NRI Income Tax Return Filing

‘NRI’ or Non-Resident Indian is a citizen of India or a person of Indian origin who is not a resident in India. Residency for tax purposes is decided based on a person’s physical stay in India. There are three conditions that could determine NRI residency for tax purposes:

  • Firstly, when an individual’s stay in India is lesser than 60 days in a particular tax year.
  • Secondly when the stay is in excess of 60 days but is lesser than 182 days and the cumulative stay in the four years preceding the year in question is lesser than 365.
  • Finally, when an individual depart from India for taking up an employment outside India and his or her stay is lesser than182 days in the year of departure.

In this article, we review the procedure for income tax return filing for NRIs.

Should NRI’s file income tax return in India?

Yes, NRI’s should file income tax return in India if they have taxable income in India. For example, an NRI having a house property in India earning rental income would be required to file income tax return, if the rental income exceeds the exemption amount. Tax is applicable for NRIs for the following types of income.

  • Income which accrues or arises in India
  • Income which is deemed to accrue or arise in India
  • Income which is received in India
  • Income which is deemed to be received in India

Further, losses of a particular financial year are allowed to be carried forward for being set-off against income of future financial years only when the return of income for the year of loss has been accordingly filed. Finally, delayed filing of return attracts a penal interest at the rate of 1% per month on the balance tax payable. In addition, a penalty of Rs 5,000 may be levied if the return is not filed within a period of one year from the end of the applicable financial year.

Hence, its important for NRIs to file income tax returns promptly.

When NRI Income Tax Return is NOT Required?

A NRI is not required to file an income tax return in India, while having income in India, only if:

  • Total income in the previous year consisted only of investment income or income by way of long-term capital gains or both and tax has been deducted from such income at source.

Due Date for NRI’s Income Return Filing

NRI Income tax return must be filed on or before 31st July following the financial year by an individual, the due date being September 30 if the NRI is a working partner of a firm whose accounts are necessary to be audited. If one has missed the due date, he/she can file a belated return.

Procedure of Filing NRI Income Tax Return

NRIs can easily file their income tax return online. In addition to efiling, they can also file through the following methods:

  • Furnishing the return in a paper form;
  • Furnishing the return electronically using digital signature (DSC);
  • Transmitting the income tax data in the return electronically under electronic verification code;
  • Transmitting the data in the return electronically and thereafter submitting the verification of the return in Return Form ITR-V;
    • The assessee should print out two copies of Form ITR-V. One copy of ITR-V, duly signed by the assessee, has to be sent by post to – Post Bag No. 1, Electronic City Office, Bengaluru— 560100, Karnataka. The other copy may be retained by the assessee for his/her records.
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