Income Tax Return Filing In India For Non Residents, NRIs

FY 2023-24 ITR FILING IN INDIA BY NRI, PIO, EXPATRIATES, SEAFARERS, RESIDENT INDIVIDUALS – RESIDENTIAL STATUS, DUE DATE, ITR FORMS, BELATED ITR, DOCUMENTS, E-FILING, DTAA, BENEFITS, PENAL PROVISIONS, CONSEQUENCES – CA SERVICES, TAX CONSULTANT IN DELHI NCR, MUMBAI, BANGALORE, HYDERABAD, KOCHI, CHENNAI, KOLKATA, GURGAON, NOIDA, PUNJAB, CHANDIGARH, MAJOR CITIES INDIA

Background

Non-Resident Indians (NRIs), Overseas Citizens of India (OCIs), Person of Indian Origin Residing Abroad (PIOs), Foreign Citizens Residing In India (Expatriates) are always concerned about compliance of Laws & Regulations. Income Tax Return (ITR) filing is one of that compliance.

In India, filing of Income Tax Return is a very important, needful and regular compliance. All NRIs, OCIs, Expats are required to file an ITR in India in relation to tax payment and reporting of their Income and other financial transactions. Also, ITR filing is needed to claim tax refund of TDS deducted.

There are various terms, which confuse NRIs, Foreign Citizens, OCIs, PIOs. Hereunder are some relevant terms, which NRIs, OCIs, Expats wish to understand:

Income Tax Return

Income Tax Return is a statement of income components, which a person has earned during a year. Every person need to report the details of income component in the ITR Form. The ITR form also contain information about various deductions, exemptions, reliefs, which a person can claim. ITR form also reflect the computation of tax calculation on the net taxable income, and the details of taxes paid thereon. In addition to this, as per the category & requirement of form, there are various other information, which needs to be submitted in the ITR form. The ITR form is filed on yearly basis for a full year (i.e previous year or financial year).

Previous Year and Assessment Year

In India, ITR is filed in Assessment Year (AY) for Previous Year (PY). Previous Year is equivalent to a Financial Year e.g. if ITR has to be filed for FY 2023-24 then the Previous Year shall be April 1, 2023 to March 31, 2024. And the assessment year shall be 2024-25.

Residential Status

This is one of the most important concept for an Indian ITR. Hence, NRIs/Expats/OCIs need to determine their residential status first. Residential status is determined based on number of days spent in India. This status is categorized in three category (i.e. Non-Resident ‘NR’, Resident & Ordinary Resident ‘ROR’, Not Ordinary Resident ‘NOR’). Generally, if stay in India is for very limited days during the year, the Residential Status for NRIs/OCIs/Expats etc remain Non-Resident. Briefly, following are relevant points for determination of residential status:

If a person stay in India for more than 182 days in a year then he is considered as Resident in India.
If a person stay in India less than 60 days in a year then he is considered as Non-Resident in India.
If a person stay between 60 days to 181 days in India then based on various parameters his residential status is determined.
A person, who is determined as Resident as per above criteria, can be further determined in ROR or NOR. The same is done based on his past 10-11 year stay records.
A person can also be Deemed Resident in India, as per new Residential Rules.

To understand more on the Residential Status Determination Rules (updated with budget 2020 changes), please refer following:

NRIs, PIOs Residential Status Determination (updated after 2020 Rules amendments)

New Residential Rules (Budget 2020 Amendment) for NRIs, PIOs

Hardship Due to coronavirus conditions for maintaining a Non-Resident Status: Due to corona virus many foreign citizens and NRIs are stuck in India. Now question comes what will happen if they could not leave India due to unavoidable circumstances and they become Resident in India. Here, it is important for them to consult with their consultant to seek proper advise as per their facts and circumstances.

