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How are NRIs taxed on rental income?


My son is a non-resident Indian (NRI) with a small rental income of 30,000. Neither he nor his tenant can afford a chartered accountant to submit the tax deducted at source (TDS) on this income to the income tax department. Can he pay TDS towards the rent to the department as advance tax?

—Name withheld on request

As per income tax rules on TDS, the deductor is obligated to deduct TDS and deposit the same with the government using the prescribed form and timelines.

In case, the total income of the deductee is less than taxable limit, the deductee can seek a low TDS deduction or zero TDS deduction certificate from an income tax officer. Based on this, the deductor may not deduct any TDS.

I have been working in the US since 2002 and sending money to my non-resident external (NRE) account in India. Will tax be levied on this? Should I file tax returns in India?

—Name withheld on request

Non-residents are allowed to transfer money to NRE accounts held in India.

Deposits made to NRE accounts are not taxable and neither is the income earned on such deposits made taxable in India.

I am an NRI. Can I invest in tax savings equity mutual funds?

—Name withheld on request

ELSS, or equity linked savings scheme, allows taxpayers to claim tax benefit in accordance with section 80C of the income tax act. A deduction of 1.5 lakh is available under section 80C. NRIs are allowed to invest in ELSS provided they meet the know your customer (KYC) and other compliance requirements of the fund house.

Archit Gupta is founder and chief executive officer, Clear.in.

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