Taxation rules for NRIs

Here are some exemptions and tax-saving tips that non-resident Indians can avail of 
Juggling finances in one country is bad enough; having to do it in two can be baffling . When it comes to filing taxes, NRIs find themselves in this unenviable position as the Income tax rules for NRIs are different from those that are valid for residents. Here's a quick guide to NRI taxation. 

Taxes applicable: 
Income which is earned outside India by an NRI is not taxed here. An NRI doesn't have to pay tax on the interest income in a non-resident external (NRE) account or foreign currency nonresident (FCNR) account. But you must be careful about taxes you pay in your new home country as some income that is exempt in India is taxed abroad. 

Filing returns: 
There is no need to file income tax return if you don't have any income here. However, if the income accruing in India through capital gains, rent, dividend or interest is beyond the threshold limit, you will have to file tax returns. Here, too, you can claim certain deductions. So, for 2011-12 , an NRI (male, below 60 years) whose income exceeds 1.8 lakh and a person above 60 years who earns more than 2.5 lakh should file returns in India. 

Investments 
If, as a resident, you made some investments and redeemed them after becoming an NRI, these will be treated differently . For instance, NRIs cannot extend the tenure of their PPF account. Capital gainslong-term or short-term-will be applicable when you redeem/sell your past investments. If you sell shares that are listed on a recognised stock exchange in India after holding them for more than a year, you will not have to pay tax on the capital gain provided the securities transaction tax has been paid. 

Tax-saving tips 
NRIs can save on these taxes by investing in pension plans, life insurance policies and tax-saving mutual funds. The repayment by an NRI towards principal amount of home loan is eligible for deduction up to 1 lakh, while the interest payment is also allowed as a deduction. NRIs can also buy a health insurance policy here for themselves, their family and dependent parents , and claim deduction up to 35,000 for the annual premium paid. If you have been repaying an education loan, the interest paid can be claimed for deduction . NRIs can put their money in tax-saving bonds too. Capital gains up to 50 lakh earned from selling a capital asset can be invested in bonds of NHAI or REC. Investment income foreign currency bonds, are subject to tax at 20% as against the maximum rate of 30%. NRIs can invest in such assets and benefit from the lower rate. Also, an NRI can avail of lower tax rates on interest income through beneficial treaty provisions.

US call centre Bill has slim chance of becoming a law

A Bill that seeks to bar US firms that outsource call centre jobs from receiving federal grants and loans has created uproar in India, but is nowhere close to becoming a law.

The Bill, introduced by Congressman Tim Bishop, a New York Democrat, has been referred to four committees in the House of Representatives: Energy and Commerce, Oversight and Government Reform, Armed Services, and Education and the Workforce. Bishop introduced the legislation earlier this month.
The US Call Centre and Consumer Protection Act is cosponsored by two Republicans, Congressmen Dave McKinley of West Virginia and Michael Grimm of New York, and two other Democrats, Congressmen Mike Michaud of Maine and Gene Green of Texas.
“We are hopeful that the hearings may be forthcoming next year due to the legislation's bipartisan support,” Bishop’s spokesman Oliver Longwell told The Tribune.
Congressional sources said the Bill stands little chance of becoming a law. The Bill requires overseas call centre employees to disclose their location to consumers in America and gives customers the right to be transferred to a US-based call centre on request. The Bill has the support of the 700,000-member Communications Workers of America.
“It is common sense that we should not be rewarding companies that ship jobs overseas, while millions of qualified Americans are looking for work,” Bishop said. “Taxpayer dollars should only be used to give incentives to good corporate citizens who create American jobs,” he added. The Bill would also require the US Department of Labour to monitor firms that send call centre jobs overseas.
These firms would be ineligible for any direct or indirect federal loans or loan guarantees for five years. Customer service/call centre employment in the US has dropped from 5.2 million in 2006 to 4.7 million in 2010 as the US firms have relocated operations overseas in a bid to cut their own costs, according to the Communications Workers of America.
India has been one of the main beneficiaries of outsourced jobs. Outsourcing has become a contentious practice as the US economy has stalled.
“If you are frustrated by dealing with call centres that are located overseas and having to worry about the security of your personal information, this Bill will give you a choice to deal with American workers who must comply with American laws,” said Michael Gendron of Communications Workers of America.

THE FINE PRINT

• No direct or indirect federal loans or loan guarantees for five years for American firms that outsource call centre jobs
• Bill designed to limit identity theft threat at foreign call centres
• It requires overseas call centre employees to disclose their location to consumers in the US and gives customers the right to be transferred to a US-based call centre on request