Non resident tax filing
01
Capital Gains Computation
Under the 2025 rules, capital gains taxation has been unified to simplify compliance, though indexation benefits have largely been removed.
Long-Term Capital Gains (LTCG): Taxed at a flat 12.5% for all assets (Equity, Real Estate, Gold).
Equity: Gains up to ₹1.25 lakh per year are exempt.
Holding Period: 12 months for listed securities; 24 months for real estate and unlisted shares.
Short-Term Capital Gains (STCG):
Listed Equity: Taxed at 20%.
Other Assets: Taxed at your applicable income tax slab rates.
02
Rental Income Taxation
Rental income is classified as “Income from House Property.”
Standard Deduction: A flat 30% deduction is allowed for maintenance and repairs, regardless of your actual spending.
Municipal Taxes: You can deduct property taxes paid during the year from the total rent.
Interest on Home Loan: Interest paid on a home loan for a rented property is fully deductible without the ₹2 lakh cap (which only applies to self-occupied homes).
Net Taxable Rent: $[(\text{Gross Rent} – \text{Municipal Taxes}) – 30\% \text{ Standard Deduction} – \text{Interest}]$.
03
Foreign Income Disclosure
For Residents in India, disclosing global assets is mandatory under the Black Money Act.
Schedule FA (Foreign Assets): You must disclose all foreign bank accounts, shares (including RSUs/ESOPs), and immovable property held between January 1 and December 31.
Schedule FSI (Foreign Source Income): Used to report the specific income earned abroad (Dividends, Interest, etc.).
Penalty: Failure to disclose can lead to a flat penalty of ₹10 lakh, even if the income itself is not taxable.
04
Tax Credits under DTAA
The Double Taxation Avoidance Agreement (DTAA) prevents you from paying tax twice on the same income.
Tax Credit Method: If you paid tax on income in a foreign country (e.g., the USA), you can claim that amount as a Foreign Tax Credit (FTC) against your Indian tax liability.
Mandatory Form 67: To claim this credit, you must file Form 67 on the e-filing portal before filing your Income Tax Return.
TRC: Non-residents must provide a Tax Residency Certificate (TRC) from their home country to avail of lower DTAA tax rates in India.
05
Interest Income Taxation
Interest from FDs, Savings Accounts, and RDs is taxed under “Income from Other Sources.”
Tax Slabs: Interest is added to your total income and taxed at your slab rate.
TDS Threshold (FY 2025-26): Banks will deduct TDS if interest exceeds ₹50,000 for regular individuals and ₹1 lakh for senior citizens.
Deductions: Under Section 80TTA, you can claim up to ₹10,000 on savings account interest (not applicable in the New Tax Regime).