NRIs can get Section 80C tax benefit on premium paid for a life insurance plan

NRIs are also allowed to deduct property tax paid and 30% standard deduction on rental income less tax paid..

I am a non-resident Indian (NRI) living in the US for the past five years. Before moving out, I had bought a term insurance cover with a sum assured of ₹40 lakh. I have an ancestral property, which I have rented out as a residential house. Since I pay tax on the income accrued in India, can I claim deduction against the insurance policy (which I did not cancel or surrender)? — Saransh Palkar

NRIs are allowed a maximum tax benefit of ₹1.5 lakh under Section 80C for the premium paid on an insurance policy. The rental income has to be reported under the head income from a house property. Note that the tenant may be cutting tax deducted at source. While reporting rental income, you are allowed to deduct property tax paid and 30% as a standard deduction on the rental income less taxes paid. From the remaining income, you can claim deduction for the premium paid.

I was living in Germany since 2015 and recently returned to India. The German firm I worked for has retained me as a consultant. I receive the money in my bank account. Is this taxable in India? If so, how much? — Akansha Sachdev

Whether or not your income is taxable in India depends upon your residential status as per the Income-tax Act. This status must be determined for every financial year (FY). For FY20, you can test your status in the following manner. You must meet any of the following conditions and both the additional conditions:

Conditions: a) You are in India for 182 days or more in the FY; or

b) You are here for 60 days or more in the FY and 365 days or more in the last four FYs.

Additional conditions: You are a resident in two of the last 10 FYs; and you are here in the seven years immediately preceding the relevant FY for 729 days or more.

If you meet any of the first conditions but do not meet the additional conditions, you shall be considered a resident but not ordinarily resident (RNOR). If you do not meet any of the first conditions, you shall be an NRI.

There have been some changes to the residential status from FY21. The period of 182 days has been reduced to 120 days for all those visiting individuals who have income exceeding ₹15 lakh during the FY. Such individuals will be considered RNOR for the said FY if their stay exceeds 120 days. Therefore, NRIs with total income of up to ₹15 lakh shall continue to be NRIs if their stay is 181 days or less, as per the conditions mentioned above.

If you are a resident in India, your global income will be taxed in India. If you are RNOR or NRI, income earned, received or accrued in India is taxed in India. Such income earned from abroad and received outside India shall not be taxable in India.

In relation to your services as a consultant, your profession is exercised from India. Your income from consulting services rendered from India accrues in India. Even if you are an NRI or RNOR, your income is likely to be taxable in India. An individual’s income gets taxed at the income tax slab rates in India. You can claim a foreign tax credit for taxes deducted by the foreign company following the DTAA between India and the other country.