Taxability

Upon determination of Residential status, Taxability of Income is determined. For Taxability, following are some important points:

A person, who is determined as Non-Resident or NOR, is not liable for tax in relation to his foreign income.
A person, who is determined a ROR, is liable for tax on his global income in India.
Any income either earned in India or received in India is taxable in India despite any residential status.

Double Taxation Avoidance Agreement (DTAA), Relief of Double Taxation U/s 90

Sometimes, it happens

That a person is determined a Resident in India, and that person is also considered a Resident in his/her residence/home country as per local laws of that country.
That an income is taxable in two countries i.e. Country of Source (where income is arising) and Country of Resident (where that person is normal Resident).
Taxes are levied in two countries.

To provide a relief in such cases and also for some other purposes, DTAAs are entered between various countries. These DTAAs, amongst others, provide for:

Determination of Tax Resident Country
Determination of Taxability Country
Determination of Tax Rates In Source Country
Determination of Tax Relief Provisions If Tax is levied in Source Country
Information Exchange Between Tax Authorities of Two Countries

DTAA also provide relief (Foreign Tax Credit) from double taxation of an income due to taxability on an income in two countries i.e. source country as well Residency Country. For more on that how to get relief from double taxation, click here

Due Date

Indian ITR Due Date is July 31 of Assessment Year.
This Due Date is Sept 30 of AY for certain business entities.
For NRIs/OCIs, Expats etc generally the Due Date will remain July 31 of the AY.
Hence, e.g. for FY or PY 2023-24 the ITR due date is July 31, 2024.
Due date for Audit ITR is Oct 31, 2024 for FY 2023-24 ITR.

Preparation Of Documents and Information For ITR

For the preparation and filing of ITR, lot of information and documents are required. Hence, before the ITR preparation there is a requirement to arrange all the needful information and documents. These documents & information are directly connected with the income, deductions, taxes payment and other details to be submitted in ITR Form. Here is exhaustive list and other information in relation to documents for ITR filing in India.

For the ITR preparation, 26AS is also an important information source, which is available on income tax return filing portal. It provides details of all TDS and related Income. Hence, it is simple and straight source for claiming refund of TDS. Now, a new source of information is also available on Income Tax portal i.e. Annual Information Statement (AIS). It captures lot of information. Assessee need to refer this also before filing the ITR. Through this AIS and 26AS, Income Tax Department is now capturing lots of information. Hence, assessee need to be alert to file his/her ITR regularly and correctly to reconcile the same with the 26AS and AIS records.

Belated ITR, Revised ITR, Updated ITR

An ITR is filed on or before due date. However, if ITR is not filed by due date, it can be filed after due date also. Also, if an ITR is already filed by due date, it can be revised for any modification in the original ITR. However, the Belated ITR or Revised ITR can be filed by December 31 of relevant Assessment Year. Hence, for FY 2023-24 (AY 2024-25) ITR Belated or Revised ITR can be filed by Dec 31, 2024 only (unless extended by Govt). Thereafter, the ITR filing mechanism (i.e. Online window) gets closed for filing of ITR. This is applicable for all including Non-Residents (NRIs, Foreign Citizens).

To provide an opportunity for those who missed their ITR as well Belated ITR filing, in the Budget 2022, Govt of India, has provided provision of an Updated ITR. This Updated ITR can be filed up to 2 years from the end of relevant assessment year. There is a small amount of penalty for filing Updated ITR which is based on Tax Payable. Updated ITR provisions are applicable wef April 1, 2022. NRIs, OCIs are also eligible for this. To read more on Updated ITR, kindly read our Budget 2022 For NRIs, Foreign Citizens.

E-Campaign – Further, On July 20, 2020, Income tax department has also launched an e-campaign to aware the tax payers about their financial transactions during the relevant financial year and also to file their ITRs. In this regard, emails are being sent to those who have incurred any specified financial transaction (SFT) i.e. Mutual Fund, Deposit, Shares, Property, Foreign Remittance, Car Purchase, Credit Card, Other Investments etc. In the month of Dec 2023, Income tax dept has issued e-campaign alert to NRIs, OCIs for high value transactions confirmation and reason for non-filing ITRs where ITR was not filed. Hence, it is very important for tax payers to file ITRs.

