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Akash Janrao and Associates

Who is a Non resident Indian or NRI ?

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Generally An NRI is a person resident outside India who is a citizen of India or is a person of Indian origin. However there are different definitions of NRI under FEMA and Income Tax Act. We at AJA, help our NRI clients to understand the complex provisions of the definition of Residents, Non Residents, Residents but not Ordinarily Residents & Deemed Residency.

We, at AJA provide the following Taxation & Investment Services For Non Resident Indian (NRI):

  • NRI Tax Advisory Services and filing of Income Tax returns

  • Tax Implication on Sale of Property in India by a NRI

  • NRI Investment Consultation services

  • Certification for Form 15CB required by Residents and Non Resident Indians for remitting funds outside India.

Definition of NRI under FEMA:

Under the Foreign Exchange Management Act (FEMA), generally, a person is resident outside India if he is in India for less than 182 days during the course of the preceding financial year and also includes any person who stays abroad:

  • For the purposes of carrying out employment or any business or vocation;

  • Under circumstances indicating an intention to stay outside India for an uncertain duration;

  • Any Indian citizen deputed outside India for a temporary period in connection with employment for education

Definition of NRI or Residential Status under the Indian Income Tax Act, 1961 :

From the FY 2020-21 , an individual is resident in India if he is in India in the financial year for:

Genrally, an individual who does not satisfy the above conditions is a non-resident.

Also from FY 2020-21 , A resident is “not ordinarily resident” in India in any financial year if he:

OR

  • 182 days or more; or

  • Has been in India for 365 days of more during the 4 immediately preceding financial years and for 60 days or more during the financial year (the period of 60 days stands changed to 120 days or more for Indian citizens or persons of Indian origins on a visit to India whose total income in india is less than INR 15 lacs , and the period of 60 days stands changed to 182 days for citizens of India who leave India for employment abroad as member of a crew of an Indian ship). As amended by Finance Bill 2020.

    • Has been “non-resident” in India in any 9 out of the 10 previous years preceding that year

    We at AJA, as a NRI Tax Consultant in Pune, provide various NRI Advisory Services, like Evaluation of NRI Residential Status, Applicability of New Provisions of Deemed Residency applicable from FY 2020-2021 onwards , NRI Income Tax Consultation, NRI Income Tax Returns Filing, NRI Investment Advisory Services, NRI Tax Implications on Sale of Property, 15CA CB Advisory and Certification Services for remittance of funds outside India , etc .

    • Stay in India for 729 days or less during the 7 previous years preceding the relevant previous year.

Who is a Non resident Indian or NRI ?

​

Generally An NRI is a person resident outside India who is a citizen of India or is a person of Indian origin. However there are different definitions of NRI under FEMA and Income Tax Act. We at AJA, help our NRI clients to understand the complex provisions of the definition of Residents, Non Residents, Residents but not Ordinarily Residents & Deemed Residency.

New Provision Regarding Deemed Residency:

The Finance Bill, 2020 has proposed that an Indian citizen shall be deemed to be resident in India, if he is not liable to be taxed in any country or jurisdiction. This is an anti-abuse provision since it is noticed that some Indian citizens shift their stay in low or no tax jurisdiction to avoid payment of tax in India.

The new provision is not intended to include in tax net those Indian citizens who are bonafide workers in other countries. In some section of the media the new provision is being interpreted to create an impression that those Indians who are bonafide workers in other countries, including in Middle East, and who are not liable to tax in these countries will be taxed in India on the income that they have earned there. This interpretation is not correct.

In order to avoid any misinterpretation, it is clarified that in case of an Indian citizen who becomes deemed resident of India under this proposed provision, income earned outside India by him shall not be taxed in India unless it is derived from an Indian business or profession.

Resident but Not-Ordinary Resident (RNOR) :

There is one more class that is slightly different from Resident and NRI. They’re called ‘Resident and Not Ordinary Resident'(RNOR). You classify as an RNOR Indian if you satisfy below requirements.

