Do NRIs need to file income tax return in India?


income tax returns, nrihelpinfo

From the last 25 years, there has been a tremendous change in the Indian Economy. GDP Growth rates have risen, India has integrated more with the global economy, NRIs are growing as more and more Indians are settling overseas. Many Indians, presently NRIs, who left India to settle in overseas nations in the last 3 decades have an individually common problem of filing of Income Tax Return in India. Most of NRIs have either not filed Income Tax Returns or some have been filing Income Tax Returns erroneously as Resident Indians. Still, there is another substantial minority of NRIs who have Income in India, but they haven’t bothered to file Income Tax Returns in India itself. This carelessness or oversight can be attributed to some of the usually held misconceptions by these people:

  1. I don’t need to file Income Tax Returns as I do not earn wages or have a business in India.
  2. Banks and many financial institutions already deduct TDS, so, there is indeed no need to file Tax Returns in India.
  3. I live in a tax-free country, so I definitely do not have to pay any taxes
  4. I only have a couple of properties in India and have no other source of an income, therefore why should I pay taxes?
  5. I have a rental income, though again it is not above the threshold limit for filing of Income Tax Returns in India
  6. I only have Investment in Mutual Funds and Insurance or Bank Deposits, and the Income from them is tax-free, hence I do not need to file an Income Tax Return.

With the changes in Income Tax Provisions about Long Term Capital Gains in this year’s budget in India, NRIs will have no option but to file the Income Tax Returns.

Some of the reasons “Why NRIs Should File Income Tax Return in India” are:

  1. If NRIs have an income over the threshold limit of INR 2,50,000 lakhs
  2. If any financial institutions or banks have deducted TDS
  3. If NRIs have LTCG (Long Term Capital Gains Tax) on account of selling of any financial instruments, for example, Equity, Private Equity, Mutual Funds, and so on
  4. If the time period of a sale of property by them was in association to the time of TDS deduction
  5. If NRIs have an Indian credit card in their possession with some transactions that have been made
  6. If there have been funds deposits in their account
  7. If they want to claim the benefits of DTAA
  8. If they want to get the benefits of various Tax Deduction Plans available in India
  9. If they have more than one property in India (as the second property possess by NRIs, the same of market rent on that second property will be considered to be an Income in India -unless they file an ITR (Income Tax Return) and claim the appropriate adjustment)

With the linking of Aadhar Card and Pan Card with all kinds of investments and property purchases and sales coupled with the use of Big Data by Indian Regulatory authorities, it is important that NRIs should begin Filing Income Tax Returns. In fact, many times, by not filing ITR NRIs end up losing the benefit of receiving a refund for Tax Deducted at Source (TDS) which had been deducted at a higher rate.

In conclusion, it is essential for NRIs to File Income Tax Returns in India to avoid future assessment notices and peace of mind.

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Do NRIs need to file income tax return in India?

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