Filing Income Tax Returns NRI | ITR Filing Non-Resident India | Lower Tax Deduction | Tax Exemption Certificate | Sale of Property by NRI | Property Due Diligence NRI | Property Agreement Drafting NRI | Power of Attorney (PoA) | Property Registration (only in Mumbai) NRI| Property Legal Counsel NRI | Repatriation of Funds | Double Taxation Treaty Benefits | Form 15 CA / CB | Computation of Capital Gains Tax NRI | TDS Matters for NRI | NRI ITR Filing | NRI Tax Refunds | NRI Stock Trading | NRI Investments | NRI Mutual Funds | NRI Investment Planning | NRI Repatriation | NRI Remittance | NRI USDT Arbitrage | Providing a CA Certificate (Form 15CB) | NRI Business Setup in India | NRI FDI Policy | NRI Entry Strategy and Structuring Advice | NRI RBI and FEMA Compliance

NRI Taxation India: Filing Income Tax Returns in India | FAQs

NRIs, OCIs, PIOs, and Expatriates, residing either abroad or in India, prioritize adherence to laws and regulations. Filing Income Tax Returns (ITR) stands as a crucial compliance. It is imperative for NRIs, OCIs, and Expats to file ITRs in India for tax payment, income reporting, and reclaiming TDS deductions. Understandably, certain terms always confuses them. Following are some key terms they often seek clarification on.

 

Income Tax Return

An Income Tax Return (ITR) serves as a detailed statement of the income components earned by an individual within a given year. It is mandatory for individuals to report the specifics of their income in the ITR Form. Additionally, the form encompasses information regarding various deductions, exemptions, and reliefs that individuals can claim. The ITR form also illustrates the computation of tax on the net taxable income and provides details of taxes paid. Depending on the form's category and requirements, individuals must furnish various other information. ITR forms are filed annually for the entirety of a previous year or financial year.

Previous Year and Assessment Year

In India, ITRs are filed in the Assessment Year (AY) for the Previous Year (PY). The Previous Year aligns with the Financial Year. For example, if an ITR needs to be filed for FY 2023-24, the Previous Year would span from April 1, 2023, to March 31, 2024. Consequently, the Assessment Year for this period would be 2024-25.

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Residential Status

Understanding one's residential status is pivotal when filing an Indian Income Tax Return (ITR). Hence, NRIs/Expats/OCIs must ascertain their residential status initially. This status hinges on the number of days spent in India and is classified into three categories: Non-Resident (NR), Resident & Ordinary Resident (ROR), and Not Ordinary Resident (NOR). Typically, if an individual's stay in India is minimal throughout the year, they maintain a Non-Resident residential status. Here are the key points for determining residential status:

  1. If an individual stays in India for more than 182 days in a year, they are considered a Resident in India.
  2. If an individual stays in India for fewer than 60 days in a year, they are deemed Non-Resident in India.
  3. For stays between 60 to 181 days in India, various parameters are considered to determine residential status.
  4. A person classified as a Resident based on the above criteria can further be categorized as ROR or NOR, depending on their past 10-11 years' stay records.
  5. Additionally, a person can be deemed a Resident in India as per the new Residential Rules.
 
Taxability

Once the residential status is established, the taxability of income has to be  ascertained. Here are key points regarding taxability:

  1. Non-Residents (NRIs) or Residents but Not Ordinary Residents (RNOR) individuals are not subject to tax for their foreign income.
  2. Residents & Ordinary Residents (RORs) are liable to pay tax on their global income within India.
  3. Income earned or received in India is taxable in India regardless of residential status.

DTAA

DTAA stands for Double Taxation Avoidance Agreement which provides relief of Double Taxation U/s 90.

Instances may arise where an individual is recognized as a resident in both India and their home country according to local laws. Consequently, income may be subject to taxation in two jurisdictions: the Country of Source (where income arises) and the Country of Residence (where the individual is normally resident). To address such scenarios and others, Double Taxation Avoidance Agreements (DTAAs) are established between countries. These agreements facilitate:

  1. Determination of the Tax Resident Country.
  2. Identification of the Taxability Country.
  3. Establishment of Tax Rates in the Source Country.
  4. Provision of Tax Relief Measures if tax is imposed in the Source Country.
  5. Exchange of Information Between Tax Authorities of Both Countries.

