Is It Necessary To File Income Tax Return For The Interest Earned In NRO Account?
Posted on October 01 2020
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Pooja lives and works in the UK. She checked her Form 26AS online and found out that a TDS entry of Rs 20,000 is showing which was deducted @30% on the interested earned in her NRO account. Whereas, she has no other income in India other than that interest. She has no idea whether she requires to pay tax for these interested earned or no. Should she file her Income Tax Return in India?
Depending on the residential status whether your income will be taxed or no in India.
Firstly, you should always find out the residential status. Since, Pooja is an Indian Citizen and has gone abroad for employment; she will be a Resident if she spends 182 days or more in India. She left India on 3rd July 2015 and returned back to India on 15th March 2016. Therefore in the financial year that began on 1st April 2015 and ends on 31st March 2016, she has spent less than 182 days in India. Since she is an Indian Citizen and gone abroad for employment, qualifying as a resident she requires to stay in India for 182 days or more. Therefore, she is an NRI for the purpose of Income Tax in India.
For Pooja, only the income earned or accumulated in India is taxable whereas the income earned abroad is not since she is an NRI. NRI are taxed depending on the income earned in India. Interest on the NRO account is exempt from tax.
Pooja is required to add all her income that she earned in India. For example, Pooja’s earned an interest on the NRO account of Rs. 80.000 as it is her income. For financial year 2015-16, the minimum income which is exempt from tax is Rs 3,00,000. Her total earned income in India is less than the minimum exempt amount and therefore she’s not required to pay any tax on it. Therefore, there is no tax which is payable by her but she is required to claim for a refund of the TDS deducted on her interest income.
A refund can be claimed only by filing an IncomeTax Return for that particular financial year. She decides to file an Income Tax Return to claim a refund of Rs 30,000. If you delay in filing your income tax return then your refund will also get delayed.
TaxAssist is a professional income tax consultancy in India for both corporate houses and individual tax payers; the latter comprising Salaried Individuals, Seafarers, Professionals and Non Resident Indians.
With the help of Tax Assist and its team of income tax professionals, taxpayers can minimize their Income Tax liability, maximize their net income and create opportunities to save for current and future needs while maintaining proper accounting standards and income tax returns which are compliant with the Law.
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