Frequently Asked Questions (FAQs)

On long-term capital gains, the TDS deduction is generally 20% and on short-term capital gains, the TDS deduction is enrally 30%. 

Yes, if the TDS exceeds the threshold of the actual tax liability, NRIs are allowed to claim a refund by filing their income tax return. Whatever is the excess TDS, it is adjusted against the overall tax liability, and if there is any surplus, the Income Tax department returns it. 

Yes, both NRI and OCI cardholders are liable to pay taxes in India on the income earned or received in India. This includes income received from property, capital gains, interests on NRI accounts, dividends, and other income that has been sourced in India. Any income earned in India by NRIs is generally not taxable in India. 

The rentian income from house property is completely taxable under the heading "Income from house property". However, NRIs are eligible to claim this deduction. If applicable, the tenant is authorized to deduct the 30% TDS on the property. 

The due date for NRIs to file the income tax return in India is generally July 31 of the following financial year's assessment year. In cases where NRIs are required to audit their accounts, the due date is October 31. 

NRIs can file their income tax return through the Income Tax Department e-filing portal. The steps to do so are.

• Registering on the port using PAN. 
• Choose the right ITR form. 
• Fill in all the requested information, such as your personal details, income, and TDS details. 
• Upload the supporting documents if required. 
• Verify the return using Aadhaar OTP, net banking, or by sending an ITR-V to the CPC in Bangalore.

NRIs use ITR-2 for the income from property, capital gains, salary, or foregin assets. If an NRI earns income from a profession or business in India, then ITR-3 applies to them. The type of form choice depends on the type of income that is earned in India.

The Non-resident Indians are taxed on the Indian sourced income that includes

• Rental income from property in India.
• Capital gains from the sale of property or assets in India. 
• Interest earned on NRO accounts. 
• Dividends from Indian companies. 
• Income from business or profession in India.

An individual is considered an NRI (Non-Resident Indian) under the Income Tax Act. They must stay in India for less than 182 days in a fiscal year. NRIs are taxed only on the income earned in India.

NRIs can reduce the capital gains tax on the property sales by:

• Investing in another residential property under Section 54. 
• Investing in the specified bonds under Section 54EC. 
• Claiming the deduction for the cost of improvement and the indexed cost of acquisitions. 

A US tax resident has met the Green card test and is taxed on their worldwide income. 

The non-resident alien is an individual who has not met or qualified for any of these tests; hence, they pay taxes only on the income sourced in the US. 

The Normal deadline is April 15 or the next business day. 

• NRIs living abroad get an automatic extension till June 15. 
• You can request an additional extension till October  15. 

The FATCA, or the Foreign Account Tax Compliance Act, requires U.S. taxpayers to report the foregin financial assets in cases where their value exceeds the set threshold. The Indian banks, as well as your account, will be reported to the Internal Revenue Service under FATCA. 

FBAR or the Foregin Bank Account Report, FinCEN Form 14 must be mandatorily filed if you are a person living in the US and have foreign bank accounts, including those in India. Additionally, the total balance of these must be over $10,000 at any time in a year. 

If you are a US tax resident or a citizen, then your global income is taxable, including your Indian income.      

Yes, you can easily do so by filing it through the IRS e-file system or the authorized tax software. 

The nonresident aliens use Form 1040NR and are usually taxed at the flat rate of 30% on their US source passive income, such as the rent, dividends, interests, and more.                       

Whereas their US-sourced employment income is taxed at graduated rates of 10% to 37%, depending on the income tax benefits. 

You can determine your residency status by using the Substantial Presence Test. 

• You must file Form 1040 for residents and Form 1040NR for non-residents. 
• You must report both the US and the Indian Income if applicable. 

Lastly, you must claim the foreign tax credits or the treaty benefits to reduce the double taxation. 

Yes, the interest paid on the home loan in India can be deducted in the United States under certain conditions. However, this is to ensure that the property has been declared as a foregin asset, and if there is any rental income, then it must also be reported. 

Yes, if you qualify as a US tax resident, then you will be responsible for reporting your global income in the United States, which means that the income earned in India may be taxable here. However, to avoid double taxation, you must utilize the benefits provided by the India-US Double Taxation Avoidance Agreement (DTAA).

 Form 1040 is the individual income tax return IRS form for U.S. residents. The form is used to report deductions, credits, income, and tax owed. 

 Form 1040 is used for U.S. citizens and tax residents who report their worldwide income. 

The Form 1040NR is used by non-resident aliens who are required to file a report with the US or produce income. 

FBAR (FinCEN 14) is used for reporting the foregin bank accounts if the balance exceeds $10,000. 

FATCA (Form 8938) is used to report foreign financial assets, such as bank accounts, shares, property, interests, and other assets, if they exceed the IRS thresholds. 

ITR 1: It is used only for resident individuals and does not apply to NRIs.

ITR-2: NRIs must use this form to report their Indian income, such as rent, capital gains, etc. 

Form W-2 is issued by U.S. employers and is generally known as the wage statement. This form shows salary, tax withheld, and other deductions. It is generally issued by January 31 by the employer. 

When a US taxpayer receives gifts or any form of inheritance from a foregin entity or a person that exceeds a certain threshold, then in that case Form 3520 is required. 

Employee income is reported on. 

• The employer issues Form W-2. 
• Included in Form 1040/1040NR is for tax filing. 

FBAR (FinCEN Form 114) if the total aggregate balance > $10,000. 

Form 8938 (FATCA) if the assets exceed IRS thresholds.