When a non-resident Indian has income from foreign exchange assets as well as other income, tax planning assumes special significance. A calculation has to be made by the non-resident of the income tax payable on the investment income out of such foreign exchange assets. In the case of a large investment it would generally be prudent for him to be liable to income tax according to the special provisions of Chapter XII-A @ 20% income tax only. As regards his other income, he would be liable to income tax on the usual slab rates of tax. Where, however, the non-resident finds that the investment income is below Rs. 9,60,000 it would be better for him to be taxed like a normal resident individual. If this tax planning is adopted by him he would pay less tax. |
