Life insurance and pension plans
The Life Insurance and Pension Plans are tax efficient schemes for NRIs. Life insurance will offer a maximum of Rs 1 lakh, which is the upper cap under Section 80C of the Income Tax Act.
ELSS (Tax saving Equity Mutual Fund schemes)
ELSS also offers similar benefits under Section 80C of the Income Tax Act. ELSS are equity linked mutual fund schemes that invest in a diversified portfolio of Indian stocks. ELSS schemes can be purchased online, but do remember there is an element of risk in ELSS as they invest sums into equity markets. However, they are tax efficient instruments for NRIs.
Loan to buy a home
Buying a house property is beneficial for NRIs as the interest income and principal income will allow for a tax rebate. The total deduction for interest payment on home loans for 2013-14 was hiked to Rs 1.5 lakh by Finance Minister Chidambaram in the Union Budget earlier this year. The principal amount repayment on home loan already qualifies for a tax rebate of Rs 1 lakh.
Health insurance premium
NRIs can take a health insurance policy from Indian companies for themselves, their family and also dependent parents and claim deduction for the premium paid. The limit is Rs 15,000 under Section 80D of the Income Tax Act.
Like resident Indians, non resident Indians can also take educational loans and claim tax deductions.
There are various other tax benefits that apply to resident Indians that can also apply to NRIs, for example donations to approved institutions.
It's important to note that NRIs cannot invest in Public Provident Fund, National Savings Certificate, Senior Citizens Savings Account and Tax Saving Infrastructure Bonds.