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  • Has been “non-resident” in India in any 9 out of the 10 previous years preceding that year

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OR

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  • Stay in India for 729 days or less during the 7 previous years preceding the relevant previous year.

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In case of RNOR individuals, the foreign income (i.e., income accrued outside India) shall not be taxable in India. Foreign sources means income which accrues or arises outside India (except income derived from a business controlled in or a profession set up in India).

To Understand Residential status per Income Tax Act, 1961 from F.Y. 2020-21 onwards:

The Residential status shall be determined as per the flow chart: CLICK TO VIEW

What are the types of bank accounts available to NRIs?

  • Non-Resident External [NRE] Rupee savings account:

    Your funds in NRE savings accounts are held in convertible rupees – principle and interest are fully repatriable. Interest income is fully exempt from tax in India. The savings account can be opened jointly with a Non-Resident individual.

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  • Non-Resident External [NRE] Rupee fixed deposit:

    Fixed deposit in Indian rupees where the principle and interest are fully repatriable. All interest earned is fully exempt from tax in India. The account can also be opened jointly with a non-resident.

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  • Non-Resident Ordinary [NRO] Rupee savings account:

    Your funds in Non Resident Ordinary (NRO) savings account are held in India, in Indian rupees. The NRO account can be funded through NRI income in India. Only the interest in an NRO account is repatriable. Interest income on this account is liable for Indian Income Taxes. Non-Resident Ordinary [NRO] Rupee fixed account Fixed deposit in Indian rupees where the earnings in India can be deposited. The interest is repatriable [after payment of tax].

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  • Foreign current Non-residents [FCNR] deposit:

    The FCNR Deposit is a fully repatriable foreign currency deposit available in major currencies: US Dollars, Pound Sterling, Euros, Australian dollars and Canadian dollars. Your funds in FCNR Deposits are maintained in foreign currency and are fully repatriable, including the interest you earn. All interest earned is fully exempt from tax in India.

To Understand Residential status per Income Tax Act, 1961 from F.Y. 2020-21 onwards:

Yes, you can remit funds for opening the account in any convertible currency. The NRO / NRE accounts are maintained in rupees and the funds remitted will thus be converted into India rupees at the spot exchange rate. Foreign currency deposits can be maintained in the currency of your choice i.e. USD, GBP, EUR, AUD and CAD etc.

But what is the tax implication of this RNOR category?

  • RNOR citizen has to pay tax only on income accrued / generated in India. The foreign income earned by that person is exempt from tax.

  • It is primarily used by returning NRIs.

  • A person can be classified as an RNOR for usually 2 years after their permanent relocation to India.

  • Returning NRIs must use this RNOR status to set things in order and get ready to be taxed as Indian citizens in future.

