Mohanraj
The following are the list of Tax Saving Options available for NRIs. As far as NRIs are concerned only limited tax savings options are available for them when compared to Resident Indians.
1. Section 80C of Income Tax Act
a)
Life Insurance and Retirement/Pension Plans –
NRIs can buy
retirement plan with or without life cover and also choose between a
traditional plan (endowment, money-back) and a unit-linked plan
depending upon your risk appetite. There is also a facility available
with few insurers like LIC for NRIs to obtain insurance cover from their
present country of residence where all formalities are completed in
their present country of residence, subject to fulfillment of certain
rules and restrictions on sum insured amounts and add-on riders. For more details please contact the Insurance Company or your Insurance Agent.
b) Investment in House property – Buying a house or flat in India
availing of a home loan from Banks or Housing Finance Companies is a
good investment/tax savings option for NRIs. The principal and interest
payments made every year for a home loan availed in India are allowed as
deductions subject to an overall limit of Rs 1 lakh per year on
principal payments (under section 80C) and full interest payments made
during the year (under section 24b) - in case of let-out property.
c)
ELSS (Tax saving Equity Mutual Fund schemes) –
ELSS are equity-oriented mutual fund schemes that directly invest in a
diversified portfolio of shares in the Indian Stock Market. The tax
savers can buy units of ELSS schemes directly from the respective Mutual
Funds of can be purchased online, if they have enabled that facility
with the Mutual Fund. There is lock-in-period of three years in the ELSS investments. These schemes are e ideal for long-term tax-free savings
2. Section 80D - Health Insurance Premium
NRIs
can buy health insurance policy in India for themselves, their family
and also dependant parents and claim deduction for the premium paid up
to Rs 35,000 per annum Please note that, these deductions are available
for a maximum amount of Rs 15,000 in case of non-senior citizens and Rs
20,000 for senior citizens.
3. Deductions u/s 80
a) Deduction u/s 80G – Donations made to certain specified charitable institutions are only eligible to claim deduction under this section.
b) Deduction under 80E – for interest payment towards Educational loan taken
from any bank/approved financial institution
for higher studies (comprising full time as well as vocational studies
pursued after passing senior secondary examinations studies) for self or
any of immediate family members (children, spouse)
Note : The overall limit of deductions available on section 80C, 80CCC is Rs 1 lakh per annum.
The following Investment Options are not available for Non-Resident Indians
a)
PPF (Public Provident Fund)b) NSC (National Savings Certificate) - it is mentioned somewhere that, NRIs can buy NSC subject to certain Terms & Conditions, I am not sure about those Terms& Conditions. Better avoid investing in NSCs
c) Senior citizens savings account
d) Tax saving infrastructure bonds under section 80CCF
e) Post office time deposits are not available for NRIs.
However, if you had already invested in any of these investments when you were a Resident Indian, you can continue these investments till maturity. In case you made deposit in any of the above mentioned investment options as a Non-Resident Indian, if the authorities comes to know about this, your money will be refunded without any interest or capital appreciation.
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