Nothing but tax law and residency tests for six hundred words might sound dry, but for the Indian diaspora it is often the single topic that determines whether their India-linked income stays trouble-free or turns into a compliance headache. That was the ground covered in “NRI – Income Tax,” a webinar held on 25th August 2021 for a high-net-worth audience, with Daxesh Kothari presenting. Ashutosh Financial Services runs sessions like this regularly because tax rules for non-residents shift often enough that even people who have lived abroad for decades can find themselves caught out by a definition they assumed hadn’t changed.
The session opened with the basic architecture of what gets taxed in India: income that is received, accrued, or arises in India is taxable regardless of who earns it, while foreign income generally escapes Indian tax unless it comes from a business controlled from India or a profession set up here. From there, the discussion moved into how residential status itself is determined, which turned out to be more layered than most people expect. Since the financial year 2020-21, an Indian citizen or Person of Indian Origin visiting India becomes a resident if they stay 182 days or more in a year, but a separate test applies if their Indian and India-linked foreign income exceeds Rs. 15 lakhs, potentially classifying them as “Resident but Not Ordinarily Resident” even on a shorter stay. This distinction matters because it changes access to DTAA concessional rates, exemptions on investment income, and whether foreign business income becomes taxable in India at all.
Double Taxation Avoidance Agreements formed a substantial part of the session. India has DTAA arrangements with more than 89 countries, and the core idea is that a non-resident can choose whichever is more favourable, the rate under the DTAA or the rate under the Indian Income Tax Act. The speaker walked through how dividend and interest income are taxed differently depending on the country of residence, and explained why obtaining a Tax Residency Certificate each year is essential to actually claim these concessional rates. A related complication arises when someone qualifies as a tax resident of two countries simultaneously, such as an Indian citizen who also holds a US Green Card. In these cases, a “tie-breaker rule” within the relevant treaty, based on permanent home, then centre of vital interest, then habitual abode, determines which country gets to tax global income and which only taxes source income.
For those returning to India permanently, the session addressed how NRE, NRO, and FCNR accounts and deposits are treated once residency status changes, along with how interest income shifts from tax-exempt to taxable depending on the account type and the timing of conversion. It also covered foreign tax compliance obligations that many NRIs are unaware of, including FATCA and FBAR reporting requirements in the US, and the Common Reporting Standard that facilitates information exchange between over a hundred countries’ tax authorities. A detailed comparison showed how FATCA and FBAR differ in their reporting thresholds and what counts as a reportable foreign asset, since foreign real estate held directly, for instance, is treated differently from real estate held through a foreign entity.
The session also worked through TDS obligations across different types of Indian income for NRIs, from rental income and capital gains to interest and dividends, along with the surcharge and cess structure that applies above certain income levels. Practical tax planning ideas followed, covering deductions still available to NRIs under sections like 80C and 80D, the treatment of gifts between family members, and how capital gains exemptions can be structured. The presentation closed with case studies illustrating how funds transferred through NRE accounts versus balances held in India can be planned differently to manage both Indian and foreign tax obligations.
Sessions on regulatory and tax topics like this one reflect Ashutosh Financial Services’ ongoing effort to help NRIs navigate an area where a single misunderstood provision can carry real financial consequences. The organisation continues to hold these educational sessions because staying current on tax law is not optional for anyone managing money across two jurisdictions, it is a basic requirement for financial peace of mind.
