NRI Taxation

NRI Taxation

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Tax filing season has arrived in India and all are getting ready with their documents and financial details for the same. However, every NRI’s has one question in Mind whenever tax season is nearby, ‘Do I need to file taxes in India as well?’.

In light of the new developments, it has become a must for all of us to clearly understand our tax liabilities and abide by them accordingly. Things become more confusing in case you are a non-resident and are not well-versed with the latest provisions.

To remove these worries, we’ve gone ahead and taken the time to put together a quick but useful FAQ series, under our TAX-IMPACT Programme to guide and assist our fellow Indians Staying abroad on understanding the basic of Indian Income Tax and Tax Filing.

“In light of the new developments, it has become a must for all of us to clearly understand our tax liabilities and abide by them accordingly. ” 

FAQ’s on Indian Income Tax Filing for NRIs. Series 

1. When and why Should an NRI File Tax Returns in India?

 Though non-resident Indians (NRIs) earn their living abroad, they are obligated to file returns in India (for AY 2019-20) when:

  • They have Gross Total income in India that exceeds the basic exemption limit which is INR 2, 50,000/- p.a.
  • they have Short Term or Long Term Capital Gains from any investments or assets , even when gains are less than 2,50,000 p.a.
  • They have to claim TDS refunds arising from NRO Savings & fixed deposits interests etc.
  • They have to carry forward losses to future years.

Note : Many taxpayers believe that if they have paid their taxes (through TDS/Advance Tax etc), so they have no further obligation. However, even if you have paid the taxes still you have to file the ITR in case the above mentioned conditions are met.

2. What all Incomes are Taxable in India for an NRI?

An NRI has to pay tax on any income that accrues or arises in India or is received in India. This usually includes rental income from property owned in India, income from capital gains, interest income (except Interest from an NRE & FCNR account ) etc. earned in  India.

3. What is the last date of Filing the tax returns in India? 

The Last date of filling a return is declared every year, and it is usually 31st July for Individual. The due date for filing ITR for Assessment Year 2019-20 is 31st July 2019.

4. What will happen when I have taxable Income, but do not file my income tax return?

Having taxable income and not filing income tax return can put you in trouble with the Income Tax. Yes, if a person who is required to furnish a return of income and fails to do so within time prescribed then he/she will have to pay interest on tax due along with Late Filing Fees and penalty. Also legal action can also be initiated.

5. What if I miss the Due Date?

In case the taxpayer misses the due date to file his return, he can file a belated return. A belated return can be filed either by the end of the relevant assessment year or before the completion of the assessment, whichever is earlier. For the current assessment year, a belated return can be filed any time before 31st March 2020 if the assesses fails to file his return on or before 31st July 2019.  You cannot file Tax Return once the Relevant AY ends.

6. ) Do NRIs Have to Pay Advance Tax?

As an NRI, if your tax liability exceeds Rs 10,000 in a financial year, you are required to pay advance tax. In case you fail to do so, you will have to pay an interest on the outstanding liability under Section 234B and Section 234C of the I-T Act.8.)

Few other Important Pointers:

a.)    Please ensure that you have your latest details (contact Number and E-mail id and address etc.) updated in the Income Tax Records. This ensures that any communication received from IT is not missed.   

b.)    You should have your Income Tax site login details, like user id and password. 

c.)    Quoting of Aadhar card number not mandatory for NRIs in their return. 

d.)    NRIs having total income above Rs 50 lakhs in India are required to report the cost of certain assets (movable as well as immovable) located in India only and the corresponding liabilities under the schedule of assets and liabilities. 

e.)    Non-residents are not required to report their assets and financial interests outside India.