12 Proven Tax Hacks for NRIs

How It Works:

RNOR status allows you to avoid tax on foreign income for 2-3 years after returning to India. Perfect for those with ongoing foreign income, investments, or rental properties abroad.

Action Steps:

• Qualify as RNOR if you were NRI for 9 out of 10 years OR stayed abroad for 729 days in 7 years
• File ITR showing RNOR status
• Keep proof of foreign stay (passport stamps, visa, employment records)
• Foreign income remains tax-free in India during RNOR period

How It Works:

India has DTAA with 90+ countries. You can claim credit for taxes paid abroad against your Indian tax liability, effectively preventing double taxation on the same income.

Action Steps:

• Obtain Tax Residency Certificate (TRC) from foreign country
• File Form 67 with your ITR to claim foreign tax credit
• Keep proof of foreign tax payment (receipts, bank statements)
• Apply treaty provisions for lower TDS rates on Indian income

How It Works:

As an NRI, you can strategically time property sales during RNOR period or when you have lower income to reduce tax impact. Long-term gains (>2 years) are taxed at 20% with indexation vs 30% for short-term.

Action Steps:

• Hold property for >2 years for LTCG benefit (20% vs 30%)
• Sell during RNOR period if returning to India
• Claim indexation benefit to reduce taxable gains
• Invest in 54EC bonds or new property to save tax under Section 54

How It Works:

Interest earned on NRE (Non-Resident External) accounts is 100% tax-free in India. Plus, both principal and interest are freely repatriable without any restrictions.

Action Steps:

• Open NRE savings/fixed deposit accounts
• Transfer foreign income to NRE account (not NRO)
• Interest rates: 6-7% on FDs, completely tax-free
• No TDS deducted on NRE interest

How It Works:

Rental income is taxed at slab rates (up to 30%) plus 4% cess. Use deductions smartly: claim 30% standard deduction on rent, home loan interest (no upper limit for let-out property), and municipal taxes.

Action Steps:

• Claim 30% standard deduction automatically
• Deduct full home loan interest (no ₹2L cap for let-out)
• Deduct municipal taxes paid
• Set off losses against other income
• Appoint a CA to handle TDS compliance (lower TDS certificate)

How It Works:

If your professional income is under ₹50L, you can opt for presumptive taxation where only 50% is taxable. No need to maintain books of accounts or get audit done.

Action Steps:

• Declare 50% of gross receipts as taxable income
• No audit required if income < ₹50L
• File ITR-4 (Sugam)
• Pay advance tax quarterly
• Cannot claim actual expenses (only if expenses > 50%)

How It Works:

You can gift any amount to spouse, parents, or children tax-free. They can then invest this money, and the income will be taxed in their hands at lower rates.

Action Steps:

• Gift money to family members (completely tax-free)
• They invest in their name in FDs, stocks, mutual funds
• Income gets taxed in their lower tax bracket
• Caution: Don't gift to minor children (clubbing rules apply)
• Keep gift deed/proof of transfer

How It Works:

Different treatment for US Social Security, UK State Pension, etc. Some are taxable only in source country, some in both. Use DTAA provisions wisely.

Action Steps:

• Check DTAA article on pensions with your country
• US Social Security: Taxable only in US if you're US resident
• UK State Pension: Taxable in India if you're India resident
• Private pensions: Usually taxable where received
• File Form 67 for foreign tax credit if applicable

How It Works:

Crypto gains are taxed at flat 30% from FY 2022-23. No deduction for any expenses except cost of acquisition. 1% TDS on transfers > ₹50K. NRIs must report in ITR.

Action Steps:

• Report all crypto trades in ITR-2/ITR-3
• Pay 30% flat tax on gains (no loss set-off allowed)
• Factor in 1% TDS by exchanges
• Maintain records of all transactions
• Keep cost of acquisition proofs
• Use Indian exchanges compliant with TDS rules

How It Works:

Offshore insurance maturity proceeds may be tax-free if premium < 10% of sum assured. Death benefits generally tax-free. But must be reported in ITR Schedule FA.

Action Steps:

• Ensure premium < 10% of sum assured for tax-free maturity
• Report in Schedule FA of ITR
• Keep policy documents and payment proofs
• For US policies: Be aware of FATCA reporting
• Consider jurisdiction (Singapore, Dubai policies popular)
• Death benefits to nominee are tax-free

How It Works:

USD 1 million per year can be remitted tax-free (LRS limit). Above that, 5% TCS applies. Time your repatriation and use NRE accounts smartly.

Action Steps:

• Use Liberalized Remittance Scheme (LRS) - USD 1M/year
• NRE account: Freely repatriable without limits
• NRO account: Max USD 1M/year repatriation
• Plan large repatriations across financial years
• TCS of 5% applies on LRS > ₹7L for certain purposes
• TCS can be claimed back while filing ITR

How It Works:

Stock options are taxed twice: at vesting (perquisite) and at sale (capital gains). Use DTAA provisions and 89(1) relief for arrears to minimize tax.

Action Steps:

• Perquisite tax on vesting: Report in salary income
• Capital gains on sale: LTCG/STCG based on holding
• Use Form 67 to claim foreign tax credit
• Relief u/s 89(1) for salary arrears due to vesting
• Keep FMV (Fair Market Value) records at vesting
• For US: Be aware of double taxation, use DTAA