Filing of ITR for earlier years

If ITR is not filed even by the end of relevant assessment year, a question arises that can it be filed after that. In other words, Can ITRs for earlier years be filed after the time lapsed. Here, one umbrella is available if there is a refund or carry forward of losses. For this, considering a hardship, CBDT has given a circular, where an application can be filed with Commissioner or Principal Commissioner of Income Tax or CBDT depending on the size of refund or losses. This application can be filed for not more than 6 year old. Here, assessee can file an application with the prescribed authority to allow him to file the ITR. On considering the merits of cases, the authority allow or disallow the application. Thereafter, assessee can file the ITR to claim that refund or carry forward the loss {Section 119 of Income Tax Act}. Here is a detailed process on that how can the ITR be filed for earlier years, if someone has missed it?

Income Tax Slabs {Resident and Non-Residents (NRI, Foreign Citizens)}

Income Tax Slabs are the rates at which tax is calculated on Total Income of assessee. These slabs and tax rates are announced every year by the Finance Minister of India via Annual Budget. For Non-Residents (NRIs, Foreign Citizens), generally tax slabs remain the same as it is for Indian Resident. One difference which generally remains between Resident and Non-Resident Tax Slabs are that Senior Citizen and Super Senior Citizens Extended Tax Slabs benefits are not allowed to Non-Residents. Here are Tax slabs for FY 2021-22 ITR in India:

Accordingly, there is no tax if Net Taxable Income is less than Rs 2.50 Lakhs.

Further, the tax slabs are same for FY 2022-23 as it was for earlier years. New tax slabs are also applicable in FY 2022-23 like earlier year. Hence, assessee (including Non-Resident) can choose a tax slab which provide best tax saving as per his taxable for that year. Here are the Tax Slabs and new tax option for FY 2022-23 in India:

New Income Tax Rates Options and Tax Slabs for FY 2021-22 and 2022-23 (Foreign Citizens, NRIs, Indian Residents)

New Tax Slab option system is also available for Non-Residents, Foreign Citizens, NRIs etc.

Components of Income

In India, Income is categorised in 5 categories ie

Income From Salary
Income From House Property
Income From Business of Profession
Income From Shares, Mutual Funds Sales Capital Gain
Income From Property Sale Capital Gains
Income From Other Sources

NRIs Taxability In India

Generally, NRIs/OCIs are liable for following kind of Income In India:

Income from House Property (Wrt Immovable Property In India)
Interest Income From NRO Bank Accounts In India
Gains From Mutual Fund or Shares Traded In Indian Share Market
Gains on Sale of Immovable Property In India (Inherited Property/Other Property in India)
Salary/Business Income in the year of Migration From/To India

Further to this, for detailed summary on financial transactions & income, which generally form part of NRI PIO ITR in India, please refer General & Frequent Financial & Income Transactions of NRI ITR in India

Benefits of Filing Indian ITR

NRIs/OCIs/Expats must file an Indian ITR if there is any Income Taxable In India. In addition to a Statutory Compliance, there are various reasons/benefits for filing of Indian ITR including following:

To claim back the refund of TDS deducted in India
To report his/her Residential Status as well financial transactions or income incurred/earned in India during a PY
To use ITR copy as a legal/govt document for various purposes
To keep a track record with the Income Tax Department in India
To carry forward of losses (e.g. loss on Property Sale)
To avoid Income Tax Enquiries (ITR plugs many IT Dept Notices)
To avoid Penalty for Non-filing or late filing of ITR

Please also refer Benefits of ITR Filing in India To NRIs, PIOs

Penal Provisions, Consequences of Non-Filing of ITR, Late Filing of ITR

Penalty Fee for Late Filing Fee
Loss of TDS Refund Claim
Late Processing of ITR
Carry Forward of Losses Lapses
Notices From IT Dept

