A citizen of a different country residing and working in India is liable to pay taxes as per the provisions stated in the Income Tax Act, 1961. Income earned by a foreign national within India is taxable under law and is implemented regardless of his/her status as a residence or citizen of the country. However, the individual can file for tax returns if he/she earns less than a minimum exempted amount.
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Foreigners who reside in India must and are liable to pay taxes must pay taxes on the following types of income:
An income earned by a foreign national while his service tenure in India is taxable as per the rules of the ITA irrespective of his citizenship or residential status. This payment can be generated either through a job or through the services rendered. The income tax is collected through TDS and foreign nationals can file for returns if their income is less than a minimum exempted amount.
Usually, foreign nationals have to pay taxes based on their residential status which are as follows:
In India, an individual income is taxed as per the income tax slabs he/she belongs to. The taxes are levied based on the residential status of the individual and his income level. The non-employment income is also liable to be taxed at a variable rate depending on the income type. Thus foreigners fulfilling the above-mentioned criteria are liable to pay taxes on their incomes as per the provisions of the Income Tax Act, 1961.
Foreign nationals can avail certain benefits with respect to taxation within India. They can avail benefits through the Double Tax Avoidance Agreement (DTAA). The DDTA is an agreement between two nations that helps foreign nationals to avoid paying taxes on the money he earns. Thus foreign nationals, whose incomes are liable to be taxed in India as well as in their own country, can avail the DTAA as a way out of being doubly taxed on the income he/she earns.
Foreign nationals are required to submit the following documents while filing income tax returns in India:
Form 16: This form can be collected by the individual filing for taxes from his employer. It contains information that includes information about an individual’s income, deductions made from the individual’s income during the financial year etc.
TDS certificate: The TDS certificate is also identified as Form 16A. The form can be acquired from financial institutions. It mainly contains details of the taxes that have been deducted on other income earned by the individuals like investments or a side business etc.
See Also: Tax Exemptions To Invest Wisely
Bank statements: Bank statements are important documents for foreign nationals while applying for income tax returns. Thus they are required to provide the details of all transactions made throughout the financial year. These transactions include investments, income accrued, expenditures etc.
Details of property: Properties or assets sold within the country are liable to be taxed as capital gains tax. Details of the sale of property or assets must be mandatorily presented while filing for tax returns.
Investment proofs: If a foreign national has made any type of investments in India, then they are liable to provide proof of the same. The step is necessary if the investments do not feature in form 16.
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