NRI Tax Return Filing
NRI Tax Return
In FY 2020-21, approx. 5.89 Crore Income Tax Return has been filed in India. This includes both Income tax returns of
Residents as well as NRI tax return.
Income tax or direct taxes are the backbone of any
country. The government of any country depends on direct tax or income tax
collection for meeting the demand of huge population relating to health,
infrastructure, education, defence, roads and other needs.
Similarly, income tax collection is major source of
revenue for Indian government as well.
Indian government expects the Indian residents and
citizens to pay their taxes and file their Income Tax Return on time to the
government.
However, this expectation is not only with Indian
Residents but also with the Non Resident Indians or NRIs. Accordingly, any
person whether Residents or Non Residents have to pay their taxes and file
their tax returns in India in case his/her income is more than the minimum
threshold prescribed.
NRI Tax Return Filing - Determining Residential Status
NRI Tax
return filing
depends upon whether the source of income is from India. Taxability of
any income of an individual is also dependent upon his residential status. In
case of a resident, his income earned whether in India or abroad is taxable in
India. In case of a Non Resident, his income earned abroad is not taxable in
India. Only his income earned in India is taxable. Similarly, in case of Not
Ordinary Resident, only his income earned in India is taxable in India.
In case of following types of
income earned in India, normally, Non resident is liable to pay taxes and file
his Income tax Return in India provided the income exceeds the
basic exemption limit of Rs 2,50,000
a)
Interest on Fixed deposits
b)
Dividend from shares or mutual
fund
c)
Capital gains from sale of
immovable property
d)
Rental Income
e)
Capital gains from sale of
shares or mutual funds
f)
Salary earned in India
Some points relating to NRI Tax Return Filing
·
Like Residents, they
also enjoy the slab benefits
·
In case income of NRIs
fall under section 115G, they are not liable to pay taxes or file their tax
return in India.
·
Like residents who
need to deduct TDS in case payment is in excess of prescribed limits, there is
no such benefits available for NRIs and in case any payment is made to
non-residents who are liable for TDS, TDS is deducted on entire payment without
any threshold.
·
Deduction u/s 80C are
also available to NRIs just like Residents. However, they cannot claim tax
deductions on Public Provident Fund (PPF), National Saving Certificate (NSC)
and any schemes related to senior citizens and so on.
·
NRIs can also claim
deduction u/s 80D, 80E, 80U and section 54.
·
Any dividend received
from shares or mutual fund is taxable..
·
Earnings from
government bonds are non-taxable. Similarly, any income from from Foreign
Currency Non-Resident (FCNR) or Non-Resident External (NRE) accounts, are
non-taxable.
·
Exemptions under
Sections 54, 54EC and 54F are also available to NRIs from capital gains.
Double Taxation
There
may be a situation where same income earned by NRIs is taxed in both the
countries i.e country of residence as well as source country. In order to avoid
such situation, India has entered into Double Tax Avoidance Agreement or DTAA with
several countries.
As
per DTAA, such double taxation can be avoided by any of the 2 methods i.e tax
credit method or exemption method..
Under
exemption method, tax is payable only in one country and another country
exempts it. Under tax credit method, income will be taxed twice. However,
credit of such income can be claimed in the resident country.
Documents required for NRI Tax Return Filing
Following documents are required for filing NRI tax return in India:
1. Copy of PAN card
2. Copy of Form 16 or 16A or salary slips or
contract letter from employer/deductor.
3. Copy of Form 26AS and AIS
4. Copy of
bank statement of NRE and NRO accounts
5. Details of all the income earned in India.
6. Details of capital gain transactions
Comments
Post a Comment