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  1. Big Income Tax query answered! NRIs are subject to tax in India only in respect of India sourced income

Big Income Tax query answered! NRIs are subject to tax in India only in respect of India sourced income

NRIs are subject to tax in India only in respect of India sourced income

By: | Published: February 21, 2018 3:07 AM
Income Tax query, income tax for NRI, Agricultural income, Education Cess, tax liability, non agricultural income, SHEC NRIs are subject to tax in India only in respect of India sourced income (that is, income received, accruing or arising in India or deemed to be received, accrued or arisen in India).

*My cousin is working with an international ship and he goes on contract basis for seven months and he is an NRI. Will he be exempted for paying tax in India?

– D Raj
If you are an Indian citizen working abroad or a member of a crew on an Indian ship, then you are considered an Indian resident in a financial year if your stay in India is for 182 days or more during that financial year. Thus, your cousin will be an NRI if he resides in India for a period less than 182 days. NRIs are subject to tax in India only in respect of India sourced income (that is, income received, accruing or arising in India or deemed to be received, accrued or arisen in India). However, income which is received and earned outside India is not taxable in India.

* My yearly pension is about Rs 4.3 lakh and agriculture income is Rs 80,000. What will be my income tax for FY18?
—J S Kamboj Singh

Agricultural income is exempt from tax under Section 10. However, for computation of income tax, agricultural income is aggregated with non-agricultural income if the assessee is an individual who has non-agricultural income exceeding the taxable limit (i.e. Rs 2.5 lakh) and has agricultural income exceeding Rs 5,000. The agricultural and non-agricultural income is aggregated and income tax is computed on the sum (say income tax T1). Next, the agricultural income is increased by the first slab of income on which tax is charged at nil rate (i.e. Rs 2.5 lakh) in case of individual; Rs 3 lakh in case of resident senior citizen and Rs 5 lakh in case of senior citizen of 80 years and above) and income tax is calculated on such sum (income tax-T2). Income tax T2 is then reduced by income tax T1 and Education Cess and SHEC is added to the amount so obtained. This amount is the amount of income tax payable by the individual. Assuming you are a senior citizen less than 80 years of age and not claiming any deductions/ allowances under the Act, your tax liability comes out to be Rs 8,240.

TThe writer is partner, Nangia & Co.
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fepersonalfinance@expressindia.com

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