Further, individuals will be considered RNOR for the year if they meet the following conditions
The concept of deemed residency was introduced in Finance Act 2020. According to this, Indian citizen earning more than Rs 15 lakh from Indian sources shall be deemed a resident of India (resident but not ordinary resident) if they are not liable for payment of taxes in any other country. This became applicable from FY 2020-2021.
The deemed resident shall always be resident but not ordinary resident (RNOR).
Under this scheme tax on long term gains of is paid @ 10% and tax on interest income is paid @ 20% in respect of foreign exchange assets.
For long-term capital gains made from the sale or transfer of these foreign assets/interest income earned on such assets, there is no benefit of indexation and no deductions allowed under any provisions of income tax.
But exemption can be availed on long term capital gain under Section 115F when the gain is reinvested back into the foreign exchange assets with a lock-in period of 3 years.
In this case, capital gains are exempt proportionately if the cost of the new asset is less than net consideration.
The above benefits may be available to NRI even when they become a resident – until such an asset is converted to money and upon submission of a declaration by the NRI to apply the special provisions to the assessing officer.
The NRI may choose to opt out of these special provisions, and in that case, the income (investment income and LTCG) will be charged to tax under the regular provisions of the Income Tax Act.
Income tax return is not required to be filed by NRI if total income includes only interest income and LTCG and TDS has been deducted on such income.
New Income Tax Regime