NRI Income Tax Return Filing in India – NRI Status, Tax applicability to NRI, Due Date for Filing Income Tax Return & Procedure

Introduction

NRIs must pay tax in India on capital gains from shares, mutual funds, term deposits, and rental property if they exceed the basic exemption ceiling, despite the fact that income received outside of India is not subject to tax there. In this article information such as NRI Income Tax Return Filing in India, NRI Status, Procedure for filing Income Tax Return, and Due date for filing NRI ITR is mentioned.

NRI Status

Based on a person’s actual stay in India, residency for tax purposes is determined. For tax purposes, NRI residency may be determined by one of three circumstances:

• First, if a person stays in India for fewer than 60 days during a given fiscal year.
• Second, where the stay exceeds 60 days but falls between 182 and 365 days, and when the total length of stay over the four years prior to the year in question is less than 365.
• Lastly, if a person leaves India to accept a job outside of India and stays there for fewer than 182 days in the year of departure.

The Income Tax authorities determine whether a specific person would be recognized as an Indian resident for a specific financial year based on the criteria mentioned above decides residency status of NRI (Non-Resident India).

Information on NRI Income Tax Return Filing

It is crucial to comprehend just how an NRI begins to be responsible for paying taxes in India. According to the Foreign Exchange Management Act’s provisions, a citizen of Indian descent can only be referred to as an NRI if they have maintained a relative duration of absence from India while travelling abroad for a predetermined number of days.

By default, an NRI’s foreign income is not subject to tax in India. However, an NRI would need to submit a tax return if their income in India from things like capital gains from investments in mutual funds, shares, rental property, and term deposits exceeded the basic exemption amount as outlined in the Income Tax Act.

The interest earned on capital gains from term deposits, shares, and mutual funds is taxed at the highest rate under the taxation imposed on the income of NRIs from sources based in India. That usually eliminates the requirement for filing any tax returns. On the other hand, it is also possible that the entire TDS (Tax Deducted at Source) surpasses the NRI’s bare minimum tax due. As a result, submitting tax returns is the sole way to request a tax refund.

Tax applicability to NRI (Non-Resident Indian)

Below are the types of income that is taxable for NRI:

• Any money that is earned or develops in India
• A source of revenue that is presumed to be in India
• Any earnings that are made in India
• A sum of money that India considers to have been received

Additionally, losses from one FY (Financial Year) may only be carried forward and offset against income from subsequent fiscal years once the proper tax return for the year of loss has been submitted. Finally, late submission of a return is subject to a penalty interest charge of 1 percent per month on the outstanding tax. If the return is not submitted within a year of the end of the relevant financial year, a fine of INR 5,000 may also be assessed. As a result, NRIs must file their income tax returns on time.

NRI Income Tax Return Filing in India procedure

Online income tax filing is simple for NRIs. They can file electronically as well as using the following other channels:

• Submitting the return digitally and signing it with a Digital Signature Certificate (DSC).
• Electronic data transmission of the income tax information in the return pursuant to the electronic verification code.
• Submitting the return’s data online, followed by the return’s verification in Return Form ITR-V.
• The assessee should print a copy of Form ITR-V if the taxpayer is utilizing it. The copy must be mailed to the Electronic Data Processing Center in Bangalore, duly signed by the assessee.
• Submitting the return on paper (manual filing of Income Tax return).
• Taxpayers should be aware that only assesses who are older than 80 are allowed to file an income tax return manually.

Due Date for Filing Income Tax Return for NRI in India

• An individual must file an NRI Income Tax Return by the deadline of July 31st following the financial year.
• However, if the NRI is a working partner of a company whose accounts must be audited, the due date is taken to be September 30.
• The taxpayer may submit a late return even though they missed the deadline.

Conclusion

The Indian Income Tax Act, 1961, referred known as NRI taxes, relates to people who make money outside of their place of residence. They are subject to significantly different income tax laws and benefits than resident Indians. The NRIs received tax relief in the Union Budget of 2021 since they were exempt from double taxation. The government has amended the Income-tax Act of 1961 to include a new Section 89A, which prevents the accrual basis taxation of income from accounts opened abroad.