  • How can Accounting Service will help my business?
    A book keeping and accounting service can assist you to keep track of all expenses so that the tax preparer can send over the necessary paperwork. You can get a clear picture of your company's financial health if you hire an efficient accounting service.
  • Is there any option to use it for more than one CA firm?
    As a chartered accountant in practice, you are allowed to join more than one company as a partner. In contrast, a practicing chartered accountant cannot become a partner in other firms or professions other than practice.
  • Where would you find the best Chartered accountants in Pune?
    Their 50-Point Inspection encompasses customer evaluations, history, complaints, ratings, contentment, trust, pricing and overall quality. In this way, you can find the best one!
  • Which 3 accounting items are the most important for a business?
    Many experts believe the top line, or cash, is the most important component on a company's balance sheet. Other important factors to examine include accounts receivable and short-term investments. A balance sheet includes assets, liabilities, and equity.
  • How will outsourcing of Accounting and Finance benefit the business?
    Outsourcing finances and accounting reduce the time and effort required to manage and supervise your in-house accounting personnel. It will allow you to devote more time and resources to the most important aspects of your organization.
  • What is financial accounting and what are its advantages?
    A company's financial transactions are meticulously tracked in financial accounting. This year's revenue and expenditure are shown in a Financial Statement of Accounts, a technical document that records and summarizes all of the business's activities.
  • What are the advantages of accounting services?
    Accounting, when done effectively, provides abundant information on the health of your company's finances. It's easier to make smart business choices if you have a clear view of your money.
  • What is applicability of statutory audit?
    An audit is required if an LLP's yearly income exceeds Rs. 40 lakh or its capital contribution exceeds Rs. 25 lakh. In addition, a tax audit is required of proprietorships and partnerships that surpass a certain sales threshold.
  • What are the important elements to check in the statutory audit of banks?
    The following are critical items to verify during a bank's statutory audit: Procedure for Cash Verification. Tax-Related Purchases. Loan Accounts Verification. Loan Accounts Verification Preliminary Examination. Disbursement. Inspection Following Disbursement.
  • What is the applicability of Section 138 (Internal Audit)?
    Suppose the Board decides to appoint an internal auditor, in that case, it must be a chartered accountant or a cost accountant or such other professional as the Board deems appropriate to undertake an internal audit of the company's duties and operations.
  • Which is the criteria for appointment of an internal auditor?
    The Board of Directors may appoint an internal auditor who is a chartered accountant, cost accountant, or other certified professional. The internal auditor may or may not be an employee. No matter whether you're a Chartered Accountant or not.
  • What is Internal Auditing?
    What is the purpose of an internal audit? –A company's internal controls, such as its corporate governance and accounting systems, are examined during an internal audit. In addition, financial reporting and data gathering is supported by these audits, which assure compliance with applicable legislation.
  • Statutory audit of banks is mandatory?
    Banks are required to undergo a statutory audit. The Reserve Bank of India (RBI) and the Institute of Chartered Accountants of India (ICAI) jointly designate Statutory Auditors. All banks undergo a thorough audit once a year after the conclusion of the preceding fiscal year.
  • What is the Statutory audit?
    Legally mandated audits of financial accounts and records are known as "statutory audits."... Enterprises that must be audited include public companies, banks, brokerage and investment organizations, and insurance firms.
  • What do you mean by 'income earned in India'?
    In India, all wages are considered to have been earned there. Therefore, even if you charge a fee for a service delivered in India, you are still considered to have earned revenue in India.
  • Is Income tax Act applicable only to residents?
    New provision 6(1A) of the Income-tax Act, 1961. Such a person is considered an Indian resident only if his domicile, residency, or other comparable factors exempt him from taxation in any other nation or jurisdiction.
  • What is Income Tax?
    A direct tax levied by the state on its citizens' income. Income does not merely mean pay. It also covers rental income, corporate earnings, professional gains (such bonuses), capital gains, and "other kinds of income."
  • What does the Income Tax Department consider as income?
    Income tax returns must be filed by everyone who earns any money in a given year. From a wage, firm profits or rental or dividend income to capital gains or interest or any other form of income, all comes under the category person’s income.
