If you are a Non-Resident Indian and you are new to the taxation landscape in India, then filing taxes in India would feel too difficult. As the top tax consultant in Gurgaon, we have helped countless NRIs navigate income tax rules in India. Read more to learn about the key points for non-residents filing tax returns in India:
If you are a Non-Resident Indian (NRI), filing income tax returns in India might seem complicated to you at first. However, understanding more about the tax regulations in India can help you navigate the process with more ease. Whether you live in the US, UK, UAE, or any other country, if you earn income in India, you may need to file ITR for the income earned or accrued in India.
This guide highlights 11 key points every NRI should know when it comes to cross border transactions and NRI tax filing in India. Find out more about India income tax filing for NRI in the following sections:
The Indian tax laws may seem complex when it comes to NRI taxation and other rules and regulations, such as the FEMA Compliance. Here are 11 key points for the income tax return for NRI:
You are considered an NRI if:
Recommended: Income Tax for NRI in India: Everything You Need to Know
As an NRI, you are liable to pay taxes only on the income you earn in India. This includes:
It must be noted that income earned abroad is not taxable in India for NRIs under the Income Tax Act.
If your total income in India during the financial year exceeds ₹2.5 lakhs, you must file an Income Tax Return (ITR), even if tax was already deducted at source (TDS).
When it comes to India income tax filing for NRI, it’s important to understand the tax slabs that apply to you. NRIs are taxed just like resident Indians under both the old and new tax regimes, but without the rebate under Section 87A (which is available to residents with income up to ₹5 lakh).
Here’s a quick look at the NRI income tax slab in India under different regimes:
Note: NRIs are not eligible for the rebate under Section 87A (up to ₹12,500).
If you’re an NRI returning to India permanently, your India NRI tax filing must include your global income. Make sure to file your ITR in India accurately.
You can obtain Form ITR-26AS from the Income Tax Department's official website. Make sure you use the right form and fill in accurate details from your records to avoid discrepancies during the India tax filing NRI process. If you find any discrepancies, then they should be corrected before you submit the form. Submission of the form with errors or discrepancies can lead to penalties or even legal consequences, depending on the severity of the misconduct.
NRIs should disclose all details about the assets and liabilities in India and outside India. This includes:
The disclosure of such details helps tax authorities to understand your financial position and ensure that your income tax return is accurate and complete. This is also necessary for compliance with anti-money laundering regulations.
Read Also: Corporate Tax Filing Obligations for Foreign Companies in India
When you file your return of income tax, you need to take note of TDS (Tax Deducted at Source) and tax exemptions for NRIs to avail major deductions and exemptions. During NRI tax filing in India online, you can claim exemptions from liabilities or the sale of assets, and also claim deductions from investments, education loan interest rates, and more.
India has signed a Double Taxation Avoidance Agreement (DTAA) with more than 90 countries across the world. This means that you can get relief from paying taxes twice (in India and your country of residence).
To claim DTAA relief, you need to submit the following documents when you file your ITR:
Availing the DTAA benefits can significantly reduce your tax liability under the India NRI tax filing.
Interest earned on NRE (Non-Resident External) accounts and FCNR (Foreign Currency Non-Resident) accounts is tax-free in India if you are an NRI. On the other hand, the interest earned on NRO (Non-Resident Ordinary) accounts is fully taxable, with the interest subject to a TDS rate of 30%. Keep such factors in mind during India income tax filing for NRI.
The income earned from selling a house property or from investments on a long-term capital gain is subject to a TDS rate of 20%. You can claim deductions from the purchase of a new residential property as stated under Section 54.
Gone are the days of needing to visit the Income Tax Department in person. NRI tax filing India online is convenient, and the process is also simple. What you need to do is:
The last date to file income tax returns is July 31st for NRIs. Do not cross the deadline for India NRI tax filing to avoid fines or penalties from the Income Tax Department.
Read More: What Happens If You Don't Respond To Income Tax Notice?
India tax filing NRI doesn't have to be a stressful experience. Professional help from top CA firms in India can help you through the complex process, so don't hesitate to reach out to them for help.
If you're unsure about how to handle your NRI tax filing India online, reach out to our tax consultants today to receive personalized guidance for the process.
Learn when and how should NRIs file Form 67 to claim foreign tax credit in India & about Double Taxation Avoidance Agreement tax relief on foreign income.
Are NRIs required to file income tax returns? Understand what you need to know for the income tax return for NRI status in India to ensure compliance.
Understand the mandatory compliances under the Companies Act for foreign subsidiary companies. Learn about foreign subsidiary company compliance today!
