The 4-year rule for NRI status is based on an individual’s presence in India over a specific period. According to the Income Tax Act, an individual can be treated as an NRI (Non-Resident Indian) if they meet either of the following conditions:
Presence in India for Less Than 182 Days:
If an individual is physically present in India for fewer than 182 days during the preceding financial year, they qualify as an NRI.
Cumulative Presence Over Four Years:
If an individual has been in India for fewer than 60 days during the current financial year and a cumulative total of 365 days or more outside India during the preceding four financial years, they also qualify as an NRI.
Remember that these rules determine an individual’s tax residency status, impacting their tax obligations in India.
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Wondering about what is the 4 year rule of NRI. The "4 year rule" for Non-Resident Indians (NRIs) refers to the criteria set by the Indian Income Tax Act to determine the residential status of an individual for tax purposes.
The rule helps to identify whether an individual qualifies as an NRI, which impacts their tax liabilities in India.
According to the rule, an individual is considered a resident in India if they satisfy either of the following conditions:
Stay in India for 182 days or more in a financial year: If an individual stays in India for 182 days or more during the financial year (April 1 to March 31), they are considered a resident.
Stay in India for 60 days or more in a financial year and 365 days or more in the preceding 4 years: If an individual stays in India for 60 days or more in the current financial year and has been in India for at least 365 days in total over the four preceding financial years, they are also considered a resident.
For NRIs, the 4-year rule plays a crucial role in determining their tax liabilities. NRIs are subject to tax only on income earned or accrued in India, while residents are taxed on their global income.
Implications of the 4-Year Rule:
Tax Residency: If an individual qualifies as an NRI under the 4-year rule, their foreign income remains non-taxable in India, providing significant tax benefits.
Investment and Banking: NRIs enjoy specific benefits related to investments and banking in India, such as special deposit schemes and relaxed rules for repatriation of funds.
Compliance and Reporting: NRIs must adhere to specific compliance requirements, including reporting their Indian income and maintaining proper documentation.
This is all about what is the 4 year rule of NRI.
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What is the 4 Year Rule of NRI?
shivam
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6 months
2024-06-27T15:59:08+00:00 2024-06-28T21:37:29+00:00Comment
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