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Non-resident Indians and their deductions and exemptions The income of NRIs can also be deducted or exempted in the same manner as that of residents. Read to know more about nri taxation in india. Here are a few that have been discussed: Deductions under Section 80C It is also possible for NRIs to deduct most of the expenses under Section 80. A maximum deduction of Rs 1.5 lakh is allowed under Section 80C for FY 2020-21.

Of the deductions under Section 80C, those allowed to NRIs are: i. Premiums must be paid in the NRI's name or in the name of their spouse or any child (child may be dependent or independent, minor or major, married/unmarried). In order to qualify, the premium must be less than ten percent of the sum assured. ii. Fees paid to schools, colleges, universities, or other educational institutions in the State of Two children may receive full-time education in India (including play school, pre-nursery, and nursery). iii. Deduction is allowed for principal repayments on loans taken for buying or constructing residential properties. A deduction is also allowed for stamp duty, registration fees, and other expenses incurred by the NRI in transferring the property. iv. A unit-linked insurance plan (ULIP) is sold with life insurance cover for deduction under Section 80C of the Income Tax Act. It includes contributions to the unit-linked insurance plans of mutual funds, such as the Dhanraksha 1989 plan and other UTI unit-linked insurance plans. v. Investments in ELSS: ELSS has been the most preferred option in recent years as it allows you to claim a deduction under Section 80C up to Rs 1.5 lakh, it offers the EEE (ExemptExempt-Exempt) benefit As these funds invest primarily in equity markets in a diversified manner, they provide a positive tax benefit to taxpayers.

Other allowable deductions Besides the deduction that an NRI can claim under Section 80C, they are also eligible to claim various other deductions under the income tax laws, which have been discussed here: Deduction from house property income for NRIs NRIs can claim all the deductions available to a resident, including parents’ insurance deductions from income from house property for a house property purchased in India.

Deduction towards property tax paid and interest on home loan deduction is also allowed.

You can read about house property income in detail here.

Deduction under Section 80D NRIs are allowed to claim a deduction for the premium paid for health insurance. This deduction is available up to Rs 25,000 in the case for insurance of self, spouse, and dependent children. In addition, an NRI can also claim a deduction for parents’ insurance (father or mother or both) up to Rs 25,000.

However, the deduction limit is set up to Rs 50,000 if the insurance premium is paid for resident senior citizens (self, family and parents). Hence, insurance premium paid for senior citizen NRIs cannot be claimed under Section 80D. Within the existing limits allowed, a deduction of up to Rs 5,000 for preventive health checkups are also available. Moreover, medical expenditure of up to Rs 50,000 incurred for resident senior citizens can also be claimed within the existing limits of Section 80D. However, the person on whom the medical expenditure is incurred should not be covered under any health insurance policy.

Deduction under Section 80E Under this section, NRIs can claim a deduction of interest paid on an education loan.

This loan may have been taken for higher education for the NRI, NRI’s spouse, children, or a student for whom the NRI is a legal guardian.

There is no limit on the amount which can be claimed as a deduction under this section. The deduction is available for a maximum of eight years or till the interest is paid, whichever is earlier. The deduction is not available on the principal repayment of the loan.

Deduction under Section 80G NRIs are allowed to claim a deduction for donations for social causes under Section 80G. Here are all the donations which NRI can claim under Section 80G. Deduction under Section 80TTA Non-resident Indians can claim a deduction on income from interest on savings bank accounts up to a maximum of Rs 10,000 like resident Indians.

This is allowed on deposits in savings accounts (not time deposits) with a bank, co-operative society or post office and is available starting FY 2012-13.

Deductions not allowed to NRIs Some investments under Section 80C: Investment in PPF is not allowed (NRIs are not allowed to open new PPF accounts. However, PPF accounts that are opened while they are a resident are allowed to be maintained) Investments in National Savings Certificates (NSCs) Post office 5-year deposit scheme Senior Citizen Savings Scheme (SCSS) Deduction for the differently-abled under Section 80DD Deduction under this section is for maintenance, including medical treatment, of a handicapped dependent (a person with a disability as defined in this section). Such deduction is not available to NRIs. Deduction for the differently-abled under Section 80DDB

Deduction under this section towards medical treatment of a dependent who is disabled (as certified by a prescribed specialist) is available only to residents.

Deduction for the differently-abled under Section 80U Deduction for disability where the taxpayer himself has a disability as defined in the section is allowed only to resident Indians.