Tips for NRIs Filing Income Tax Returns in India
This definition also covers individuals who are posted in U.N. Organizations and Officials who have been sent to the foreign land by Central/State Governments and Public Sector undertakings on temporary. Now, if we talk of filing income tax returns then if an NRI’s taxable income in India exceeds the prescribed exemption limit than they are liable to file return of income.
Taxable Incomes of NRIs– Following are the taxable incomes of NRIs –
Note – Double Taxation Avoidance Agreement works well in favor of NRIs. It is a contract made between India and a number of foreign countries by way of which you as an NRI can be saved from being taxed in the country of your residence.
As an NRI, you are liable to pay taxes if your earnings in India have been more than the exemption limit. You are exempt from filing income tax returns if your income is churned out by long term investments. Permanent Account Number (PAN) is the most essential ID that you need to hold for file income tax returns. You may file your returns either online or in physical form.
Forms for NRIs
- ITR 1 – For Those of you who have received or accrued income from farming
- ITR 2 – For Thos of you who do not have any other profession or business apart from partnerships in companies.
- ITR 3 – For Those of you who do not have any other profession or business apart from partnerships in partnership firms.
- ITR 4 – For those of you who have received or accrued incomes from proprietary business.
- You will have to follow the online procedure of filing returns if your taxable income stands more than Rs 10 lakh. This was made mandatory by the Central Board of Direct Taxes (CBDT) from financial year 2011-2012.
- Make sure that you apprise yourself clearly about the interest liabilities on non-payment of advance tax. As an NRI, you should be clear about the amount of tax that had to be paid by you and see whether it has been paid on time or not. Incase of default you need to recalculate the due amount and payoff the same prior to filing your income tax returns in India.
- Make sure that you do file a return in order to get your refund. You must remember that in case if you have a refund due, you must claim the refund of any excess taxes that have been paid by you.
- It is very much important for you to provide your accurate bank account number along with the MICR code of the branch. This needs to be done with more precision if your mode of filing income returns in India is online.
- You need to know that dividends that you earn from mutual funds and equity shares are exempt form tax in India
- Long term capital gains on equity mutual funds and equity shares do not qualify for taxable slab which means that any gain that gets accrued to you from selling the units after one year of purchase is not taxable in India. However, you are required to pay securities transaction tax at the time of sale of these funds.
- All interest that is received by you in your FCNR and NRE account does not fall under the taxable slab.
- You are entitled to claim a deduction on mortgage interest along with ad hoc deduction of 30% of net annual value as repairs and maintenance expenses in case you have given your property on rent.
- Section 80G makes you entitled to claim a deduction if you have extended your contribution towards any approved charity.
- Section 80C entitles you to claim deduction for making investments in any of equity linked saving schemes, PPFs, life insurance premiums etc but that is to the extent of Rs 1 lakh every financial year.
- Section 80D entitles you to claim a deduction if you have a running health insurance policy in name of your dependents or in your name. You get a deduction of Rs 15000 if you have a health insurance policy in name of your spouse and your dependent children. You are entitled to claim an additional deduction of Rs 15000 too if you have same in name of your parents. The latter deduction of Rs 15000 can be raised to Rs 20000 if any of your parents has crossed 65 years of age.