Ans.
Income earned by a NRI is
taxable at slab rate (except for certain special income which is taxed at
special rate). An option is provided to the NRI
who is not earning business income to either be governed by new tax regime or old
tax regime, whichever is beneficial for him. Different slab rate
of tax is provided in New Tax Regime and Old Tax Regime and details of which along with comparison between
both the regime are explained in the ensuing paragraphs. From FY 2024-25 onwards, the new tax regime is set
as the default option. If anyone wants to continue with the old regime, he/she is required to
opt for it at the time of filing the ROI.
· The slab rates applicable to NRI individual under new tax regime and old
tax regime is tabulated below:
Total Income
|
Tax Rate under Old Tax Regime
|
Total Income
|
Tax Rate under New Tax Regime
|
Upto Rs. 2,50,000/- (basic exemption limit)
|
NIL
|
Upto Rs. 3,00,000/- (basic exemption limit)
|
NIL
|
Rs. 2,50,001/- to 5,00,000/-
|
5%
|
Rs.3,00,001/- to 7,00,000/-
|
5%
|
Rs. 5,00,001/- to 10,00,000/-
|
20%
|
Rs.7,00,001/- to 10,00,000/-
|
10%
|
Above Rs. 10,00,000/-
|
30%
|
Rs.10,00,001/- to 12,00,000/-
|
15%
|
|
|
Rs.12,00,001/- to 15,00,000/-
|
20%
|
|
|
Above 15,00,000/-
|
30%
|
· Higher basic exemption limit is available in case of
resident senior citizen. However, if the senior citizen is an NRI, such higher basic
exemption limit is not available and slab rates tabulated above will continue
to apply to all NRI individuals including senior citizens.
· The new tax regime provides
beneficial slab rates. However, the taxpayer loses certain deductions under the
said regime. The comparison of some important deductions available under both
regimes (FY 2024-25) is tabulated below:
Nature of deduction
|
Old Tax Regime
|
New Tax Regime
|
Deduction under Chapter VI A (Refer FAQs to understand the deductions available
under Chapter VIA), eg:
80C – LIC
80D – Mediclaim premium
80G – Donation
80TTA – Deduction for interest from savings account
|
ü
|
X
|
Exemption of income of Minor
|
ü
|
X
|
Interest on home loan– self- occupied or vacant property
|
ü
|
X
|
Interest on home loan– let out property i.e. property given
on rent
|
ü
|
ü
|
Family Pension
|
ü
|
ü
|
House Rent Allowance (i.e. deduction for rent paid)
|
ü
|
X
|
Leave Travel Allowance
|
ü
|
X
|
Personal Allowances (i.e. children education allowance,
allowance granted to meet hostel expenditure of his child, allowance to meet
cost of travel on tour, expenditure for purchase of uniform, expenditure
incurred on helper etc.)
|
ü
|
X
|
Deduction of payment of professional tax
|
ü
|
X
|
Standard deduction of Rs. 50,000 from salaries
|
ü
|
ü
|
Set off of loss carried forward attributable to any of
deductions referred above
|
ü
|
X
|
· Surcharge Rates: Further, the
surcharge rate for FY 2024-25 under both the regime is given below:
Income
|
Rate of Surcharge
|
Effective tax rates after
surcharge and Cess**
|
Rs. 50
lakhs to Rs. 1 Crore
|
10%
|
34.32%
|
Rs. 1 crore
to Rs. 2 crores
|
15%
|
35.88%
|
Rs. 2
crores to Rs. 5 crores*
|
25%
|
39%
|
Above Rs. 5
crores – New Tax regime
|
25%
|
39%
|
Above Rs. 5
crores – Old Tax regime
|
37%
|
42.74%
|
* Provided that in case where total income
includes dividend income from shares or long-term capital gain on transfer of
capital assets and short term capital gain on transfer of equity share in a
company or a unit of an equity oriented fund or a unit of a business trust,
rate of surcharge on amount of Income-tax computed in respect of that part of
income shall not exceed 15% and in that case effective tax rate after surcharge and cess shall be 35.88%.
**Health and Education cess shall be levied
at the rate of 4% payable on income-tax and surcharge.
Marginal tax rate relief on surcharge is
available i.e. a relief will be
provided to certain taxpayers up to the amount of the difference between the
excess tax payable (including surcharge) on the income above prescribed limit and
the amount of income that exceeds such prescribed limit.