DTAAs also offer relief, such as the Foreign Tax Credit, to alleviate double taxation on income taxed in both the source and residency countries.

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Due Date for Filing Income Tax Returns (ITR) in India

  • The due date for Indian Income Tax Returns (ITR) is July 31 of the Assessment Year.
  • However, certain business entities have a due date of September 30 of the Assessment Year.
  • For NRIs, OCIs, and Expats, the general due date remains July 31 of the Assessment Year. For instance, for the FY or PY 2023-24, the ITR due date is July 31, 2024.
  • The due date for Audit ITR is October 31, 2024, for FY 2023-24 ITR.

Preparation Of Documents and Information For ITR

Before preparing the ITR, gathering necessary information and documents is crucial. These documents and information are directly linked to income, deductions, tax payments, and other details required in the ITR Form. Important sources of information include Form 26AS, available on the income tax return filing portal, which provides details of all TDS and related income. Additionally, the Annual Information Statement (AIS) available on the Income Tax portal captures significant information. It is essential for taxpayers to reconcile their ITR with the records in Form 26AS and AIS.

Belated ITR, Revised ITR & Updated ITR

ITRs are typically filed on or before the due date. However, if missed, they can be filed after the due date as a Belated ITR or Revised ITR. These can be filed until December 31 of the relevant Assessment Year. Additionally, the government introduced the concept of an Updated ITR in the Budget 2022, allowing taxpayers to file an updated return within 2 years from the end of the relevant assessment year. NRIs and OCIs are also eligible for this provision.

E-Campaign

The Income Tax Department launched an e-campaign on July 20, 2020, to raise awareness among taxpayers about their financial transactions and encourage ITR filing. The campaign includes sending emails to individuals involved in specified financial transactions. In December 2023, the Income Tax Department issued e-campaign alerts to NRIs and OCIs regarding high-value transactions and non-filing of ITRs. It is crucial for taxpayers to file their ITRs promptly.

Filing of ITR for earlier years

If ITRs are not filed by the end of the relevant assessment year, taxpayers may wonder if they can file them later. In cases where there is a refund or carry forward of losses, taxpayers can file an application with the Commissioner or Principal Commissioner of Income Tax or CBDT. This application can be filed for not more than 6 years old. The authority considers the merits of the case and may allow or disallow the application. Subsequently, taxpayers can file the ITR to claim the refund or carry forward the loss.

CA Mitesh and Associates is India's leading NRI Taxation Firm with special focus on NRI Property matters and NRI Investments in India. Check out details of our NRI Tax Services.

Income Tax Slabs

Income Tax Slabs represent the rates at which tax is computed on the total income of the assessee. Announced annually by the Finance Minister of India through the Annual Budget, these slabs determine tax liability. For Non-Residents (NRIs, Foreign Citizens), tax slabs generally mirror those for Indian Residents. However, a notable difference is that Non-Residents do not benefit from the extended tax slabs available to Senior Citizens and Super Senior Citizens. No tax is levied if the net taxable income is less than Rs 2.50 Lakhs.

Furthermore, the tax slabs remain consistent for FY 2022-23 as they were in previous years, with new tax slabs also applicable. As such, taxpayers, including Non-Residents, can select a tax slab that offers the most advantageous tax savings based on their taxable income for the year.

Components of Income

In India, income is classified into 5 categories:

  1. Income From Salary
  2. Income From House Property
  3. Income From Business or Profession
  4. Income From Shares, Mutual Funds - Sales Capital Gain
  5. Income From Property Sale - Capital Gains
  6. Income From Other Sources

NRIs Taxability In India

Typically, NRIs/OCIs are liable for the following types of income in India:

  1. Income from House Property (With Respect to Immovable Property In India)
  2. Interest Income From NRO Bank Accounts In India
  3. Gains From Mutual Fund or Shares Traded In the Indian Share Market
  4. Gains on Sale of Immovable Property In India (Inherited Property/Other Property in India)
  5. Salary/Business Income in the year of Migration From/To India

Benefits of Filing Indian ITR

NRIs/OCIs/Expats must file an Indian ITR if any income is taxable in India. Apart from statutory compliance, there are various reasons/benefits for filing Indian ITR including:

