Non Resident Indians (NRIs) are eligible for deductions under Chapter VI A as are available to Resident Individuals. There are certain incomes which are exempt for all taxpayers and it does not vary with the residential status of individual. These incomes includes agricultural income, dividend income and specified capital gains (e.g. long term capital gains u/s 10(38) arising out of sale of equity shares on stock-exchange on which STT is paid and also long term capital gains on sale of mutual fund units). However there are two most common incomes exempt only in the hands of NRIs, which are as follows:

• Interest income of NRIs from Non Resident External (NRE) Accounts is exempt from income tax.
• Interest payable by a scheduled bank on Foreign Currency Non-Resident (FCNR) deposits is also exempt under the Income Tax Act.

Deductions under Section 80C, 80CCC, 80CCD All the tax saving options and investment instruments provided under Section 80C, 80CCC and 80CCD are available for NRIs except the following:

• They are not allowed to open a PPF account. But an existing PPF account can be continued till maturity.
• Any investment in National Saving Certificates (NSC), Senior Citizens Savings Scheme (SCSS) and Post Office Time Deposits (POTD) is not permitted.  But those that were purchased before becoming an NRI can be continued till maturity.

However an NRI can invest a maximum of Rs.100000 under this section. A special deduction of Rs.20000 u/s 80CCF would be permissible on investment on any long – term infrastructure bonds as notified by the Government. Deductions under Section 80D – Health Insurance Premium Non-residents Indians can claim deduction under section 80D for premium paid on medical claim / health insurance policy of self and family (Rs15000 / Rs20000 as the case may be) and Rs15000 (Rs20000 if either of parents is a senior citizen) premium paid towards insurance of the health of parents. Other Deductions under Section 80

• Deduction for interest paid on educational loan is allowable u/s 80E for 8 years.
• Deduction u/s 80G is also allowed donations paid to specified institutions subject to certain ceiling limits.

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