For many Non-Resident Indians, questions around taxation rarely stay confined to one country. An investment held in Mumbai, a pension accruing in Chicago, a property inherited in Ahmedabad, and a bank account in Dubai can all come with their own set of rules, and keeping track of where each one stands is not always straightforward. Ashutosh Financial Services has long held the view that sound financial decisions start with clear information, which is why the organisation continues to host sessions that break down these subjects into something practical and usable. On 17th December 2019, this commitment took shape in Rajkot with a session titled “Real Life Situations of Taxation & Regulations Faced by Non-Resident Indians,” led by Daxesh Kothari for an audience of NRIs navigating cross-border financial obligations.
The session opened with a subject that trips up more people than one might expect: who actually counts as a resident of India for tax purposes. Under the Income Tax Act, an individual is generally treated as a resident if they spend 182 days or more in India during a financial year, though shorter thresholds apply in certain other situations. Anyone who doesn’t meet these conditions is classified as non-resident. For those who do qualify as resident, a further distinction separates “resident and ordinarily resident” from “resident but not ordinarily resident,” a classification that determines how much of a person’s global income India can tax. Non-residents don’t need to worry about this second layer, since only their Indian income falls within the country’s tax net, while income earned and received abroad stays outside it.
This distinction becomes especially relevant when income arrives from multiple countries, a common scenario for NRIs. Two competing principles are typically at play: the residence rule, under which a country taxes its residents on worldwide income regardless of where it was earned, and the source rule, which taxes income based on where it was generated. To prevent the same income from being taxed twice under these overlapping principles, India has signed Double Taxation Avoidance Agreements with roughly 90 countries, including the US, UK, UAE, Canada, and Australia. These agreements also help synchronise something that often causes confusion: financial years don’t align globally. India follows an April-to-March cycle, while the US tax year runs January to December. Getting the timing of income right, and understanding how tax already paid in India can be claimed as credit abroad, ultimately shapes how much someone owes in either jurisdiction.
The session then moved through how specific categories of Indian income are taxed for NRIs, along with the applicable withholding tax, or TDS, rates. Salaries are taxed at normal slab rates, rental income after a standard 30% deduction, and capital gains on shares or mutual funds depending on how long the investment was held and whether it’s equity or debt-oriented. Interest on NRO accounts, private deposits, and small savings schemes attracts a flat 30% TDS, while certain income streams, such as interest on NRE and PPF accounts, agricultural income, and dividends on mutual funds, remain fully exempt.
A meaningful part of the discussion addressed inheritance, a topic that becomes layered once assets exist in more than one country. Indian assets are governed by Indian succession law, while assets held abroad follow the laws of that respective country. Where a valid Will exists, testamentary succession under the Indian Succession Act applies; where none exists, intestate succession is determined by laws specific to the deceased’s religion, such as the Hindu Succession Act or Muslim Shariat Law. Nominees and joint holders, it was clarified, are custodians of an asset rather than its legal owners, and inheritance rights ultimately rest with the beneficiaries named under a Will or applicable succession law.
The session also covered practical ground around selling property in India through Power of Attorney, the tax treatment of such sales, and the compliance requirements attached to loans and gifts exchanged between NRIs and resident Indians, including limits under FEMA and the Income Tax Act. Repatriating funds from an NRO to an NRE account, permitted up to US$1 million per person annually once applicable taxes are settled, rounded out the practical toolkit shared with attendees.
Financial systems that span borders rarely stay simple, and staying informed about them is an ongoing exercise rather than a one-time effort. Ashutosh Financial Services remains committed to organising sessions of this kind, aimed at helping individuals build the awareness needed to manage their finances with clarity, wherever in the world they may be based.
