INCOME TAX COMPLIANCES
If the annual income exceeds the basic exemption limit of Rs. 2.5 lakh,
it's mandatory to file tax returns, whether you're an NRI (Non-Resident Indian)
or a resident. Typically, the deadline for filing returns is July 31
of the relevant assessment year.
What is Income Earned or Accrued in India?
India follows the “source rule” basis of taxation, i.e., all the income which accrues or arises from or through a source in India is taxable in India. Therefore, identifying the source of Income is of utmost importance. If it is established that the income has its source in India, whether direct or indirect, such income would become taxable in India. A list of such incomes are:
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Any salary received in India,
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Any salary received for services rendered in India,
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Rental income (if any) received from a property situated in India,
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Capital gain (if any) arising on account of transfer of property or asset in India
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Any income from deposits in India such as interest on fixed deposits
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Any interest received on the savings bank account, etc.
FEMA COMPLIANCES
The Foreign Exchange Management Act (FEMA) is a law enacted by the Government of India in 1999 to control this flow of foreign currency across Indian borders.
FEMA replaced the earlier Foreign Exchange Regulation Act or FERA, which was more stringent, in the wake of economic reforms introduced in the Indian economy in the early nineties. FEMA aims to facilitate external trade and their payments in India, a systematic improvement and continuation of foreign exchange in the Indian market. It outlines the procedures, formalities, businesses of all foreign exchange transactions in India.
It’s important for Indians working abroad to understand FEMA rules for NRIs very carefully since it can affect the way they can send and receive funds from India.
Which Bank Account can you open?
Once you change your status from resident status to Non-Resident Indian or NRI, that is, living outside India but still a citizen of this country, you have to go through some formalities concerning the Savings Accounts you hold.
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FEMA rules for NRIs do not allow holding a savings bank account. NRIs need to set up an NRO or NRE Account as stipulated by the Reserve Bank of India (RBI).
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- An NRO is a Non-Resident Ordinary rupee account and can be held jointly by two or more NRIs. All Legitimate dues in India of the account holder., Proceeds of remittances received in any permitted currency from outside India through normal banking channels or any permitted currency tendered by the account-holder during his temporary visit to India or transfers from rupee accounts of nonresident banks can be credited to this account. Funds remitted, therefore, are non-repatriable to another country.
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- An NRE is a Non-Resident (External) Rupee account. It permits for money transfer services from outside India, and the entire amount in the account is also repatriable back to the country where the NRI stays currently. Income earned in this account is exempt from taxation.
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- FCNR is a Foreign Currency (Non-Resident) Account, and NRIs can deposit any foreign currency in it. It’s a foreign currency fixed or term deposit available for one to five years. There is no tax implication on this type of account, and funds are completely repatriable on maturity.
This is one of the most crucial FEMA rules for NRIs.
IRS COMPLIANCES (USA)
IRS compliance services in the United States are provided by tax professionals,
including certified public accountants (CPAs), tax consultants, and tax advisory firms. These services aim to assist individuals and businesses in meeting their federal tax obligations and ensuring compliance with IRS regulations.
