Deposits made in Non-Resident External (NRE) / Foreign Currency Non – Resident (FCNR) deposits:

In case where such HNIs are non-resident Indians and have liquid funds, they can opt for investment in the term deposits under the NRE rupee deposits or FCNR (foreign currency deposits) accounts, interest from which is exempt from tax under the income tax of India. This kind of investment strategy can be adopted in case of a risk averse investor having deep pockets, who wish to invest in India and also avail of the tax benefits.

Tax Planning Through Home Loan:

HNIs can buy residential house on home loans. This will increase their wealth and at the same time help them to plan their taxes. If a residential house is purchased through a home loan, this will allow an individual to claim deduction of interest under section 24. The maximum deduction allowed for a self occupied property is Rs 2,00,000.

 In case of a person having more than 1 house property, then the deemed rental provision will allow him to set off full amount of interest against the market rental of that property.

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