Can a person not born in India inherit real estate legally and if so what are the Taxes implications of such a capital gain? The short answer is yes. The question acquires escalating interest if one considers estates of Ultra High Net-Worth Individuals owning land worth hundreds of crores.
Conditions for Property Transfer to Non Residents in India
The important requirement of such a transfer, however, is that the property must have been in the ownership of a person resident in India at the time of purchase. The asset may be in the form of commercial, agricultural or residential land.
As of now, there is no inheritance tax on property in India. However, the property is still subject to wealth tax, in particular, if its value is greater than Rupees 30 lakh and the inheritor owns more than one property within the geographical territory of India.
Conditions for Income Taxes on Non Residents in India
Your overseas assets would only attract income taxes in India if you either reside in India for 182 days of the current financial year or you have done so for 60 days in the current year and at least 365 days in the preceding four years according to the Income Tax Act, 1961. This applies even to the crew of foreign ships and vessels which remain within Indian Coastal waters for 182 days of the year.
Note that individuals who continue to be in the employment of an Indian company or those who remain on an Indian ship in international waters would be counted as a resident tax assessee by the CBDT irrespective of the duration of their stay outside India.
Tax Laws for NRIs
NRIs may be subject to taxes in India only for income earned here and would have to file income tax returns regardless if those earnings exceed Rupees 300,000 for the fiscal year 2017-2018. An NRI, as understood under FEMA guidelines, is a person who ordinarily holds residence outside India for the purposes of “employment, business or vocation” and whose behavior and circumstances show that the duration of such residence is uncertain or indefinite. So if an individual lives in India for less than 182 days in a financial year, she automatically qualifies to be an NRI in the next financial year for the purposes of tax. NRIs are also required to file income tax returns online for their earnings here.
The Income Tax Act specifies an ‘Ordinary Resident’ as one who has stayed in India for 730 days or more during the last 7 immediately preceding financial years prior to the current assessment year.
Those who do not fulfill the condition prescribed above will be considered as Residents but Not Ordinarily Resident (RNOR).
Taxes for Residents Working Abroad
For Resident Indians, any income regardless of where it is earned will be taxable in India. For the rest, only those incomes which are “received, accrued or arisen in India” will be considered for taxation here. The tax rates and slabs remain the same as those for ordinary residents.
Types of Taxes for Non-Residents in India
A non-resident in India is obliged to pay the tax authorities the following taxes:
- A special category of tax rates on capital gains and distributed dividends (other than those mentioned in Section 115 O).
- Sportsmen and entertainers or their associations participating in an event, appearing in an advertisement or other media and earning an income in India are taxed at the aggregate of the following two rates:
- 20% of the fee received.
- An amount of tax that she would have been charged had she not earned that fee.
- Ordinary tax slab rates on par with resident taxpayers.
If you are a non-resident individual haggling with tax officials, it is time you called in a professional tax expert. AllindiaITR is one such platform with very transparent charges and highly efficient services. The website is owned and promoted by Corwhite Solutions Private Limited.
Awesome and much useful information. Nice and detailed explanation.i have one doubt that,if a person earning in abroad outside india in foreign currency and salary is credited in nre account in india but he doesnot complete his 182 days is that money earned in abroad in foreign currency is liable for tax?
Thanks in advance
Nice work this is great initiative that u take to tell us about all the information about What Taxes Do Non Residents Pay in India. from this I came to know about differnt taxes law. How NIR pay taxes i came to know from this blog. Great work keep it up and keep posting this type of things.
can you more briefly explain about Conditions for Income Taxes on Non Residents in India?
Thank you for your informative article, I have been doing research on this subject, for almost a week now, I keep entering sites that are supposed to have what I am searching for, only to be discouraged with the lack of what I needed. Thank you again.
Hello sir, i have one doubt. I may go foreign to work soon and we will get 2 salaries, which are indian salary and foreign salary. My company says that tax will be paid by my company for my foreign salary and i will anyway pay the tax for my indian salary. So now i am paying tax twice. Is there any common income slab for paying tax ? Do i need to pay tax when i transfer the foreign money to my indian account ?
thanks for your amazing articles regarding NRI pays in India, I know little about that but after reading this article I well know about the all taxes that NRI pay in India. I want to know that if a NRI purchasing a property in India so according to property act at what rate he pay tax for it?
Another great topic this topic is lingering in my head from a very long time since i have studied the topic of tax in my class i have been thinking what about the people who are NRI how do they pay their taxes. This blog has helped me to clear all my doubts and it has helped me to understand how the process of tax payment is done fir the NRI. This blog is very detailed and has each and every information regarding the topic. I can now easily share this information with my uncle who is an NRI and i am sure it will help me definitely. This blog has helped me otherwise i never knew that there is a governing body for the payment of taxes for the nri’s. One question can you please tell me what slab rates do the NRI’S Follow.