Non-resident Indians (NRIs) often have income sources both in India and abroad, which makes understanding the tax filing process in India essential. NRIs must submit an Income Tax Return (ITR) if their Indian income is over the basic exemption level or if they have certain financial activities, even though they are solely taxed on income earned or accumulated in India. Filing ITR helps NRIs comply with Indian tax regulations, claim tax refunds, and maintain a clear financial record, ensuring smooth financial transactions in India and abroad.
Who needs to file tax returns?
An NRI is required to file an Income Tax Return in India under the following circumstances:
- Income exceeds 2.5 lakh: If their income crosses this limit.
- Income from Assets: If they earn from property, investments, or capital gains in India.
- Claiming refund: The excess tax (TDS) has been deducted.
- DTAA Benefits: To avoid double taxation under the Double Taxation Avoidance Agreement (DTAA)
Steps to file ITR in India for NRIs:
- Determine your residential status: Examine the number of days you spent in India throughout the fiscal year to see if you are eligible to be considered an NRI for tax reasons.
- Required documents: Collect necessary documents such as TDS certificates, bank statements, form 16, etc.
- Choose the correct ITR form: NRIs usually file using either ITR-3 (for business/professional income) or ITR-2 (for capital gains, residential property, and wage income).
- Income tax portal register/login: Register or log in to the income tax department website and fill in all the personal details, income information, and more.
- Claim Deductions: Certain deductions under sections 80C, 80D, and 80E are available to non-resident individuals. Make sure you take the appropriate deductions.
- Verify and Submit: After reviewing the form, submit it online and verify using Aadhaar OTP, net banking, or by sending a signed ITR-V.
Documents required for filing ITR form for NRI:
It’s crucial to have all the necessary documents when filing your Income Tax Return in India as an NRI:
- Bank account details
- Salary slips
- Form 16 (If employed in India)
- Passport for identity and nationality verification.
- Tax payment receipts
- Indian property details
- Photocopy of the previous year’s returns
Conclusion:
Filing ITR is a crucial responsibility for NRIs with income in India. It assists with refund claims, guarantees adherence to tax regulations, and prevents penalties. With the availability of online filing, the process has become simpler and more efficient for NRIs.
At KDP Accountants, our expertise is helping non-resident Indians (NRIs) manage their tax returns and financial compliance in India. Our team ensures a smooth and hassle-free process tailored to your needs.
