a. He/She is in India in the previous year for a period of 182 days or more. b. He/She is in India for a period of 60 days or more during the previous year and 365 days or more during 4 years immediately preceding the previous year. If any individual is not able to fulfil the above two condition, he/she is a Non Resident Individual (NRI). After getting residential status, it is necessary to know whether that person is a resident with ordinary resident individual or resident but not ordinary resident individual. Under section 6(6), a resident individual is treated as ‘resident and ordinary resident’ in India if he/she satisfies the two basic conditions. a. He/She has been resident in India in at least 2 out of 10 previous years immediately preceding the relevant previous years. b. He/She has been in India for a period of 730 days or more during 7 years immediately preceding the relevant previous year. If any individual is not able to satisfy the above two condition, he/she will be treated as a resident but not ordinary resident. (NRO)

Individual Taxpayers
Income	Resident and ordinarily resident	Resident but not ordinarily resident	Non-resident
Indian income	Taxable in India	Taxable in India	Taxable in India
Business income and business is controlled wholly or partly from India	Taxable in India	Taxable in India	Not Taxable in India
Income from profession which is set up in India	Taxable in India	Taxable in India	Not Taxable in India
Other foreign income	Taxable in India	Not Taxable in India	Not Taxable in India

Taxation Rules for NRIs There are various source of income of NRI which is not taxable in India. a. Income which is earned outside India by an NRI is not taxable in India. b. Interest income in a non-resident external (NRE) account and foreign currency non-resident (FCNR) account is not taxable in India. c. Dividend income and long-term capital gains (Equity shares or Equity oriented mutual fund where STT is paid) tax is zero in India. d. If an NRI do not have any income in India, he/ she need not file income tax return. Deduction An NRI is eligible for 80C deduction by investing in pension plan, life insurance policies and tax saving mutual funds (ELSS scheme). The repayment of principal amount of a home loan is also eligible for 80C deduction up to max of 1 lakh rupees. Interest payment of housing loan is allowed as deduction up to rupees 1.5 lakhs. An NRI can claim deduction of max Rs 35,000 by taking medical insurance policy in his/her name/family members/parents.  If he/she has been repaying education loan, the interest amount is allowed as deduction under section 80E. If he/she generates income by selling capital asset, it will be treated as capital gain. He/she can also put this amount in tax saving bond for saving your tax. Capital gains up to 50 lakhs can be invested in the bonds of NHAI or REC for saving capital gain tax. Investment If an NRI has a Public Provident Fund (PPF) account in India, he/she can put his deposit in his/ her account but can’t extend their PPF account after maturity. An NRI can invest in mutual funds on a repatriable basis as well as non-repatriable basis. The various procedures for investing in mutual funds are a. Apply for a PAN card b. After getting PAN card, apply for Know your customer (KYC) verification (where your address proof, identity proof and PAN card are required) c. Open NRE or NRO or FCNR account depending on your requirement (In case of repatriable basis you must have an NRE or FCNR bank account in India but in case of non-repatriable basis NRO account is required). d. Choose a good scheme, Fill up the Mutual form and submit in AMC. Tax Deducted at Sources (TDS) treatment

SL no	Particulars	Taxable in India
1	Interest on NRE	NO TDS
2	Interest on FCNR	NO TDS
3	Interest on NRO	30% TDS
4	Interest on Corporate deposit & bond	20% TDS
5	Dividend From equity shares & MF (equity & debt)	Exempt
6	LTCG Equity shares and Equity MF (more than 50% Equity)	Exempt
7	STCG Equity shares and Equity MF (more than 50%Equity)	15% TDS
8	LTCG on debt MF & corporate debenture	10% TDS
9	STCG on debt MF & corporate debenture	30% TDS
10	LTCG on house property & gold	20% TDS
11	STCG on house property & gold	30% TDS
12	Professional service	20% TDS *
13	Professional service	10% TDS **
14	Income from lotteries, cross word puzzles and horse races.	40% TDS

*If agreement is dated between 1.6.1997 to 30.5.2005 **If agreement is dated on or after 1.6.2005 Waiver of TDS 1. If NRI’s total income is less than the basic limit 2. If NRI files a return 3. In case of FD, submitting 15H and 15 G*** *** Form 15H can be submitted by a person who is above 60 years and Form 15G can be submitted by a person who is below 60 years. Three regulatory changes that will make NRIs happy 1. NRIs can open joint account with Indians. 2. Paying for medical expenses made easier. 3. NRIs can avail loan from Indian relatives. Always seek advice from a SEBI registered investment adviser (RIA)for NRI services. The adviser will guide you properly for Investment, tax and estate planning.