Call Us

FOR EXISTING POLICY

Have query on premium, payout or any servicing need?

Call us:

1 860 266 9966

Monday - Saturday | 10 am - 7 pm IST

Call charges apply

Dedicated NRI Helpdesk:

+91 22 6251 9966

Monday - Saturday | 10 am - 7 pm IST

Call charges apply

FOR NEW POLICY

Want to buy a new policy online?

Call us:

+91 22 6984 9300

Give missed call for a call back:

+91 11 6615 8748

Monday - Sunday | 8 am - 11 pm IST


Exclusively for NRIs:

Call us:

Give missed call for a call back:

+91 11 4473 0242

Monday – Sunday | 9 am – 9 pm IST

Language

Need assistance in choosing the right insurance plan? Get a call from our Expert.

Need assistance in choosing the right insurance plan?Get a call from our Expert.

+91 dropdown arrow

Select Plan dropdown arrow
  • Term plans
  • Saving plans
  • Wealth plans
  • Retirement plans
  • I don't know/I need help

TATA AIA Life Insurance Co. Ltd will send you updates on your policy, new products & services, insurance solutions or related information. Select here to opt-in. T&C apply.

Income Tax New Rules for NRIs In India

A person may have multiple income sources, and he may be subject to taxes* for those in our country. The usual heads under which a person is eligible to pay tax in India are; ‘Income from Salary,’ ‘Income from Capital Gains,’ ‘Income from House Property,’ and ‘Income from Business or Profession.’
 

All other kinds of incomes that are not covered under these 4 heads fall under the category of ‘Income from Other Sources.’ The other sources here primarily comprise income earned on savings and investments, like interest earned on a bank savings account or a fixed deposit scheme and dividends earned on investments made in India. 
 

The interest and dividend tax for NRIs is different from those for a resident Indian. Therefore, if you are an NRI, you must know how income from other sources is taxed for NRIs in the country and if you can buy an NRI insurance policy for tax savings.

Who is an NRI?

A Non-Resident Indian (NRI) is an individual of Indian origin who lives outside India for various reasons - personal, business, employment, education, etc. 
 

The term "Non-Resident" refers to the fact that these individuals do not reside in India on a permanent basis. They may hold Indian citizenship or another country's citizenship. NRIs typically hold Indian citizenship or are of Indian origin but have obtained citizenship of another country.
 

The Indian Income Tax Act defines NRIs based on the duration of their stay in India. 
 

Typically, an NRI stays in India for less than 182 days during a financial year or has been outside India for a total of 365 days or more in the preceding four financial years. 
 

NRIs maintain connections to India and contribute to the economy through remittances, investments, and cultural activities. Therefore, there are clear provisions for the taxability of NRIs in India.

Interest and Dividend Tax Rate in India for NRIs

Now that we have a clear understanding of who is an NRI let us see the interest and dividend tax rate for them.

Tax on Interest from Fixed Deposits and Bank Accounts for NRIs

An NRI can have these bank savings accounts in India: 
 

  • Non-Resident External (NRE) account: Indian currency-denominated account for parking foreign currency in the country 

  • Non-Resident Ordinary (NRO) account: Indian currency-denominated account for managing income earned in India

  • Foreign Currency Non-resident (FCNR) account: Foreign currency-denominated account to manage income earned outside the country in foreign currency

The interest you earn on an NRE and an FCNR account is tax-free in India. On the other hand, the interest you earn on an NRO account is fully taxable. It is taxed according to the applicable tax rates and is also subject to tax deductions by the bank. 
 

Additionally, India has a Double Taxation Avoidance Agreement (DTAA) with some countries. If you are an NRI residing in one of these countries, you will be taxed either under the provisions of the DTAA or the Income Tax Act, whichever is more beneficial for you.

Tax on Dividends for NRIs

If an NRI earns a dividend on an investment made in shares of an Indian company or in mutual funds, it is taxable in India. Such an income is subject to 20% tax plus any applicable surcharge and cess without providing for any deduction under Chapter VI-A of the act such as investments made in Public Provident Funds, life insurance premiums, national pension schemes, etc.,
 

If a balanced tax remains unpaid after tax deductions, the NRI can pay an advanced or self-assessment tax before filing an income tax return in the country. Moreover, a delay in filing the advanced tax or a self-assessment tax will attract interest for late payments. 
 

The dividend tax rate for NRIs under the income tax provisions is as follows:
 

Residential Status

Type of Shareholding

Other Conditions

Base Rate

(%)

Surcharge

(%)

HEC

(%)

Effective TDS

(%)

NRIs

Any

Dividends for Bonds and other Government 

10

 

4

10.400

FIIs/FPIs

 

20

 

4

20.800

Company

Up to ₹1 Crore

20

 

4

20.800

₹1 Crore to ₹10 Crore


20

2

4

21.216

Beyond ₹10 Crore

20

5

4

21.840

Other than the above

Up to ₹50 Lakhs

20

 

4

20.800

 

₹50 Lakhs to ₹1 Crore

20

10

4

22.880

 

Beyond ₹1 Crore

20

15

4

23.920

Disclosing Income in the ITR Form

Along with paying the correct tax, you must also disclose it correctly under the schedule of the ITR form so that there is no confusion and unnecessary notices from the ITR department. 
 