  1. To claim a refund of TDS deducted in India
  2. To report residential status and financial transactions/income in India during a Previous Year (PY)
  3. To use ITR copy as a legal/government document for various purposes
  4. To maintain a track record with the Income Tax Department in India
  5. To carry forward losses (e.g., loss on Property Sale)
  6. To avoid Income Tax Enquiries (ITR resolves many IT Dept Notices)
  7. To avoid penalties for non-filing or late filing of ITR

Penal Provisions, Consequences of Non-Filing of ITR, Late Filing of ITR

Penalties and consequences of late filing or non-filing of ITR in India include:

  1. Penalty fee for late filing
  2. Loss of TDS refund claim
  3. Late processing of ITR
  4. Lapse in carrying forward of losses
  5. Notices from the IT Department

E-Filing of ITR in India, ITR Filing Process

As per Income Tax Provisions, ITR in India can only be filed online, i.e., through the e-filing process. Key features of this process include:

  1. Registration on the income tax e-filing website (eportal.incometax.gov.in) to create a login ID.
    Filing Income Tax Returns NRI | ITR Filing Non-Resident India | Lower Tax Deduction | Tax Exemption Certificate | Sale of Property by NRI | Property Due Diligence NRI | Property Agreement Drafting NRI | Power of Attorney (PoA) | Property Registration (only in Mumbai) NRI| Property Legal Counsel NRI | Repatriation of Funds | Double Taxation Treaty Benefits | Form 15 CA / CB | Computation of Capital Gains Tax NRI | TDS Matters for NRI | NRI ITR Filing | NRI Tax Refunds | NRI Stock Trading | NRI Investments | NRI Mutual Funds | NRI Investment Planning | NRI Repatriation | NRI Remittance | NRI USDT Arbitrage | Providing a CA Certificate (Form 15CB) | NRI Business Setup in India | NRI FDI Policy | NRI Entry Strategy and Structuring Advice | NRI RBI and FEMA Compliance
  2. The login ID is created with PAN number, mobile number, email ID, and other details. No documents are needed.
  3. The assessee can prepare their ITR online using facilities on the website or by generating a JSON file through software.
  4. The file is then submitted on the web portal of the income tax department.
  5. Upon submission, an acknowledgment (ITR V) is generated, which needs to be e-verified on the web portal or sent in hard copy (after signing) to the processing center of the Income Tax Department in Bangalore.
  6. The Income Tax Department's Central Processing Centre processes the ITR and issues refunds if applicable.

CA Mitesh and Associates is India's leading NRI Taxation Firm with special focus on NRI Property matters and NRI Investments in India. Check out details of our NRI Tax Services.

Why Choose Our Services

CA Mitesh & Associates is a renowned Chartered Accountant and Tax Consultancy Firm with strong online presence and offices located in India. We pride ourselves on our specialized team dedicated to assisting NRIs, Expats, and Foreign Citizens with their tax matters, including ITR filing. Here's what sets us apart:

  1. Expert Team: Our team comprises experts proficient in handling NRIs' tax matters, including NRI ITR filings.
  2. One-Stop Solution: We offer comprehensive services for NRIs, providing a single point of contact for various NRI-related services, including ITR filing.
  3. Extensive Experience: With years of experience, we have successfully catered to NRIs, OCIs, and Expats from diverse countries worldwide.
  4. Best Practices: We employ the best methodologies, processes, and technologies to deliver convenient and effective services.
  5. Minimal Litigation: Our approach aims to minimize litigation, ensuring smooth tax compliance for our clients.
  6. Quick Refund Processing: We prioritize fast refund processing for ITRs, ensuring timely financial returns for our clients.
  7. Address and Representative Services: We provide address and representative services tailored to the needs of NRI ITR filers.
  8. Global Coverage: With our strong online presence and technology, we ensure comprehensive support for our clients worldwide.

FAQs - NRI Taxation India - Filing Income Tax Returns in India

Above information can be helpful to NRIs, Expatriates and Other Non-Residents in relation to their various doubts about Indian ITR such as:

Question: What are the provisions of Indian Income Tax Return in relation to NRI, Foreign Citizens ITR in India?

Answer: The primary provision that significantly impacts the taxation of NRIs and Foreign Citizens (PIO, Expats) is their Residential Status. Typically, NRIs and Foreign Citizens fall under the categories of Non-Resident or Resident but Not Ordinary Resident. In both cases, the scope of Indian ITR is limited to income earned or received within India. Therefore, the determination of residential status is crucial for NRI and Foreign Citizen ITR in India. Additionally, understanding terms such as previous year, assessment year, due date, and scope of income is essential.