Please also refer Consequences, Penal Provisions For Late Filing or Non-Filing of ITR in India

E-Filing OF ITR IN INDIA, ITR Filing PROCESS

As per the Income Tax Provisions, now an ITR in India can be filed online only i.e. E-filing process. The salient features of this e-filing process of ITR filing are:

Register on the website (www.incometaxindiaefiling.gov.in), and create a login id.
This login id is created with PAN number, mobile, email id and other details. Only information. No document is needed.
Thereafter, assessee can get his ITR prepared either online with the help of facilities provided on this website or by generating a .xml file through a software.
Thereafter, this file is submitted on the web portal of income tax (www.incometaxindiaefiling.gov.in).
On submission of this file, an acknowledgement is generated i.e. ITR V.
This ITR V needs to be either e-verify (on the web portal only) or it can be sent in hard copy (after signing it) to the processing center of Income tax department in Bangalore.
In due course of time, IT Dept Central Processing Centre process the ITR and issues the refund if any.

For detailed process of ITR filing in India by Residents, Non-Residents (NRIs, PIOs, OCIs, Foreign Citizens), please refer here.

OTHER INFORMATION AND CA services – NRI, PIO, Non-Residents

S Lohia & Associates, Chartered Accountant, Tax Consultants – Services & Credentials – Special Team For NRIs, Expats, Foreign Citizens Tax Matters

We, S Lohia & Associates (a Chartered Accountant and Tax Consultancy Firm), having offices at various places in India, do have a special team for servicing NRIs, Foreign Citizens for their Tax Matters (including ITR filing etc). We would be frank to mention few of our skills as under:

Expert Team In handling NRIs Tax Matter including NRIs ITR.
One Window service in relation to various services of NRIs including ITR.
Experience of handling NRIs/OCIs/Expat of various countries across the world.
Best Methodologies, Processes & Technologies To provide convenient & effective services.
Minimum Litigation.
Fast Refund Processing of ITRs.
Address Services For NRI ITR.
Representative Services For NRI ITR.
Having offices/access to across the India Income Tax Offices

FAQs – NRIs, PIOs, OCIs, Expatriates, Foreign Citizens, Resident Individuals

Above information can be helpful to NRIs, Expatriates and Other Non-Residents in relation to their various doubts about Indian ITR such as:

Q: What are the provisions of Indian Income Tax Return in relation to NRI, Foreign Citizens ITR in India?

Ans: The basic provision which affect more to the taxation of NRI and Foreign Citizens (PIO, Expats) is the Residential Status. Generally, the residential status of NRIs and Foreign Citizens are Non-Resident or Not Ordinary Resident. In both the cases, Indian ITR scope remains limited to their Income earned or received in India. Hence, major relief comes in the form of exclusion of foreign income and source from the Indian ITR. Hence, Determination of Residential status is pre-requisite for NRI, Foreign Citizen ITR in India. Further, there are various terms as mentioned above e.g. previous year, assessment year, due date, scope of income etc, which should be referred to.

Q: Whether NRI, Foreign Citizens (PIO, Expats) are required to file ITR in India? Is ITR mandatory for NRIs, Foreign Citizens even if they have nil or very minimum income in India? Why NRIs should file ITR in India if there income in India is below taxable limit? What are the benefits of filing ITR in India?

