Tax Filing for NRI in India

If you are a non-resident Indian who lost connection with your birthplace but not the earnings cropping up from your land or property back home, then filing the income tax return is a thing that you have to pursue together with your visits back home.

If you are non-resident Indian, revenue earned and received in a foreign country, and funds remitted back is not assessable to tax. But if your earnings in India (by way of interest from the savings account or fixed deposits or leasing income) go beyond Rs.2, 50,000, then online tax filing India is a necessary step for you.

Above and beyond, here are all your queries resolved.

Is NRIs’ Income Earned Abroad Taxable?

An NRI’s income tax in India depends upon his residential status for the particular year. If your residential status is ‘NRI,’ your revenue that is earned or accumulated in India is chargeable in India. Income acquired in India or earnings for service provided in India, revenue from a property located in India, capital gains on the shift of asset situated in India, interest on the savings bank account or earnings from fixed deposits are all instances of revenue earned or accumulated in India. These earnings are taxable for an NRI. Earnings that are made overseas or in a foreign country are not taxable in India. Interest earned on an NRE account or the FCNR account is tax-free. On the other hand, the interest on NRO account is liable to tax for an NRI.

Does an NRI need to file income tax returns in India?

NRI or not, any person whose earnings exceeds Rs.2, 50,000 is obliged to file an income tax return in India.  However, make a note that NRIs are only taxable for revenues collected in India.

How Can NRI’S File Income Tax Returns?

NRIs can file their income tax return online with no trouble. In addition to e-filing, they can also register through the following ways:

• Furnishing the income tax return in a paper form
• Furnishing the income tax return by electronic means using the digital signature
• Transmitting the income tax data in return by electronic means by making use of an electronic verification code

• Sending the data in return by electronic means and from then on submitting the verification of the income tax return in Return Form ITR-V
• The assessee is supposed to print out two copies of the Form ITR-V. One copy of ITR-V, appropriately signed by the assessee, has to be mailed by post to – Post Bag No. 1, Electronic City Office, Bengaluru— 560100, Karnataka. The assessee might keep the additional copy for his/her records.

When are you considered a NRI or non-resident Indian?

Before you understand who is the NRI or Non-Resident Indian, realize who is a Resident Indian. An individual would be called a RESIDENT of India for income tax if:

• He or She lives in India for 182 days or more all through the financial year

OR

• If he or she lives in India for at least 365 days for the duration of the four years preceding that year plus at least 60 days in that year.

As a result, if you do not assure the condition put up above, you will be regarded as a NON RESIDENT INDIAN. In case you are an Indian Citizen and you go away from India for employment or as a member of the team on an Indian ship. By way of explanation, if you take on a profession outside India, then the minimum period of 60 days will be increased to 182 days.

Is TDS on property applicable for NRI?

• As reported by the Indian Income Tax Act, each time a resident buys any property from a non-resident, he needs to deduct income tax (TDS) and shell out the balance amount to the broker.
• He needs to deduct 20% of the sale consideration as income tax before paying the net sum to the seller.
• First of all, the purchaser should acquire TAN under section 203A of the Income Tax Act, 1961 before deducting any TDS. TAN can be obtained by filling up the Form 49B.
• TDS have to be abstracted at the time of paying the sum to the NRI. The info about the TDS being deducted and the rate at which it was deducted must be stated in the sale deed that’s made between the NRI seller and the purchaser.
• The TDS deducted by the purchaser is supposed to be deposited using Form number or challan for TDS payment. This has to be done on or before the 7th of the following month in which the TDS is deducted.
• You can deposit the TDS through banks that are certified by the Income Tax Department government of India to collect Direct Taxes. The deposit needs to be made by the purchaser.

How much TDS to be paid on the sale of NRI property in India?

20%

What are Taxation rules for NRI property buyers?

After the NRI gets hold of a piece of immovable property, following tax provisions would be applicable for an NRI to be aware of the taxability of income earned from such investments.

• Applicability of DTAA
• Calculation of capital gains
• Calculation of rental income
• Withholding of tax
• Exemptions from capital gains
• Liability to file a return
• Deductions allowable

When is an NRI supposed to file his return of income in India?

Similar to any other individual taxpayer, an NRI should file his return of income in India if his total gross income received in India goes beyond Rs 2.5 Lakhs for any financial year. Moreover, the due date for filing income tax return for an NRI is 31 July of the assessment year.

Are taxes supposed to be deducted whenever payments are made to NRIs?

Make a note that NRIs are taxable only for earnings collected in India. So, when payments are being made to NRIs, you will pay taxes on profits made in India, and earnings accumulated from FDs or savings account.

I am an NRI and I obtain rental fee from a flat that I own in India. I am employed in the US, and I receive a salary income in the US. What income should I offer in India?

Leasing income from property in India is measured as income accumulated and assessable in India disregarding the residential status. You are obliged to pay tax on this leasing income. However, if you’re overall taxable income does not exceed the maximum amount (not liable to tax); you are not legally responsible for paying tax on it. The gross rental fee received by you is not entirely chargeable. While calculating the assessable value of leasing income, a range of deductions are accessible.   

I am an NRI. Would I be subject to capital gains tax if I put up a flat for sale that I own in India?

NRIs are contingent to a TDS (Tax Deducted at Source) of 20 percent on the long-term capital gains. However, there are more than a few cases in point when NRI can acquire a waiver of the TDS. One such case in point will be if the NRI has decided to re-invest the capital gains of the property in additional property or bonds.

Is an NRI assessable to the tax on the income he obtains in India, in his country of residence? What is the role of the Double Taxation Avoidance Agreements (DTAA) here?

NRIs can stay away from paying double tax under the Double Tax Avoidance Agreement. Time and again, it is the case that non-resident Indians live out of the country but also earn some revenue in India. In such instances, it is possible that the income made in India would draw tax in India as well as in the country of the NRI’s house. That means that they would have to shell out tax two times on the same earnings. However, to keep away from doing so, there is a thing called the Double Tax Avoidance Agreement (DTAA) that NRIs can take advantage from.

I am an NRI aged 65 years. Do I have to file a return even if my total gross income is Rs 2.8 Lakhs during a year from India?

Of course, NRI’s are supposed to file an income tax return in India if they have chargeable earnings in India. However, an NRI is not needed to file an income tax return, while having income in India, only if total revenues in the preceding year comprise simply of income by way of long-term capital gains or investment income or both and income tax has been abstracted from such earnings at the source.

How NRI’s can lower TDS on Property Sale?

You can apply for Lower Tax Deduction or Nil Tax Deduction with Income Tax Assessing Office as NRI Seller. In case, you are planning to re-invest capital gain then you can apply for tax exemption certificate as well. In consonance with an assessment by Income Tax Department, an official document will be issued to non Resident Indian seller for a property deal.

What are essential Income - Tax Exemptions and deductions NRIs can avail of in India?

NRIs can benefit from the similar tax deductions under section 80C that are accessible to resident Indians. For example, you can assert deductions on premiums paid on term deposits, for life insurance, pension schemes, and the like.