Question: Whether NRI, Foreign Citizens (PIO, Expats) are required to file ITR in India? Is ITR mandatory for NRIs, Foreign Citizens even if they have nil or very minimum income in India? Why NRIs should file ITR in India if their income in India is below the taxable limit? What are the benefits of filing ITR in India?

Answer: NRIs, Foreign Citizens (PIOs, Expats) are subject to the same ITR filing requirements as Resident Indians. ITR filing is mandatory if their Total Income exceeds the basic exemption slab limit of tax. However, if their Total Taxable Income in India is below this limit, there is no legal requirement to file the ITR in India (Sec 139 of Income Tax Act). Nonetheless, if they engage in financial transactions in India, it's advisable to file an ITR to maintain tax compliance. NRIs, Foreign Citizens (Expats, PIOs) can benefit economically by claiming refunds of TDS and tax compliantly by keeping track records and avoiding income tax inquiries.

Question: How is an ITR filed? Can NRI or Foreign Citizen (PIOs, Expats) file their ITR on their own? Whether NRI or Foreign Citizen needs Chartered Accountant or Tax Consultant (CA) Services for filing ITR in India?

Answer: ITR filing in India is now online (eportal.incometax.gov.in), accessible from anywhere with internet access. However, ITR filing is a legal process involving technical aspects, where even a minor mistake can have costly consequences. Therefore, it's advisable to seek the assistance of a Tax Expert. Chartered Accountants are authorized to provide ITR filing services to NRIs, PIOs, Expats, ensuring correct filing and offering tax planning advice tailored to their circumstances.

Question: I am an NRI. I have an immovable property in India, which is rented out. Is filing of ITR required for this transaction?

Answer: There are two scenarios to consider. If the rental income from the property exceeds the taxable limit, filing ITR is mandatory. However, if the rental income is below the taxable limit, filing ITR is not mandatory but beneficial. Any TDS deducted can be claimed by filing the ITR.

Question: What are the Income Tax Slabs for NRIs in India? What is the importance of Tax Slabs for Non-Residents? Is filing of ITR required if Non-Resident Income is within the Nil Tax Slab Rate? What is the impact of tax-saving investments to bring total income below the taxable limit?

Answer: Tax Slabs are annual tax rates published through the Indian Budget. These rates apply to Non-Residents on a yearly basis. NRIs can calculate their tax on total income in India based on these tax slabs. If their taxable income falls within the Nil Tax Slab rate, ITR filing is not mandatory. However, NRIs may choose to file ITR for various purposes and benefits. Tax-saving investments can reduce total income below the taxable limit, providing tax benefits.

Question: What is the last date to file Belated and Revised ITR for FY 2023-24 for NRIs, OCIs, Seafarers? What is the due date for FY 2023-24 ITR filing for Non-Residents, NRIs, Foreign Citizens, Seafarers? Whether there is any extension in FY 2023-24 ITR Filing Due Date? Is it applicable for Non-Residents?

Ans: Belated and Revised ITR for FY 2023-24 can be filed until Dec 31, 2024, applicable to NRIs, OCIs, Seafarers, and Merchant Navy Employees. The general due date for filing ITR for FY 2023-24 is July 31 2024. Additionally, under new provisions introduced in the Budget 2022, Updated ITR can be filed within 2 years from the end of the assessment year with some penalty fee, applicable to all assesses including Non-Residents (Foreign Citizens, NRIs, Expatriates, Seafarers), and Residents.

DISCLAIMER

Lower Tax Deduction | Tax Exemption Certificate | Sale of Property by NRI | Property Due Diligence NRI | Property Agreement Drafting NRI | Power of Attorney (PoA) | Property Registration (only in Mumbai) NRI| Property Legal Counsel NRI | Repatriation of Funds | Double Taxation Treaty Benefits | Form 15 CA / CB | Computation of Capital Gains Tax NRI | TDS Matters for NRI | NRI ITR Filing | NRI Tax Refunds | NRI Stock Trading | NRI Investments | NRI Mutual Funds | NRI Investment Planning | NRI Repatriation | NRI Remittance | NRI USDT Arbitrage | Providing a CA Certificate (Form 15CB) | NRI Business Setup in India | NRI FDI Policy | NRI Entry Strategy and Structuring Advice | NRI RBI and FEMA Compliance

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