Tips for NRIs Filing Income Tax Returns in India
NRIs are Indian citizens who have left the country and settled down in a foreign land for employment purposes or for carrying on business or are on a vacation or any other circumstance that indicates that the stay would be for an uncertain period in abroad.
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 –
1.) Income accrued or to be accrued
2.) Income sourced from India
3.) Income received or to be received
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.
Tips for NRIs filing income tax returns in India
- 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.
Exemptions –
- 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.
Deductions –
- 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.
Contributed By: Megha Sharma |
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Megha Sharma works as a guest lecturer in Delhi. She holds an MBA & Doctorate from the UPTU. With extensive knowledge and experience in various financial products, she also works as a consultant in banking & finance domains wherein she offers advice to her clients in managing personal finance. | |
I am an NRI employee in Africa in african base company. I get salary in USD in africa and I remit the same from africa to my Indian account which is normal saving account in INR.
1. as far as I know I am not liable for filling any tax return as my income is exempt but then too please confirm.
2. If I want to file NIL return then in which ITR I have to file and under which section.
3. Is there any compulsion that NRI should remit their income in NRE/NRO/NRI a/c only, are they allowed to r