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Income Tax

Filing of Income Tax Returns by NRIs

Manager 9 years ago 2 min read

31st July is the due date for filing income tax returns for any financial year. If you are a Non Resident Indian (NRI) and trying to file a tax return in India, there are many things which you need to keep in mind.

Who is a NRI?

One must know who is a NRI. According to the Income Tax Act a person is considered as a NRI in India if he in the relevant year, he has been in India for less than 182 days.

Tax liability of a NRI:

Your residential status is a very important factor for filing returns. NRIs have the exemption limit of Rs. 2, 00,000/- If a NRI is above 60 years of age, his exemption limit is Rs 2, 50,000/- If a NRI exceeds these limits, he will require filing income tax return in India.

If an NRI needs to claim any tax deducted at source (TDS) or have taken a home loan, he needs to file his return. But there are exceptions where a NRI does not require filing a return.

Special rules for NRIs:

NRIs do not enjoy similar deductions or exemptions like other residents. NRIs are not allowed to adjust the taxable capital gains against their basic exemption limit.

If a NRI earns Rs 2, 00,000/- as capital gains, he will have to pay tax at applicable rates for the full amount even if he has no other income.

NRIs do not get deduction under many sections availed by the ordinary residents such as sections 80 CCG, 80 DD, and 80 DDB.

NRIs are not entitled to the benefits of the exemptions which are normally based age or gender available to Resident Indians.

When a NRI does not need to file return or pay taxes?

If the taxable income of a NRI consisted only of income from interest and/or income from capital gains and if TDS has been paid from such income, it is not necessary for him to file tax returns.

If a NRI has earned an income from long term capital gains from the sale of equity shares or from equity mutual funds, he is not required to pay any tax and it is not required to include that in the tax return.

If a NRI has a capital loss he can set-off the said loss against capital gains. Tax can be deducted at source on the capital gains, but he can carry forward capital loss against the gain and lower his tax liability. In such cases, filing a tax return is needed.

Mandatory e-filing for NRIs:

The Central Board of Direct Taxes (CBDT) in India has declared that it is mandatory for people having annual gross total income that is before deductions amounting to more than Rs 10, 00,000/-to file their returns online. The same is also applicable to NRIs.