money matters for NRIs
Tax Deductions and Exemptions for NRIs

Tax rules on deductions and exemptions for non-residents are somewhat different. Not all deductions normally available for residents are extended to NRIs.

Tax exemptions for NRIs

Following income of NRIs is tax-free

  • Interest on NRE/FCNR (B) account
  • Interest on government issued savings certificates, notified bonds
  • Dividends from shares of domestic companies
  • Long term capital gains from listed equity shares and equity- oriented mutual funds
Tax deductions for NRIs

All income tax deductions normally extended to residents, except the ones mentioned below, apply for non-residents.

Deductions not available for NRIs

Applicable I-T Section

Health insurance premium for senior citizens

80D

Medical treatment of disabled dependents

80DD

Medical treatment for specified ailments

80DDB

RGESS- Equity investments

80CCG

Disability

80U

Apart from these, all other deductions like home loan principal repayment, tuition fee, life insurance premium, NSC, ELSS, tax saver FD, education loan interest etc. PPF, as is widely known, is out of scope for NRIs.

Deduction on house property for interest on borrowing for purchasing or constructing the house can be claimed by NRIs also under section 24.

Tax exemption certificate for TDS

Although NRIs are allowed to set-off losses in capital gains against capital gains this option is pointless since TDS is applied on capital gains. In such situations where higher tax is likely to be deducted at source than actual tax liability, NRIs can get Tax Exemption Certificate issued by his Assessing Officer and submit it to the tax deductor.


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