  • Who is supposed to pay Income Tax?
    Any Indian citizen under the age of 60 who earns more than Rs 2.5 lakh gets taxed. If a person is above 60 and earns more than Rs. 3 lakhs, they must pay taxes to the Indian government.
  • What is the period for which a person's income is taken into account for purpose of Income tax ?
    A person's annual income is subject to income tax. The year begins on April 1 and ends on March 31 of the following year, which is the tax year.
  • How does the Government collect Income-tax?
    There are three primary methods in which the government collects Income Taxes: Source-Separated Taxes (TDS) Paying Taxes Only Once (TCS) Bank accounts designed for tax-payer contributions.
  • What are revenue and capital receipts?
    Non-operating capital receipts include profits from the sale of long-term assets, capital invested by the owner, and sums received as a loan or from debenture holders. Revenue receipts consist of sales, commissions, and investment interest, all contribute to the company's annual revenue.
  • How would a particular transaction of goods and services be taxed simultaneously under Central GST (CGST) and State GST (SGST)?
    Taxes on all transactions of supply of goods and services will be imposed concurrently by the Central and State governments, save for those transactions that fall below the set threshold limitations.
  • What is GST? How does it work?
    Federal sales tax, the goods and services tax (GST), applies to the price of specified products or services. Upon purchasing a product, a buyer must pay the complete sales price, including GST, which the firm adds.
  • What are the benefits of GST?
    The GST eliminates tax escalation. Composition strategy for a small company A quick and simple internet approach. Less regulations Improvements in logistics efficiency The GST regulates the unorganized sector.
  • Will cross utilization of credits between goods and services be allowed under GST regime?
    It would be able to pay for both products and services using CGST credits if they were earned. Furthermore, in the case of SGST, the possibility of credit cross-utilization would be available.
  • What are the major chronological events that have led to the introduction of GST?
    This timeline summarizes key events in India's GST system. The L K Jha committee introduced VAT in 1974. The MVAT was introduced in 1986. (MODVAT) The Chelliah Committee advocated VAT in 1991. (GST)
  • What about the Registration Process?
    Form 32 - Details about the director, manager, and secretary. An Incorporation Certificate will be issued after the Form is completed and the Corporate Identity is created. eForm 19 requires the prospectus (Schedule II). OBTAIN A CORPORATION CERTIFICATE
  • Which taxes at the Centre and State level are being subsumed into GST?
    The following taxes have been combined at the state level: state value-added tax, sales tax, entertainment tax, central sales tax, Octroi and Entry tax, purchase tax, and excise tax are all examples of taxes
  • Who and when an entity has to register?
    Companies Act, 2013 defines 5 kinds of entities that may be registered when beginning a new business: Sole Proprietorship. LLP. One Man Band. LLLP. Private Limited. Any association or partnership with over 100 members must be registered as a corporation.
  • What are the benefits to hiring bookkeeping services?
    Mission-critical information is provided. As a result, you might save money on your taxes. You may be able to save money on accounting costs. You will save time. You may even see an increase in revenue.
  • How can having an outsourced accounting department help me manage my business?
    Outsourcing accounting is typically cheaper than hiring a full-time person. Help in key activities of the company. The finest software is used. Get accurate information Stricter controls and less fraud
  • Which are the best companies for outsourcing bookkeeping and accounting services?
    Akash Janrao & Associates is one if the best companies for outsourcing bookkeeping and accounting services.
  • What are outsourced online bookkeeping services?
    Typically, a virtual accounting firm is responsible for capturing and summarising your financial information. If your CPA has access to this data, they can help you with your taxes and financial planning going forward.
  • Why should large financial companies prefer to outsource bookkeeping or accounting services?
    Streamlines the Hiring Process and Save Money Save time and effort. Professional Bookkeepers and CPAs Intuitive Scaling of Accounting Automated systems
  • Why should outsource bookkeeping, payroll or accounting services?
    Outsourcing is helpful for budgeting. You may choose the payment plans that work best for you and your company without hiring full-time staff. This allows you to compare your alternatives and pick the best value for money.
  • Why need outsource bookkeeping services?
    Payments may be managed more efficiently and more quickly using the newest cloud-based solutions available via outsourcing. For less than the cost of your firm's outdated equipment, an experienced finance and accounting outsourcing company will be able to deliver modern technology.
