NRIs Taxes

The government of India is all set to extend the legal rights of NRIs pertaining to tax benefits. To promote charity and social welfare, the government has decided to give tax concessions to NRIs. Indians residing in the US can now benefit from tax relaxations on the investments they make in social welfare projects in India.

Under Indian Laws, gift tax was payable by the donor up to 30^th September 1998, The Gift Tax Act, 1958 was repealed with effect from 1^st October 1998 and therefore, there is no gift tax on gifts made on or after that date. Indian law allows NRIs to gift anything to one's relatives as long as they have the capacity to buy those gifts and the gifts are genuine.

The Gift Tax Act, constituted in 1958, regulates the taxability of all gifts received by individuals in India. When the Act was constituted, a gift received from anyone other than blood relatives, having a value more than Rs.25,000, was taxable. However, on October 1, 1998, the gift tax was demolished entirely. Later, in 2004, a new provision regarding gift tax was introduced under the Income Tax Act, 1961. Under section 56 (2) of the Act, gifts received by an individual in excess of Rs.50, 000 during one assessment year would be taxable.

All salaried individuals in India with an annual income exceeding the minimum exemption limit are legally obligated to file a return of income. A failure to file the returns before the due date mentioned in the IT returns form is subject to a penal interest of 1% for each month of delay. Delayed filings may also attract a flat-out charge of Rs.5,000 over and above the penal interest.

Income tax in India is typically imposed on individuals who are residents of the nation, and their income arises or accrues in India itself. In certain cases, however, non-resident Indians (NRIs) are also liable to pay tax in India.