Tax question for NRE investment in India. (we are USA residents.)

rental income is income in india even if it is bought as an nre.

 

If you are a US Resident then you should report your worldwide income. So you should report the rental income from India.

Hope this helps!

 

Whatever income u earn in India is taxable even if you r NRI I mean Rental income (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). ,savings interest(except NRE,FCNR account),long term or short term capital gain,Profits or gains of business or profession,the income earn on bonds,stocks in India all these are subject to taxable In India. If any of this income in total(ur Rental income included) not beyond the base slab for the financial year 2011-2012 i.e 0-1,80,000 Rs for General tax payer which is no tax then you don't need to pay tax in India. But if it is beyond that then u need to file the income tax in India. And about USA mostly people don't declare Indian rental income here.

 

If you are a US Citizen/Permanent Resident you need to declare your worldwide income irrespective of where it was earned. If you are a Indian Citizen staying in US (US Resident for tax purposes) you still need to declare your worldwide income in your US return.
Similarly as per Indian Tax Laws you will need to declare the income earned in India on your Indian tax return.

Declaration does not meen that you need to pay double taxes. If you have declared your income in India Tax Return and paid taxes in India, you will qualify for claiming Foreign Tax Credit for the taxes paid in India when you declare it in your US Tax Return. This will avoid dual taxation.

This document may help you understand the relevant tax laws better
http://finsai.com/docs/tax/USIncomeTaxesNonResidents.pdf

Get in touch for any queries
Shilpa