Tax relief of Foreign nationals working in India
This query is : Resolved
05 February 2010
A foreign national( not resident of India) is an employee of an Indian company. He is paid in INR while for the period of service in India and in foreign currency for the period of service outside India.Tax is deducted from his salary pertaining to his service in India.
Can that foreign national make any Investment in India to get some tax relief?? If yes then how??
Can that foreign national make any Investment in India to get some tax relief?? If yes then how??
05 February 2010
Yes , Under section 80C, the condition is for availing deduction is the person should be individual or Huf.
05 February 2010
Thanks Vijay but what is the procedure?? because we remit his salary in Euro. He will be remitting the fund fund in Euro...
26 July 2025
Great question! Here’s how **foreign nationals working in India (non-residents)** can claim tax relief through investments:
---
### 1. **Eligibility for Deductions under Section 80C**
* Foreign nationals (non-resident Indians or NRIs) are **eligible to claim deductions under Section 80C** of the Income Tax Act, subject to:
* The deduction applies only to income taxable in India.
* Investments must be made in India.
* The assessee must be an individual (which the foreign national is, so eligible).
---
### 2. **Common Eligible Investments under Section 80C for NRIs**
* Life Insurance Premiums
* Employee Provident Fund (EPF)
* Public Provident Fund (PPF) — *Note:* NRIs are generally **not allowed to open new PPF accounts**, but can continue existing ones until maturity.
* National Savings Certificate (NSC)
* Tax-saving Fixed Deposits (5-year term with banks in India)
* Tuition fees for children’s education in India
* Principal repayment on housing loan
---
### 3. **Procedure for Investment and Tax Relief**
* **Investment in Indian Rupees:**
Though salary is remitted in foreign currency (Euro), investments to claim 80C deduction must be made in India in Indian Rupees.
* **Convert foreign currency to INR:**
The foreign national can remit funds from abroad to India via normal banking channels (Liberalized Remittance Scheme does not apply to inward remittance).
* **Make eligible investments:**
Using INR funds, invest in specified instruments qualifying under Section 80C.
* **Claim deduction in Income Tax Return (ITR):**
When filing the Indian tax return, declare these investments and claim the deduction.
* **Documentary evidence:**
Keep receipts, investment certificates, and bank statements showing conversion and investment.
---
### 4. **Additional Notes**
* NRIs cannot claim certain deductions like **PPF new account opening** or some other benefits restricted to residents.
* Other sections like **80D (health insurance premium)** and **80E (education loan interest)** are also available if conditions are met.
* Foreign nationals must file Indian Income Tax Return to claim deductions.
---
### Summary:
| Step | What to Do |
| --------------- | ------------------------------------------------------------------------ |
| Salary receipt | Salary paid in INR or converted to INR in India |
| Fund remittance | Remit salary/funds from abroad to Indian bank account |
| Investment | Invest in eligible Section 80C instruments in India using INR |
| File ITR | File Income Tax Return in India and claim deduction on investments made |
| Keep documents | Maintain proofs of investment, bank statements, and tax deduction claims |
---
If you want, I can also help draft a sample procedure or checklist for the foreign national to follow for investing and claiming the tax benefits. Would that help?
---
### 1. **Eligibility for Deductions under Section 80C**
* Foreign nationals (non-resident Indians or NRIs) are **eligible to claim deductions under Section 80C** of the Income Tax Act, subject to:
* The deduction applies only to income taxable in India.
* Investments must be made in India.
* The assessee must be an individual (which the foreign national is, so eligible).
---
### 2. **Common Eligible Investments under Section 80C for NRIs**
* Life Insurance Premiums
* Employee Provident Fund (EPF)
* Public Provident Fund (PPF) — *Note:* NRIs are generally **not allowed to open new PPF accounts**, but can continue existing ones until maturity.
* National Savings Certificate (NSC)
* Tax-saving Fixed Deposits (5-year term with banks in India)
* Tuition fees for children’s education in India
* Principal repayment on housing loan
---
### 3. **Procedure for Investment and Tax Relief**
* **Investment in Indian Rupees:**
Though salary is remitted in foreign currency (Euro), investments to claim 80C deduction must be made in India in Indian Rupees.
* **Convert foreign currency to INR:**
The foreign national can remit funds from abroad to India via normal banking channels (Liberalized Remittance Scheme does not apply to inward remittance).
* **Make eligible investments:**
Using INR funds, invest in specified instruments qualifying under Section 80C.
* **Claim deduction in Income Tax Return (ITR):**
When filing the Indian tax return, declare these investments and claim the deduction.
* **Documentary evidence:**
Keep receipts, investment certificates, and bank statements showing conversion and investment.
---
### 4. **Additional Notes**
* NRIs cannot claim certain deductions like **PPF new account opening** or some other benefits restricted to residents.
* Other sections like **80D (health insurance premium)** and **80E (education loan interest)** are also available if conditions are met.
* Foreign nationals must file Indian Income Tax Return to claim deductions.
---
### Summary:
| Step | What to Do |
| --------------- | ------------------------------------------------------------------------ |
| Salary receipt | Salary paid in INR or converted to INR in India |
| Fund remittance | Remit salary/funds from abroad to Indian bank account |
| Investment | Invest in eligible Section 80C instruments in India using INR |
| File ITR | File Income Tax Return in India and claim deduction on investments made |
| Keep documents | Maintain proofs of investment, bank statements, and tax deduction claims |
---
If you want, I can also help draft a sample procedure or checklist for the foreign national to follow for investing and claiming the tax benefits. Would that help?
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