Income Tax Exemption For NRI – Similarly to residents, NRIs are also eligible to assert different deductions and exemptions against their overall profits. Below are the deductions for NRI:

Income Tax Exemption For NRI

Deductions Under Section 80C

Several of the deductions referred to in Section 80 are also applicable to NRIs. In the case of FY 2019-20, a permissible deduction of up to Rs 1.5 lakhs is permitted in Section 80C from the gross total income of the person.

Deductions allowed to NRIs under section 80C

Payment of the Life insurance premium –

Life insurance policy should exist in the name of the NRI or just in the name of their partner or of any children (a child could be completely reliant/independent, minor/major, or married/unmarried). The premium shall be below 10% of the amount insured.

Payment of children’s school fees –

Tuition fees charged towards any school, college, university or other educational organization located inside Indian territory for the function of full-time education of any 2 kids (which include school, pre-school and nursery fees).

Principal reimbursement of the loan for both the acquisition of a residential properties: 

Deductions are permitted for the repayment of the loan obtained for the purchasing or construction of residential properties. Also provided for stamp duty, registration fees, and other expenses for the transfer of these assets to the NRI.

Unit-linked insurance product (ULIPS): 

ULIPS is offered with such a life insurance exclusion within Section 80C. Requires payment to the unit-linked insurance product of the LIC mutual fund, e.g. Dhanraksha 1989 and allocation to several units-linked UTI insurance schemes.

Investments in ELSS: 

ELSS is by far the most favored choice in recent years as it enables you to assert a deduction under Section 80C up to Rs 1.5 lakhs, provides the EEE (Exempt-Exempt) advantage to taxpayers, and at the same time provides an outstanding chance to raise a profit as these funds invest mainly in the stock market in a diverse way.

Other permissible deductions

In addition to the deduction which the NRI may assert within Section 80C, it is also entitled to claim numerous different deductions underneath the Income Tax Acts mentioned below:

House Land Benefit Deduction for NRIs

NRIs can assert all exemptions applicable to an Indian citizen from household property income for such a home bought within Indian territory. Deduction in respect of the property taxes collected and interest on the home loan is also permitted. 

Deduction in compliance with Section 80D

NRIs are entitled to claim a deduction from the premium charged for health insurance. This exemption is applicable up to INR 30,000 (increased to Rs 50,000 effective 1 April 2018) for elderly people and up to Rs 25.000 in several other situations for self-insurance, spouse, and minor children. In fact, the NRI will also demand insurance deductions for parents (father or mother or maybe both) up to Rs 30,000 (Rs 50,000 applicable 1 April 2018) if their parents are older people, and Rs 25,000 if one‘s parents really aren’t senior citizens.

Deductions under Section 80E

Under such a clause, NRIs can demand a deduction of interest charged on an educational loan.  This borrowing might’ve been rendered for higher education by the NRI, the spouse or children of the NRI, or the kid for whom the NRI is the legal guardian. There really is no cap on the sum that can be stated as a deduction under such a Clause. The exclusion is valid for a period of 8 years or until interest is paid, whichever one is sooner. The deduction isn’t really eligible for the principal repayment of the loan.

Deductions under Section 80 G

NRIs are entitled to claim a deduction for social-cause contributions within Section 80G. These are all contributions qualified under Section 80G.

Deduction in line with Section 80TTA

Non-resident Indians may subtract interest income received on savings accounts up to a limit of Rs 10,000 as Indian citizens. This is authorized for savings account deposits (not time deposits) with a bank, cooperative company, or post office and is applicable as of FY 2012-13. 

Deductions not permitted for NRIs

Any of the investments under Section 80C:

i. Investment in PPF is not permitted (NRIs are not permitted to make a new or open a PPF account, but PPF accounts that are created while citizen are authorized to be retained)

ii. Investments in the NSC

iii. Post Office ‘s 5-year deposit programme

iv. Senior Citizens’ Investment Plan

Investment under RGESS 

In the successful assessment year 2013-14, deductions under Section 80CCG of the Rajiv Gandhi Equity Savings Scheme were implemented. The primary aim motivating this exemption would be to maximize the involvement of institutional investors in stock markets. The permissible deduction is less than 50 percent of the investment made in equity shares, or Rs 25,000 if those requirements are met. NRIs do not have this deduction at their disposal. In consideration of any assessment year starting on or after the 1st day of April 2018, no deductions under such a provision shall be authorized.

Deduction for the Differently-Abled under Section 80DD

NRIs are not eligible for exclusion under such a Provision for maintenance along with medical care of a handicapped dependent (an individual having a disability as specified in this Clause).

Deduction for the Differently-Abled under Section 80DDB

The medical care deduction under such a Provision for a dependent who is injured (as approved by a registered specialist) is applicable to residents exclusively.

Deduction for the Differently-Abled under Section 80U

Disability deductions are permitted only to the Indian citizen, where the taxpayer himself struggles from a disability as specified in the section.

Exemption on Sale of Property for an NRI

Long-term capital gains are levied at 20% (once the asset is owned for further than 3 years). Remember that a TDS of 20% is entitled to long-term capital gains gained by NRIs.

Under Section 54, Section 54 EC, and Section 54F on long-term capital gains, NRIs are entitled to assert exemptions. Thus, at the date of submitting a return, an NRI can enjoy the benefits of capital gains exclusions and demand reimbursement of TDS deducted from Capital Gains. There is an exception under Section 54 for long-term capital gains on the selling of a property. There is an exception under Section 54F for the selling of any commodity apart from the property of a building.