Filing Return of Income in India by NRI

  1. When is a NRI compulsorily liable to file a Return of Income (ROI) in India? 
    A NRI is liable to file ROI if his/her taxable income in India during the relevant Financial Year (F.Y.) (1st April to 31st March) exceeds the basic exemption limit (i.e. Rs. 2,50,000/- for F.Y. 2017-18 and F.Y. 2018-19).  
    However, if income is less than the basic exemption limit, aNRI is liable to file ROI:

    1. if total income includes:
      1. Income from Short-Term Capital Gains on equity shares or units of equity oriented mutual fund on which securities transaction tax is charged.
      2.  

      3. Income from Long-Term Capital Gains on any asset, which are chargeable to tax.
      4.  

      5. Other incomes chargeable to tax irrespective of the basic exemption limit.
      6.  

    2. NRI has obtained a Tax Exemption Certificate/ Lower Tax Deduction Certificate from the IncomeTax Department.
    3.  
         Also, if the income is more than the basic exemption limit, a NRI is not liable to file ROI if:  

      1. total income during the F.Y. consisted only of investment income* or income by way of long-term capital gains** or both; and
      2. tax deductible at source (TDS) has been deducted from such income.
      3.  

      * “investment income” means any income from a foreign exchange asset (FEA) other than dividends income from Domestic Company from FEA.  
      ** “Long-term capital gains” means income capital gains on selling a long term FEA.  
      “FEA” means any specified asset which acquired or purchased with or subscribed to in, convertible foreign exchange; 

  2.  

  3. Due dates for filing ROI for any F.Y. ending 31st March:
    1. Due date – By 31st July following the F.Y. ending 31st March
    2.  

    3. Beyond the due date :
    4.  

      1. NRI is permitted to file a belated ROI within a year (12 months) following the end of FY or completion of assessment which ever is earlier.
      2.  

      3. If there is a delay beyond the above, NRI is permitted to file ROI by obtaining prior approval from Income Tax Department for condonation of delay.
      4.  

    5. Revision of ROI filed:
    6.  
      NRI is permitted to file a revised ROI within a year (12 months) following the F.Y. ending 31st March or completion of assessment which ever is earlier.

  4.  

  5. Manner of filing ROI: 

    ROI is to be filed electronically through independent portal.

    www.incometaxindiaefiling.gov.in established by Income Tax Department, Government of India in the prescribed forms given below:

    ITR 2 – Declaring all income Other than Profit and Gains from Business and Profession.

    ITR 3 or ITR 4 – Declaring income from Business and Profession along with all other sources of income.

  6.  

  7. Reporting of Assets and Liability Schedule/Foreign Assets: 

    1. Assets and Liability (AL) Schedule 
      A NRI is mandatorily required to report Specified Assets and Corresponding Liabilities held in India, if the total income in India exceeds Rs.50,00,000/- in a F.Y.
    2.  

    3. Foreign Assets 
      A NRI is not required to report details of foreign assets held by him/her while filing ROI.
  8.  

  9. Benefits of filing ROI voluntarily: 
    It is advisable to file ROI even if it is not mandatorily required due to following reasons: 

    1. To claim refund of excess Tax Deducted at Sourcewith interest at 6% p.a.
    2.  

    3. To be eligible to carry forward losses to be set-off against future income.
    4.  

    5. NRI may file ROI in some years and may not file in some years. However, if he/she receives a notice from the Income Tax Department to file ROI, he must respond by filing ROI for the relevant F.Y.
    6.  

    7. The updated tax information/records help a NRI to comply with procedural documentation for repatriation of income and assets held in India. It also helps to have records as and when he/she returns to India.
  10.  

  11. Consequences of filing ROI after due date:  

    1. If ROI is not filed before the due date, NRI shall not be allowed to carry forward losses to the subsequent years.
    2.  

    3. NRI is liable to pay interest at the rate of 1% per month or part of month on the outstanding tax payable till the ROI is filed.
    4.  

    5. There will be mandatory levy of fees depending on the quantum of income declared and date of filing the ROI as under:
      1. If the quantum of income declared is less than Rs. 5 lacs, the fees levied shall be Rs. 1,000
      2.  

      3. If the quantum of income declared is more than Rs. 5 lacs, the fees levied shall be Rs. 5,000 for ROI filed until 31st December following the end of F.Y., else fees levied shall be Rs. 10,000.
    6.  

    7. In case of willful delay of filing ROI, NRI may be subject to penalty and prosecution.
  12.  

Content Partner- For any assistance / information on Tax, FEMA or related matters, you may write to our empaneled professional at nrihelp@gpkapadia.com

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