A Good News For NRI(s), About Taxation : By AAR.



You work hard day and night to earn good enough to attain a healthy and comfortable life style for yourself and your family. As being part of civilized society you also pay part of your income to government as Taxes. Well most of people think why even we pay taxes to government, which sounds pretty fair and natural question that arise in our head. Most people found that only reason to pay taxes is to avoid the legal action that can be taken against you for non-payment of taxes; But this is not the only reason to pay tax. Actually taxes are very important for the survival and growth of any nation. All the facilities that government provides, like education, health, infrastructure, other developments and especially defense of our nation rely on these taxes heavily. So Taxes are very important.

Now comes an another question how much and what taxes are to be called fair one? and which sound as the unfair ? Well we are in bit of luck that we live in free and democratic nation and our governments keep working on revising the taxation system and process time to time. And one such relief is provided to Non- Residential Indians ( NRIs) by AAR , so that they can save their money to be charged by double tax.

What is AAR ?
Before going in details about the new relief to NRIs let us understand what is AAR and its role in world of taxes. AAR stands for The Authority for Advance Rulings is a government body which takes important decisions regarding tax matters. It has responsibilities to provide the facilities of ascertaining the income tax liabilities of Non- Residential Indians (NRIs) and other special categories of residents. This body is run and managed by the chairman who is retired judge of supreme court and two other officials who are of rank of Additional Secretary to the govt. of India.

A Relief to NRIs by AAR.
According to the new ruling by AAR, the salary income of non- residents for the service they rendered overseas shouldn’t be taxed in India even when paid into bank account in India. Well its surely a relief to such NRIs as it save them from paying double tax on same income one in abroad and one in India. Let’s take a look on important points of this ruling:

  • As per the domestic tax law, which states that, ‘ tax could be charge on any income once, means and income which is been charged with tax already cannot be charged with tax again.’ So the NRIs who render their service overseas are being taxed on income on their respective country so their salary won’t be taxable in India.
  • Indian Residents are liable to pay tax on their global income irrespective of that where it is earned. And in case of NRIs the only income which they acquires here ( means in domestic region) like rent from the property in India or interests on investments/Bank savings is liable to taxes in India.
  • According to the India-US tax treaty, it’s the place where the employee perform his/her duties and not where the income is received. AAR also held that where there is no Tax- treaty, this ruling come in role as per the Domestic Tax Laws.

Well this is certainly a big relief to many NRIs, who move out to look for better opportunities and provide a better lifestyle for their family and themselves. For More detail about taxation and other accounting /management help contact SP Chopra & Co. @spchopra.com.