Most Common Concerns of NRIs Regarding Income Tax

For taxpayers, income tax is a major problem. It becomes even more complex for non-resident Indians (NRIs) regarding taxation. Beyond personal financial concerns, income tax is important because it is closely linked to government intervention and a constantly changing regulatory environment.

It can be challenging to navigate income tax as a Non-Resident Indian (NRI) because there are special laws and regulations that apply to NRIs. Income earned or received in India is normally taxable to nonresident individuals (NRIs); however, withholding tax may apply to some income sources, including interest and rental income. NRIs are subject to varied capital gains tax laws depending on the type of asset, such as securities and real estate.

This article will explore the most common concerns NRIs face regarding income tax.

Whether a Non-Resident is liable to file a return in India?

Non-resident Indians are required to file an Income tax return if they have taxable income in India exceeding the basic exemption limit of Rs 2.5 lacs. This taxable income can include rental income as well as capital gains from the sale of assets within India.

It is essential for non-resident Indians (NRIs) to understand the provisions of the Income Tax Act and any applicable Double Taxation Avoidance Agreements (DTAA). It is possible to ensure compliance with Income tax return filing by employing a Tax filing Consultant.

How can a Non-Resident receive with low or nil tax deduction?

Non-resident individuals can investigate several ways to get paid while claiming little or nothing from their taxes. Using Double Taxation Avoidance Agreements (DTAA) between the home/resident nation and India is one strategy. These agreements frequently include clauses that reduce tax obligations by preventing multiple taxation of the same revenue.

Tax deductions can be reduced by careful tax planning, which includes knowing the tax implications of various income streams and investing in tax-efficient instruments. Further, a taxpayer can apply to his jurisdictional assessing officer to obtain a low/nil tax deduction certificate in order to enable the payer to release the funds to NRI without TDS or at a lower TDS rate.

How do we get DTAA benefits between the Resident Country and India?

If you want to avail tax benefits under the Double Taxation Avoidance Agreement (DTAA) between your resident country and India, a Tax Residency Certificate (TRC) is a mandatory document. Based on TRC, an NRI has to fill out Form 10F. This document is a declaration that must be sent by a taxpayer or individual to the deductor such as a financial institution or employer in order to be eligible for benefits under the applicable DTAA

Whether repatriation of funds to India is taxable under IT Act?

Repatriation funds are generally not taxable under the Income Tax Act in India. It refers to bringing back funds earned outside India. The best example is the transfer of salary by workers in Gulf Countries to their families living in India. According to current Tax laws, Money moved to India through legal routes, such as suitable banking channels or authorized financial organizations is not taxable, if it is proved that repatriated income was earned/accrued outside India

Whether a Non-Resident has to link Aadhar with PAN?

In accordance with Section 139AA, you must link your Aadhaar card to your PAN card if you are eligible for one. For Non-Resident Indians (NRIs), obtaining an Aadhaar number is not mandatory. Hence, the CBDT exempts them from the mandatory Aadhaar-PAN linking. As a result, NRIs can continue to use their PAN without the need to link it with Aadhaar.

The above note is subject to further study and clarifications. This note does not form an opinion from our end and before taking any decision based on above, it is recommended to consult our experts on the subject.Kamdar, Desai & Patel will not be liable for any damages (including, without limitation, damages for loss of business projects, or loss of profits) arising in contract, tort or otherwise from the use of or inability to use this article, or any of its contents, or from any action taken (or refrained from being taken) as a result of using this article or any such contents.

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