When Should An NRI File Their Income Tax Return In India?
Posted on October 01 2020
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You have packed your bags and left India to settle down in abroad. But, you have earned an income from the assets that you still own back home or have deposits lying in the bank accounts in India. If you are an NRI, you may be unsure about filing an income tax return in India. As a thumb rule, if your gross total income is more than Rs 2,50,000, before allowing any deductions(under section 80) then you should file an income tax return in India. While the resident senior citizens and the super senior citizens enjoy higher exemption limits, the maximum exemption limit of Rs 2,50,000 is fixed for an NRI irrespective of his or her age.
For estimating this gross total income, a resident has to include all the incomes which is earned by her while staying anywhere in the world. While a non-resident’s gross total income for paying the taxes in India only comprises income which is earned by them in India. So, what are the incomes that a non-resident is taxable for in India?
Income from the salary will be considered to arise in India, if your services are accomplished in India. So, even though you may be an NRI, but if your salary is paid towards the services which are provided by you in India then it will be taxed in India. If the NRI owns a house property which is situated in India such income is taxable in India. The capital gains from the sale of property in India will be taxable in India. Similarly income earned from the deposits held in India should be included in your income. If the sum total of these income crosses Rs 2,50,000 then the NRI requires to file income tax return in India.
Another scheme where an NRI should file an income tax return is when the NRI seeks a refund. This can only happen when the Tax Deductible at Source (TDS) has been deducted on the NRIs income but his/her gross total income is below Rs 2,50,000 limit. A refund can only be desired by e-filing your income tax return.
Where an NRI has losses to carry forward then an income tax return should be filed by him/her.
There are a few schemes where an NRIs income will be considered as ‘earned’ in India and will be included in the income tax return in India.
If you have accounts or deposits in India. Any interests earned as income in India are taxable.
If you have moved abroad during the financial year 2015-16 and you are an NRI for purposes of income tax for financial year 2015-16. Preceding to your move, you have spent a few months in India and have earned salary in India, your employer has provided you a Form 16 and all the taxes are duly deducted by your employer. If your gross income from this employer and including all your other incomes in India for the entire financial year crosses Rs 2,50,000 then you should file an income tax return in India. If your gross income does not cross Rs 2,50,000 then you should still file your income tax return to claim a refund of the TDS which has been deducted.
If you have a house property in India which you have given out on a rent for an annual rent of Rs 3,00,000, this is your only income from India. As per rules of taxation for the house property, you can deduct 30% of the rent allowed as a standard deduction and also property taxes which are paid by you, if the resulting amount is less than Rs 2,50,000 then you are not required to file your income tax return in India. Generally, the tenants deduct TDS on the rent before making a payment to the NRIs, and therefore if TDS was deducted on your rental income then you can file an income tax return to seek a refund.
If two or more house properties are owned by you in India, though none of these are given out on rent. There is no rental income. In such a case as per the income tax act, only one house property should be considered to be self-occupied and its income should be considered nil and all others will be considered allowed to be let out properties and then you will have income from that house property, you will be required to file an income tax return in India, if your income crosses Rs 2,50,000. You have deposits in India and bank deducted TDS from your deposits. While your total Income in India is less than Rs 2,50,000 then file an income tax return in India to claim a refund for the excess tax deducted. Do note that NRIs cannot submit Form 15G and Form 15H to prevent the deduction of TDS.
If you have been settled down in abroad and you have decided to sell your only house property in India which was given to you by your parents, any capital gain on this house property is subjected to be taxed and therefore an income tax return is required to be filed.
If you decide to buy a car for your parents who are residing in India, no income tax return is required to be filed by you, and there is no tax liability for you upon the gifts to your parents.
The due date to file income tax return for NRIs and Residents individuals is July 31, 2016 for income earned in the financial year 2015-16. If there is tax payable in your return then you may have to pay penal interest, so do calculate your taxes and then file your income tax returns in time.
Tax Assist 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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