Tax Saving Investment Options for NRIs and Senior Citizens

NRIs

Most of the deductions under section 80 are also available to NRIs. For FY 2016-17, a maximum deduction of up to Rs. 1,50,000 is allowed under section 80C from gross total income for an individual.

Of the deductions under Section 80C, those allowed to NRIs are:

  • Life Insurance Premium Payment: The policy must be in the NRI’s name or in the name of their spouse or any child’s name (child may be dependent/independent, minor/major, or married/unmarried). The premium must be less than 10% of sum assured.
  • Children’s Tuition Fee Payment: Tuition fees paid to any school, college, university or other educational institution situated within India for the purpose of full time education of any two children (including payments for play school, pre nursery and nursery).
  • Principal Repayments on loan for purchase of house property: Deduction is allowed for repayment of loan taken for buying or constructing residential house property. Also allowed for stamp duty, registration fees and other expenses for purpose of transfer of such property to the NRI.
  • ULIPS or Unit Linked Insurance Plan: ULIPS sold with life insurance cover for deduction under Section 80C. Includes Contribution to Unit Linked Insurance Plan of LIC Mutual Fund e.g. Dhanraksha 1989 and contribution to Other Unit Linked Insurance Plan of UTI.
  • Investments in ELSS

Deductions not allowed to NRIs under Section 80C:

  • Investment in PPF are not allowed.
    (NRIs are not allowed to open new PPF accounts, however PPF accounts which are opened while they are a Resident are allowed to be maintained.)
  • Investments in NSCs
  • Post Office 5 Year Deposit Scheme
  • Senior Citizen Savings Scheme.

Deduction under Section 80D

NRIs are allowed to claim deduction for premium paid for health insurance. This deduction is available up to Rs.30,000 for senior citizens.  Additionally, an NRI can also claim a deduction for insurance of parents(father or mother or both) up to Rs 30,000 if their parents are senior citizen. Therefore, an NRI will be able to claim a maximum deduction of Rs. 60,000 under this section.

Deduction under Section 80E

Under this section, NRIs can claim a deduction of interest paid on an education loan. This loan may have been taken for higher education for the NRI, or NRI’s spouse or children or for a student for whom the NRI is a legal guardian. There is no limit on the amount which can be claimed as a deduction under this section. The deduction is available for a maximum of 8 years or till the interest is paid, whichever is earlier. Deduction is not available on the principal repayment of the loan.

Deduction under Section 80G

NRIs are allowed to claim deduction for donations for social causes under Section 80G.

Deduction under Section 80TTA

Non-resident Indians can claim deduction on income from interest on savings bank account up to a maximum of Rs. 10,000 like Resident Indians. This is allowed on deposits in savings account (not time deposits) with a bank, co-operative society or post office.

 

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