What are the Income Tax Deductions for NRIs in India?

I recently filed my return from the UK. My advice is to prepare all your supporting documents before you start filing.

Besides my PAN card, I kept copies of my investment proofs, TDS certificates, property tax receipts, bank interest certificates, and rental agreement. Although I wasn't asked to upload these documents during e-filing, my accountant recommended keeping them safely in case they were needed for future verification.

Tax rules and deduction limits can change from year to year, so I always check the latest provisions before filing instead of relying on older blog posts.

I'm based in Canada and file returns in India because of fixed deposit interest and capital gains. One thing I learned is that not every deduction available to resident Indians automatically applies to NRIs.

Before claiming any deduction, I checked the Income Tax Department's guidance and discussed my return with a chartered accountant. That helped me avoid claiming deductions that weren't applicable to my situation.

I also reviewed whether I could benefit from the Double Taxation Avoidance Agreement (DTAA) between India and Canada. If you earn income in more than one country, it's worth checking whether tax relief is available under the applicable treaty.

I live in Dubai and have been filing my Indian tax return for several years because I own a rental property in Kochi. In my case, I was able to claim eligible deductions related to my home loan and investments.

I claimed the principal repayment under Section 80C (where applicable) and the home loan interest deduction according to the tax provisions. I also kept records of municipal taxes paid and all rental income received during the year.

While filing online, I wasn't asked to upload every document, but I made sure I had my home loan interest certificate, insurance receipts, bank statements, and Form 16A available in case the Income Tax Department requested them later.

Here are some of the deductions for the NRIs that are not allowed in India according to the Income Tax. 

Deductions which are not allowed under section 80C: 

• You cannot do investments under the PPF. 
• Any investments in the national savings certificates (NSCs). 
• Investments under the senior citizen savings scheme (SCSS). 

Deduction under section 80DD for the differently abled 

Deduction under differently abled under section 80DDB. 

Deduction under section 80U for the differently abled. 

You get the following deductions under section 80E: 

• You can get a deduction for paying the education loan interest. 
• You can get this for higher education for the NRI children, spouse, or student. 
• There is no specific limit that you can claim as a deduction under this section. 
• You can get a deduction for a maximum of 8 years until the interest is paid.