taxes let's explore the exemptions that can help you keep more of your hard-earned money first interest earned on NRE or fcnr accounts is taxfree government issued bonds and savings certificates they also offer a tax exemption on interest earnings lastly let's explore how capital gains can be exempt under certain conditions first by selling a house or property held for over 24 months and reinvesting the proceeds in another property or depositing them in psus or other Banks next for any property besides a house capital gains can be avoided by investing in the construction of new house or purchase finally by investing long-term capital gains from immovable property in 54 EC bonds such as those from the National Highway authority of India or rural electrification Corp with the exemption capped at a maximum of 50 lakh rupees now that we have covered tax breaks let us dive into another money- saving strategy tax deductions in this segment we'll cover which deductions nris can claim and which are the ones they cannot let's first start with deductions under ATC nris get a total combined limit of 1.5 lakhs under Section 80c and here are a few ways you can claim this deduction but first if an NRI or their spouse or child has a life insurance policy they can claim a deduction for the premiums paid as long as they are less than 10% of the summer short second any fees paid for the education of up to two children in India whether for school college or university can be claimed as a deduction third if an NRI is paying back a loan they took to buy or build a house in India they can deduct the principal repayments from their taxable income even expenses like stamp Duty and registration fees can be included fourth nris can claim tax deductions by investing in ulips which offer insurance and investment in one plan with a 5year lockin period and you can claim deductions for the premiums paid for yourself your spouse and your children fifth nris can claim deductions for investing in elss funds of up to 1 and a half lakh rupees the next deduction can be claimed under Section 8D nris can claim reduction for health insurance premiums paid up to 25,000 rupes per sale spouse and dependent children additionally deductions of up to 25,000 are available for parents insurance but here's the catch if the premium paid is for Resident senior citizens the limit is raised to 50,000 Rupees for self family and parents excluding senior citizen nris from this benefit under Section 8D you can also claim up to 5,000 rupees for preventive Health checkups within the existing limits and if you're paying medical expenses for Resident senior citizens you can claim up to 50,000 Rupees for them too as as long as any health insurance policy does not cover them so we've covered how ATD handles health related deductions but what about education that is what we will discuss under at nris can claim a reduction of interest paid on Education Loans now this applies to loans taken for higher education for themselves their spouse children or a student under their legal guardianship there's no limit to the deduction amount available for maximum of 8 years or until the interest is paid off whichever comes first however the deduction does not apply to the principal repayment of the loan now that we've taken care of Education expenses let's turn our attention to giving back in the next segment deduction under atg we'll explore deductions for donations section atg of the income tax act allows deductions for donations made to eligible Charities or funds applicable to individuals and companies the deduction can be up to 50% or 100% of the donated amount depending on the recipient however not all donations qualify so it's essential to ensure the recipient is eligible under Section 80g now that we've explored deductions for donations let's focus on savings under 0ta nris can claim a reduction on savings account interest up to 10,000 rupes just like resident Indians all right so we've covered a range of deductions from education to health donations and savings but here's a thought are there any deductions that nris miss out on especially from section 8C let's check this in the next toping deductions excluded for nris first nris cannot open new ppf accounts however they can maintain existing accounts opened while they were residents Second National savings certificates or nses thirdd post office 5-year deposit schemes fourth senior citizen savings scheme or scss I know it's not easy to keep track of all the deductions or exclusions and watching the video on the loop can be quite a TK so feel free to take a screenshot of this image for your reference who does not love saving money and that is exactly how tax exemptions and deductions come to our rescue but there's another way nris can save on income tax in India and that is through dtaa picture this you are an NRI living and working abroad with ties back home in India now without a dtaa in place you could end up getting taxed twice on the same income once in your country of residence and again in India not ideal right that's where dtaa swoops in to save the day it's like a special agreement signed between two countries to prevent this double taxation headache I know we've covered a lot already so here's a quick rundown on ddaa ddaa sets out clear rules on who gets to tax what for instance if you earn a paycheck abroad your host country might tax that income but if you're making money from Investments India might be the one to tax it this way nris avoid getting hit with the double taxes on the same Cash Plus some DT even offer extra benefits like tax credits or exemptions and let's not Overlook tax cooperation d dtaas often include Provisions for sharing information between tax authorities ensuring that everyone pays their fair share but remember the perks of dtaa can vary based on the specific agreement between India and the country of your residence so it's always wise to consult a tax expert to understand how it applies to you that was a lot right we'll do a short recap and do not worry I won't bore you understanding the status of an NRI is essential governed by both Income Tax Act of 19 1961 and the FEMA act this status dictates your tax liabilities particularly concerning income earned in India in India income is classified as earned when received like salaries while a cruise relates to income due but not yet received such as interest on rent NIS taxable income sources include house property salary Investments and capital gains here's a disclaimer Please be aware that tax laws and rates can change over time additionally the actual tax liability for capital gains tax may vary based on various factors please talk to a certified tax professional before filing taxes in India when filing taxes in India NIS should use itr2 for filing returns in all instances and form ITR 3 for businesses that's it for the video guys if you like this video hit the like button and subscribe to grow NRI