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Non-resident Indians(NRI) and persons of Indian origin(PIO)with foreign citizeship are increasing
investing in India.An important question most of them have posed concern to tax rebates,tax deductions
and the tax excemption on income accruing in India.This article throws light on it. The tax
deductions, excemptions and rebates permissible to Indian residents are also to all NRIs
irrrespective of their status.According to section 88 of the Income Tax Act,1961,tax rebate can be
claimed by individuals and Hindu undivided families from total income computed according to
specifications laid down in chapter VIII.The income is considered for one asssessment year.A total
rebate of 20 per cent not discriminate between a resident and non-resident Indian.So NRIs can claim
tax rebate under section 88 of the Income Tax Act,1961,in their
investments. However,this tax rebate is perimissible only on that income which is taxable in India.In the current financial year 2000-01
(assessment year 2001-2002)NRIs and resident Indian willbe allowed tax rebates on maximum investment
of Rs.80,000 out of this Rs.60,000 has to be on Life insurance premium,cotributionx to
provident fund(PPF),deposits in 10 to 15 year post office savings
banks(CTD)accounts,subscription to NSC VIIIth
issue,contribution to Unit Linked Insurance Plan ofLIC Mutual fund,subscription to Home Loan
Account of National Housing Bank,subscription to NSS,payment for the purchase of or construction of
residential house(up to Rs 20,000 from assessment year 2001-02).Remaining can be subscription to
equity shares or debentures or units of mutual funds as specifically designed by the government of
India.Contributions to life insurance scheme,PPF,ULIP,Unit Linked Insurance Plan or spouse's name
and/or any of their children's name is permitted to rebate.Likewise,tax rebate can be claimed for
investment in 10 to 15 year CTD account inthe name of an individual or a minor child of whom he or
she is the guardian.Section 80l of the income tax Act,1961,provides for deduction on oncome certain interest and securities.
This tax benefit is applicable to resident as well as non-resident Indians.The maximum amount allowed
under section 80L is Rs.12,000.It can be on income from interest on government securities,NSC,post office
time deposit accounts,post office recurring deposit accounts,NSC of post office,deposits with
a banking company,cooperative bank,housing board and post office monthly income accounts.A further
deduction of the Central and State
governments. Section 10 of the Act provides for incomes tht are
exempted from income tax.Section 10(10)mentions payments from a provident fund Act,1925,is applicable.
The interest from PPF account thus is completely exempted from income tax.The benefit of this section
is available to NRI and resident Indians.Also there is no upper limit of exemption to this income.
Section 10(15)i exempted income from interests on the redemption or other payments on securities,
bonds,annuity certificates saving certificates and other certificates issued by the Central
government.Also included are the deposits that are notified by the central government inthe official
gezette.For example,the interest on deposits for Non-Resident(Non-Repatriable)Rupee Deposis Scheme
as also the interest on Resurgent Indian Bonds would be exempted.Income accuring from inherited
assets of NRIs is also permitted to exemptions. |
