How does Indian central government encourage investments from Non Resident Indians (NRI), Person of Indian Origin (PIO)? What the benefits and exemptions they offer to this audience? How can NRI, PIO avail these exemptions? Find out in this document.

1. Process of availing NRI Tax Exemptions
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Process of availing NRI Tax Exemptions
NRIs, PIO and OCBs while investing in India need to follow certain procedures to avail tax exemptions.
They should estimate income, tax liability and likely TDS and then apply for partial or complete Tax
Exemption certificate.
Calculating the NRI income
To simplify the calculation of the net income of a Non Resident from his gross receipts in India, the law
provides for taxation of the income of the Non Resident on 'Gross income basis', which means that the
tax liability is determined on the basis of gross receipts without going into the question of expenses
incurred in earning those receipts. Such 'Gross receipt basis' taxation operates in two ways:

2. Process of availing NRI Tax Exemptions
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Tax Exemptions from Property Investments
Income from House Property
Income from House Property is the annual value of House Property, of which the assessee is the owner.
House property consists of buildings or land. The land may be in the form of a compound housing the
building. Any rent received from standalone vacant plot is not assessable as "Income from House
Property".
One self-occupied House Property or part of such property owned by an individual and used for personal
use, but not let out, in the previous year, will not be taxable.
From the assessment year 2002-03, Income from House property is classified as: Let out Property
(L.O.P.), and Self Occupied Property (S.O.P.)
The following two deductions are available from the income under the head "Income from house
property" under the Income tax Act, 1961.
Standard Deduction: 30 per cent of net annual value is deductible irrespective of any expenditure
incurred by the taxpayer.
Interest on Borrowed capital: Interest on borrowed capital is permitted as deduction if capital is
borrowed for the purpose of purchase, construction, repair, renewal or reconstruction of the house
property.
OR
When more than one property is occupied for own residential purposes: Where the person has occupied
more than one house for his own residential purposes, only one house (according to his choice) is
treated, as self-occupied and all other houses will be "deemed to be let out".

3. Process of availing NRI Tax Exemptions
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Tax Exemption Procedure for Setting up Industrial Park
1. Application in the form IPS-1, also available on the website of Department of Industrial Policy
and Promotion to avail 100 per cent tax exemption for setting up an industrial park. This
exemption available under the 801A of the Income Tax Act, should be made to the Public
Relation and Complaint Section of the Department of Industrial Policy and Promotion.
2. Application for automatic route to be submitted in duplicate and for non-automatic approval
the application should be in six sets.
3. Application to be accompanied by a fee of Rs.6,000/- by a demand draft drawn in favour of the
Pay and Accounts Office, Department of Industrial Policy and Promotion payable at New Delhi.
4. Application for automatic route to be in accordance with the Industrial Park scheme, 2002 shall
be disposed of usually within 15 days.
5. Applications not eligible under the automatic route require the approval of Empowered
Committee set up in the Department of Industrial Policy and Promotion. On consideration of the
proposal by the committee the decision is usually conveyed within six weeks.
Source: National Housing Bank
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