  • Do Startups Have to Pay GST?
    Numerous startups are in the service business, which means they are subject to service tax. They may offset the VAT paid on purchases (say, office supplies) against the service tax on their sales under the GST scheme, something they cannot do under the existing structure. As a result, it will significantly boost the startup business, which is mainly focused on offering services. It will result in cost savings, hence improving working capital for cash-strapped firms.
  • Is There a Tax Credit for Starting Your Own Business?
    This plan was open to startups that were established between April 1, 2016, and March 31, 2021. Starting in the first year, such companies would be entitled to a tax credit of 100 percent on profits for three years in a block of seven years, provided that their annual turnover does not exceed Rs. 25 crores in any financial year.
  • Are LLC Startup Costs Tax Deductible?
    The expenditures associated with forming an LLC are tax-deductible, but you must be aware of critical limitations, exclusions, and guidelines in order to deduct these costs legitimately. The Internal Revenue Service (IRS) imposes restrictions on the number of deductions available for LLC starting fees. If your beginning expenditures are less than 50,000, you may deduct up to 5,000 for initial organizational costs.
  • Do startups pay taxes?
    The government has waived the tax that would have been paid on investments in qualifying startups that were more than their fair market value. ... Additionally, investments made by incubators in excess of fair market value are excluded from taxation. Income Tax is levied on the income as per the below-mentioned schedule of Taxes. Type of Business Entity Income and its Tax applicable Proprietorship/ Individual As per Income Tax Slab Rates Partnership/ LLP Firm - 30% of Income Indian Company - 25% of Income
  • How to Get Tax Exemption in India for Startups?
    Exemptions from SECTION – IAC- Eligible startups may claim up to 100% of profits and gains for three consecutive years during a 10-year period, provided that the company's annual revenue does not exceed 100 crores in any of the prior financial years. This tax is referred to as the Angel tax. However, the government has exempted all government-recognized companies from the Angel tax with the latest announcement. Entrepreneurs may now save money on taxes and use it for funding by using this area.
  • How do startups get tax benefits?
    The qualifying period has been extended until the end of March 2022, thanks to Budget 2021. Startups in this category would be entitled to a tax credit of 100 percent on profits for three years in a block of seven years, provided that their annual revenue does not exceed Rs. 25 crores in any one financial year during that time. Only if a startup meets the requirements of an "Eligible Startup" can it use all of the tax incentives available to it.
  • How can NRI save tax in India?
    Non-resident Indians do not have access to several key deductions that are available to residents. A PAN Card is needed to do this. Retain your non-resident Indian status. Use what you have. Interest on a Home Loan
  • Who is NRI as per Income Tax Act?
    Currently, Indian citizens who work or do business outside of India are considered non-residents under the country's tax laws. However, if an NRI spends more than 182 days in India in a financial year, he is considered a "resident" of India.
  • Do NRIs have to pay tax?
    Anyone earning more than Rs 2,50,000 per year, NRI or not, must file a tax return. NRIs are solely taxed on income earned or received in India.
  • Is NRI income taxable in India?
    If they are residents in India, all of their worldwide income is subject to taxation. In the case of NRIs, any income generated or accumulated in India is subject to Indian taxation.
  • Is Income Tax Return need to file compulsory Online for NRI for AY 2021-22?
    If your taxable income exceeds the basic exemption level, you must file an ITR (i.e. Rs 2.50 Lacs in the case of individuals). ITR filing isn't required if your total taxable income falls under the exemption level (section 139 of the Income Tax Act).
  • How much do NRI save?
    Your monthly savings of 75% (from 4.5 lakh) amount to 3.375 lakh rupees, which may be invested in one of the following ways: Equity Mutual Funds INR 1,68,750 lakh/month, or 50 percent of the entire investment.
  • How can you tell if an individual is NRI?
    A resident who spends more than 182 days outside India becomes an NRI. A "resident" is someone who has spent more than 60 days in India in the last year and 365 days in the previous four years.
  • Can NRI claim TDS refund?
    NRIs who file ITRs after the end of India's financial year are entitled to TDS refunds. To get a refund on the bank's TDS, an NRI must assess their own income and tax responsibilities.

Can an NRI invest in Mutual Funds?

Yes, an NRI can invest in certain Mutual Funds subject to certain conditions. The offer document should clearly state the NRIs could invest in the scheme. Please contact us and we will be glad to assist you.

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