Here, first NRIs, Foreign Citizens (PIOs, Expats) need to know that they are not treated separately (as compared to Resident Indians) as far as ITR Filing requirement is concerned. ITR filing is required if Total Income exceeds the basic exemption slab limit of tax (i.e. Rs 2.50 Lakh for FY 2021-22, FY 2022-23). Hence, if NRI’s or Foreign Citizen’s Total Taxable Income in India is below this limit then legally (Sec 139 of Income Tax Act) there is no requirement to file the ITR in India. Here, another important thing which NRI or Foreign Citizen need to focus is that if they are doing any financial transaction in India or not. Point is if they have any financial interest or connection in India then it is advisable that they file an ITR in India irrespective of fact that their Total Taxable Income in India is below taxable limit. NRIs, Foreign Citizens (Expats, PIOs) are benefitted in various ways if they file an ITR in India. Benefits are visible as well invisible. Some benefits are economical e.g. claiming back refund of TDS, some benefits are tax compliant e.g. keeping a track record, some benefits are in the form of avoiding income tax notices and enquiries. A more detailed summary of these benefits are provided in our blog section.

Q: How an ITR is filed? Can NRI or Foreign Citizen (PIOs, Expats) file their ITR on their own? Whether NRI or Foreign Citizen need Chartered Accountant or Tax Consultant (CA) Services for filing ITR in India?

In the past years, with the upgrading of technology, ITR filing has been made online (www.incometaxindiaefiling.gov.in). Online filing can be easily done by from anywhere sitting on a computer (with internet). However, Income Tax Return is a legal process. Also, ITR filing consists of lot of technical aspect. Even a single mistake may lead to costly and painful after effects. Beyond any doubt, It is important to and advisable to seek the services of some Tax Expert for filing the ITR. Chartered Accountants are best equipped and authorized by the laws to provide the ITR filing services to NRI, PIOs, Expats. A tax expert not only helps in correct filing of ITR, but also do screening of various transactions of NRIs, PIOs and advise them a good tax planning as well as per their facts.

Q: I am NRI. I have an immovable property in India, which is given on rent. Whether filing of ITR is required for transaction?

Ans: There can be two things. One is that rental income from property exceeds taxable limit. In that case, it is mandatory to file the ITR. Second, if rental income is less than the taxable income. In that case, though it may not be mandatory to file the ITR, however, it is beneficial to file the ITR. TDS, if any deducted thereon, can also be claimed by filing the ITR.

Q: What are Income Tax Slabs for NRIs in India? What is importance of Tax Slabs for Non-Resident? Whether filing of ITR is required if Non-Resident Income is within the Nil Tax Slab Rate? What is impact of tax saving investment to bring total income below taxable limit?

Ans: Tax Slabs are every year tax rates which gets published through India Budget every year. In the tax slabs the income tax rates are provided to calculate the tax on total taxable income. These rates are applicable for Non-Residents also on year to year basis. Non-Resident (NRIs, Foreign Citizens) can calculate their tax on total income in India as per these tax slabs and pay the taxes. If their taxable income falls within the Nil Tax Slab rate, then as per law ITR filing is not mandatory for them. Here are Income Tax Slabs for FY 2022-23 and New Tax Slab Option System for FY 2022-23. However, for various purposes and ITR Filing Benefits Non-Resident can choose to file ITR in India. If gross income of a person is more than the basic exemption limit then by investing money in tax saving investments, income can be brought down below taxable limit.

Q: What is the last date to file Belated and Revised ITR for FY 2022-23 for NRIs, OCIs, Seafarers? What is due date for FY 2022-23 ITR filing for Non-Residents, NRIs, Foreign Citizens, Seafarer? Whether there is any extension in FY 2022-23 ITR Filing Due Date? Whether it is applicable for Non-Residents?

Ans: Belated and Revised ITR for FY 2022-23 can be filed now up to Dec 31, 2023. This is applicable for NRIs, OCIs, Seafarers, Merchant Navy Employees etc. Further, wrt FY 2021-22, general due date for filing ITR is July 31. Further, if a person misses even Belated ITR date then he cannot file the ITR under normal provisions. However, reference new provision via Budget 2022, Updated ITR can be filed now within 2 years from the end of assessment year with some penalty fee. This rule is for all assesses including Non-Residents (Foreign Citizens, NRIs, Expatriates, Seafarers), Residents.

Clients Reviews

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