The dividend income should be disclosed under the column ‘Income Chargeable at Special Rates,’ while income taxed under the DTAA should be mentioned under the ‘Special Income’ schedule. Moreover, even if the income is exempt from tax, it should be disclosed under the ‘Exempt Income’ schedule to comply with the disclosure rules.

Tax-Saving with NRI Life Insurance Plans from Tata AIA

NRIs looking for tax-saving investment options can opt for our Tata AIA life insurance policy plans for NRIs. Our NRI insurance plans provide insurance coverage along with tax benefits to NRIs. You can buy your policy or file a claim seamlessly via quick and hassle-free online processes.
 

You can also make use of our various online calculators to plan your finances and find the best life insurance policy for your needs.

Wrapping Up

There are exclusive provisions in India for NRI taxpayers under the Income Tax Act and the DTAA. Therefore, it is essential to understand the provisions for taxation of interest earned on bank accounts and fixed deposits and the dividend earned on shares and mutual funds. 
 

Filing the right amount of tax under the correct schedule in the ITR form helps you avoid unnecessary notices and queries from ITR officials.

Your Life, Your Legacy: Life Insurance Inquiry for Indians Abroad

+91 dropdown arrow
  • +93 Afghanistan

TATA AIA Life Insurance Co. Ltd will send you updates on your policy, new products & services, insurance solutions or related information. Select here to opt-in.


 

Looking to buy a new insurance plan?

Our experts are happy to help you!

+91

Select plan
  • Term plans
  • Saving plans
  • Retirement plans
  • Wealth plans
  • I don't know/I need help

TATA AIA Life Insurance Co. Ltd will send you updates on your policy, new products & services, insurance solutions or related information. Select here to opt-in

People Like You Also Read

NRI Capital Gains Tax: Understanding Tax Implications on Capital Gains
Read More
Why is SIP for NRI ideal for investing in Indian Mutual Funds? Tata AIA
Read More
Pension Plans for NRIs in India: Everything You Need to Know
Read More
Things NRIs in India Should Know About Term Insurance
Read More
Should NRIs Purchase Life Insurance in India? Explained
Read More
How Can Nris Invest In Mutual Funds
Read More
Pensions Plans for NRI in India: The Detailed Guide
Read More
Know About TDS Implications for NRIs Without PAN
Read More
Do Nris Have To Pay Tax On Pf Withdrawal
Read More

People Like You Also Read

NRI Capital Gains Tax: Understanding Tax Implications on Capital Gains
Read More
Why is SIP for NRI ideal for investing in Indian Mutual Funds? Tata AIA
Read More
Pension Plans for NRIs in India: Everything You Need to Know
Read More
Things NRIs in India Should Know About Term Insurance
Read More
Should NRIs Purchase Life Insurance in India? Explained
Read More
How Can Nris Invest In Mutual Funds
Read More
Pensions Plans for NRI in India: The Detailed Guide
Read More
Know About TDS Implications for NRIs Without PAN
Read More
Do Nris Have To Pay Tax On Pf Withdrawal
Read More
Website Logo Image Icon

Tata AIA Life Insurance

A joint venture between Tata Sons Pvt. Ltd. and AIA Group Ltd. (AIA),  Tata AIA Life Insurance  is one of the leading life insurance providers in India. We post everything you need to know about life insurance, tax savings and a variety of lateral topics such as savings and investments in this space. You can access and read a host of different blogs, articles and pages at the Tata AIA Life Insurance Knowledge Center or get in touch with us with any queries or questions!

View all posts by Tata AIA Life Insurance

FAQs

Is it necessary for NRIs to file income tax returns in India?

Yes, NRIs have to pay taxes on income earned/ accrued in India. Money received or deemed to be received in India is taxable for NRIs in the country.

How can NRIs pay taxes in India?

To pay taxes in India as an NRI, follow these steps. 

  • Determine your residential status based on the number of days spent in India.

  • Declare and classify your income sources as taxable or tax-exempt. 

  • File an income tax return using Form ITR-2 or ITR-3, online or with professional assistance. 

  • Calculate your taxable income by applying relevant tax rates and deductions. 

  • Pay any tax liability through authorized banks using online or offline methods. 

  • Obtain a Tax Deduction and Collection Account Number (TAN) if applicable for TDS compliance. 

  • Maintain proper documentation of income, deductions, and tax payments. 

Stay updated with the Indian Income Tax Department's guidelines and consult tax professionals for accurate advice.

What is the latest tax-free slab for NRIs?

As per the provisions of the Budget for 2023, NRIs need not file income tax returns if their total income for the financial year is below ₹3 lakhs.

Disclaimer

  • Insurance cover is available under the product.

  • The products are underwritten by Tata AIA Life Insurance Company Ltd.

  • The plans are not a guaranteed issuance plan, and it will be subject to Company’s underwriting and acceptance.

  • For more details on risk factors, terms and conditions please read sales brochure carefully before concluding a sale.

  • This blog is for information and illustrative purposes only and does not purport to any financial or investment services and do not offer or form part of any offer or recommendation. The information is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.

  • Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.

  • Every effort is made to ensure that all information contained in this blog is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.

  • Tax: *Income Tax benefits would be available as per the prevailing income tax laws, subject to fulfilment of conditions stipulated therein. Income Tax laws are subject to change from time to time. Tata AIA Life Insurance Company Ltd. does not assume responsibility on tax implications mentioned anywhere in this document. Please consult your own tax consultant to know the tax benefits available to you.