Taxation Aspects for NRIs, PIOs, Foreigners NRIS, PIOs and Foreigners in India are liable to pay taxes which include the Property Tax, Income Tax, Service Tax, Capital Gains Tax and the Wealth Tax. The Income Tax Act, 1961 grants certain tax concessions to NRIs desirous of returning permanently. Property Tax Property Tax is payable on Residential as well as Commercial Property as per rates determined by the concerned Municipal Authorities, irrespective of whether the Property is occupied or vacant. Some Municipal Corporations/Municipalities allow concessions in Property Taxes in respect of the vacant Property. The rates of Property taxes vary from City to City. Service Tax Service Tax is an indirect tax which is levied on service providers in India except Jammu & Kashmir. The tax is levied on service providers who have annual revenue of more than Rs. 10lakh. Budget 2007-08 had introduced the proposal to levy service tax at the rate of 12.36 per cent on rental of Immovable Property used for Commercial Purpose. If, as per the rental agreement, the rent includes all taxes and levies, Service Tax will have to be deposited out of the total rent received. Income Tax In India, as in many other countries, the Income Tax payable and the scope of taxable income vary according to the Residential status of the individuals. Residential status under the tax laws is determined differently, and the definition of the terms ‘Resident’, ‘Non-Resident’, etc. under the direct taxation laws like Income Tax Act, Wealth Tax, Gift Tax, etc., are quite different from the definitions given in the Foreign Exchange Management Act (FEMA) for the purpose of regulating transactions/investment in Foreign Exchange. Resident status under the tax laws is determined on the basis of physical presence in India for every year. There are two categories of taxable entities viz. Residents: If an individual stays for 182 days or more in India, he is regarded as a resident in that year regardless of his citizenship. Residents are further sub-classified as (a) Ordinarily Residents: and (b) Not Ordinarily Residents Non Residents: A Non Resident is defined as a person who is not a “Resident” i.e., one who does not satisfy either of the prescribed tests of residence.
Posted on: Tue, 10 Sep 2013 15:10:19 +0000