For many Non-Resident Indians, understanding how Indian tax law applies to their income back home is one of those things that seems simple until you actually try to figure it out. Ashutosh Financial Services has long believed that sound financial decisions rest on a clear understanding of the rules that govern them, and this belief shaped the thinking behind a recent webinar held on 2nd September 2020, aimed squarely at NRIs trying to make sense of an evolving tax landscape.
The session, titled “Overview of NRI Taxation with Recent Amendments,” was conducted online and led by Daxesh Kothari. Given the timing, just after a set of significant changes to residency rules had come into effect from 1st April 2020, the webinar addressed a genuine and pressing need. NRIs often assume their status is straightforward, but the amended provisions introduced new thresholds and conditions that could quietly shift someone from non-resident to a taxable category without them realising it.
A large part of the discussion centred on how residential status is determined under Indian tax law, since this single classification decides how much of a person’s income India can actually tax. Previously, an individual was treated as a resident if they spent 182 days or more in India during a financial year, or alternatively, 60 days or more in that year combined with 365 days or more across the preceding four years. The updated rules extended the second condition for certain individuals, an Indian citizen or Person of Indian Origin visiting India, whose Indian and business-linked foreign income exceeds Rs. 15 lakh, from 60 days to 120 days, while also introducing a new category altogether: Resident but Not Ordinarily Resident. This status can now apply even to someone who has stayed in India as briefly as 120 days, provided their income crosses that same Rs. 15 lakh threshold and they aren’t liable to tax elsewhere by virtue of domicile or residence. The distinction matters because it changes what gets taxed. A Resident but Not Ordinarily Resident continues to enjoy exemption on foreign income, but loses access to certain treaty benefits and concessional tax rates that a straightforward non-resident would retain, while also becoming liable on income linked to any business controlled from India or profession set up here.
The session then moved into how India’s tax treaties, known as Double Taxation Avoidance Agreements, work in practice. These agreements exist to prevent the same income from being taxed twice, once in the country where it’s earned and again where the individual resides, and India currently has such agreements with roughly 90 countries. What often surprises people is that whichever is more favourable, the treaty rate or the domestic tax rate, applies to the taxpayer. For instance, dividend income taxed at 20% plus surcharge under Indian law might only attract 10% or 15% under a treaty with countries like the UAE or the UK, a gap worth understanding before assuming the higher domestic rate automatically applies.
Practical guidance followed on how various types of Indian income are taxed for NRIs, along with the tax deducted at source on each. Rental income, for example, is taxed after a standard 30% deduction, with TDS withheld at that same rate, while capital gains on property, shares, and mutual funds carry different rates depending on the holding period and whether the asset is equity-oriented. The session also worked through the practical challenge some NRIs face when their country of residence, the United States being a common example, follows a calendar year for tax purposes while India runs an April-to-March financial year, and explained how income and available tax credit should be segregated across these mismatched periods.
Beyond compliance mechanics, the presentation touched on legitimate planning avenues available to NRIs, deductions under sections such as 80C, 80D, and 80G, exemptions available through capital gains bonds, and the importance of routing income correctly through NRE or NRO accounts to avoid unnecessary tax exposure. It also introduced attendees to FATCA, FBAR, and the Common Reporting System, the frameworks under which countries exchange financial account information to curb tax evasion, something increasingly relevant for NRIs holding investments across multiple jurisdictions.
Sessions like this reflect a simple conviction: that financial confidence comes from understanding the rules that shape one’s decisions, not merely following them. Ashutosh Financial Services continues to organise such educational initiatives, helping NRIs and other individuals navigate an increasingly interconnected financial world with greater clarity.
