Non-Resident

• It is essential to determine residential status of taxpayer to determine taxability of income earned by such taxpayer.
• In case of resident taxpayer all his income would be taxable in India, irrespective of the fact that income is earned or has accrued to taxpayer outside India. However, in case of non-resident all income which accrues or arises outside India would not be taxable in India.

Meaning of Non-resident

• Section 2(30) defines non-resident as a person who is not a resident.
• Section 6 lays down the test of residency for different taxpayers

Tax incidence in case of Non-residents

Special provisions relating to certain incomes of Non Resident Indian

• Section - 115C : Definitions
• Section - 115D : Special provision for computation of total income of non-residents
• Section - 115E : Tax on investment income and long-term capital gains
• Section - 115F : Capital gains on transfer of foreign exchange assets not to be charged in certain cases
• ​ Section - 115G : Return of income not to be filed in certain cases
• Section - 115H : Benefit under Chapter to be available in certain cases even after the assessee becomes resident
• Section - 115-I : Chapter not to apply if the assessee so chooses

Guidelines for PAN applications

A non-resident Indian ('NRI') can apply for PAN by submitting the Form No. 49A along with the requisite documents and prescribed fees at the PAN application center of UTIITSL or protean. He can also make an online application through the website of UTIITSL or protean.

How to determine that an Individual is NRI ?

'Non-resident Indian' is an individual who is a citizen of India or a person of Indian origin and who is not a resident of India. Thus, in order to determine whether an Individual is a non-resident……

Income exempt from tax

Following incomes are exempt from tax in the hands of a Non-resident Indian (NRI):-

• Interest on notified savings certificates issued before 01-06-2002 by the Central Government if it is subscribed in convertible foreign exchange remitted from a country outside India [section 10(4B)]
• Interest on notified bonds (notified prior to 01-06-2002) purchased in foreign exchange (subject to certain conditions) [section 10(15)(iiad)​]​
• Interest on bonds or securities notified before 01-06-2002 by the Central Government including premium on redemption of such bonds [Section 10(4)(i)] Interest on money standing to the credit in a Non-resident (External) account in India [Section 10(4)(ii)]
• Interest on Rupee Denominated Bonds (as referred to in Section 194LC) issued outside India during the period 17-09-2018 to 31-03-2019 by an Indian company/business trust [Section 10(4C)]
• Income accrued or arisen or received by specified fund which is attributable to units held by a non-resident (not being a PE in India) or to the investment division of offshore banking unit (subject to certain conditions) [Section 10(4D)]
• Income of a non-resident from transfer of non-deliverable forward contracts, offshore derivative instrument, over-the-counter derivatives or income distributed on the offshore derivative instruments or over-the-counter derivatives [Section 10(4E)]
• Income on account of leasing of aircraft or a ship in a previous year, paid by a unit of an IFSC unit as referred to in Section 80L(1A), if unit has commenced operations on or before the 31st March 2030 [Section 10(4F)]
• Note: See provisions of section 10 for more

Meaning

As per Section 2(23A) "foreign company" means a company which is not a domestic company

Tax rate

A. Income Tax

Assessment year 2025-26 and 2026-27

• Nature of Income Tax Rate
• Royalty received from Government or an Indian concern in pursuance of an agreement made with the Indian concern after March 31, 1961, but before April 1, 1976, or fees for rendering technical services in pursuance of an agreement made after February 29, 1964 but before April 1, 1976 and where such agreement has, in either case, been approved by the Central Government 50%
• Any other income 35%

Add:

• a) Surcharge: The amount of income-tax shall be increased by a surcharge at the rate of 2% of such tax, where total income exceeds one crore rupees but not exceeding ten crore rupees and at the rate of 5% of such tax, where total income exceeds ten crore rupees. However, the surcharge shall be subject to marginal relief, which shall be as under:
• (i) Where income exceeds one crore rupees but not exceeding ten crore rupees, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of one crore rupees by more than the amount of income that exceeds one crore rupees.
• (ii) Where income exceeds ten crore rupees, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of ten crore rupees by more than the amount of income that exceeds ten crore rupees.
• b) Health and Education Cess: The amount of income-tax and the applicable surcharge, shall be further increased by health and education cess calculated at the rate of four per cent of such income-tax and surcharge.

B. Minimum Alternate Tax

A company shall be liable to pay MAT @ 15% of book profit (plus surcharge and education cess as applicable) where the normal tax liability of the company is less than 15% of book profit. However, a foreign company shall not be liable to pay MAT on following incomes if income-tax payable thereon under the normal provisions is at a rate less than 15%

• capital gains arising from transfer of securities,
• interest,
• Dividend,
• royalty and
• fees for technical services

Special Provisions applicable to Foreign Companies

• Section 4 Charge of income-tax
• Section 5 Scope of total income
• Section 6 Residence in India
• Section 7 Income deemed to be received.​
• Section 44B read with​ Section 172 Special provision for computing profits and gains of shipping

Due Dates for the Year 2025