NRI Services FAQ

When should an NRI file for the return?

If you are an NRI, you would have to file your income tax returns if you fulfill either of these conditions:

  •  Your taxable income in India during the year was above the basic exemption limit of Rs 2 lakh OR
  •  You have earned short-term or long-term capital gains from sale of any investments or assets, even if the gains are less than the basic exemption limit.OR
  •   it can be filed to claim a return if the deducted tax is more than what was payable

    Note  : "What this means is that firstly, NRIs do not get the benefit of differential exemption limits on basis of age or gender that is available to Resident Indians. Secondly, for NRIs, certain short term or long term capital gains from sale of investments or assets are taxed even if the total income is below the basic exemption limit. These include short term capital gains on equity shares and equity mutual funds where tax rate is 15% and long term capital gains on securities and assets where tax rate is either 20% or 10% without indexation," explains Vaibhav Sankla, Director, H&R Block India. What all documents do you need as a non-resident Indian?

The documents that one should submit include their passport of the residence country. This shows the total number of days spent outside India for them to qualify as a non-resident Indian. Apart from this, they should provide their de-mat account statements, and the TDS certificates they received from other parties. The statements for de-mat accounts are required for the knowledge of their bank accounts and transactions held in India.

What are the exemptions and the deductions for which you are eligible?

There are certain exemptions in India by which an individual can reduce his/her taxable income. These include certain investments, payment of the principal amount of the housing loan, etc. These exemptions are applicable to NRIs as well. Therefore, for those exemptions that are applicable, the NRIs can claim the same under the Income Tax, such as Section 80C. There are certain deductions that are specifically not applicable to NRIs. Firstly, NRIs do not benefit from differential exemption limits, based on age and gender, and applicable to resident Indians. Secondly, an NRI’s short-term or long-term capital gains from their investment sale in India, is also not included under tax exemption.

Are there any exceptions?

Yes, there are two exceptions:

  •  If your taxable income consisted only of investment income (interest) and/or capital gains income and if tax has been deducted at source from such income, you do not have to file your tax returns.
  •  If you earned long term capital gains from the sale of equity shares or equity mutual funds, you do not have to pay any tax and therefore you do not have to include that in your tax return

 Tip : You may also file a tax return if you have to claim a refund. This may happen where the tax deducted at source is more than the actual tax liability. Suppose your taxable income for the year was below Rs 2 lakh but the bank deducted tax at source on your interest amount, you can claim a refund by filing your tax return. Another instance is when you have a capital loss that can be set-off against capital gains. Tax may have been deducted at source on the capital gains, but you can set-off (or carry forward) capital loss against the gain and lower your actual tax liability. In such cases, you would need to file a tax return.

What is the last date for filing India tax returns?

 The last date to file returns for the financial year is July 31st. However, remember the following:

  •  - If you do not have any tax payable (that is all your tax has been deducted at source), you can still file your tax return by 31st March of next year without any penalties 
  • - If you do have tax payable, you can still file your returns by 31st March of next year but you will be charged an interest of 1% per month for every month of delay starting from 31st July till the time you file your tax returns 
  • - If you do not file your tax returns even by the 31st of March of next year, you may be charged a penalty of Rs 5,000 for every year of delay.

Should you have paid advance tax?

 As per the provisions of the Income Tax Act, you must pay advance tax in three installments during the year in case the tax payable, after adjusting TDS is likely to be Rs 10,000 or more. "There are interest implications in case of default in payment of any installments or lesser payment of advance tax. The interest is generally 1 percent per month for the default amount and extends till the date of payment. Therefore, NRIs should evaluate if they were liable to pay advance tax and whether the same was paid in time. If not, they would need to calculate the interest for default and deposit the same before filing the tax return,"