NRI Taxation in India - NRI Tax Return Filing

Current financial year is coming to an end and every assesse need to prepare and file Income Tax Return in India in case they have income and it exceeds basic exemption limits.

When it comes to NRI Tax Return filing, there is lot of confusion in the minds of NRIs in terms of when they become liable to pay tax in India.

In this write up, we are trying to understand about the requirement of NRI Tax Return filing in India.

NRI Tax Return

NRI Tax Return Filing

In India, taxability depends upon residential status of the assesse i.e whether He is Resident in India or Non Resident in India. Further, whether there is taxable income in India or not.

As per Indian Income Tax Act, person becomes NRI on basis of number of days of stay in India. In case number of days of stay in India in previous year is 182 days or more, he/she becomes NRI. Another condition to be fulfilled is to check number of days of stay in India in last 4 years. In case number of days of stay in India in last 4 years prior to previous year is more than 365 days and no. of days of stay in India during previous year is 60 days or more, even then person becomes NRIs.

The significance of residential status in Indian tax laws is that in case person becomes Non Resident, he would be liable to pay taxes only on income earned in India whereas in case of Resident, his global income becomes taxable in India. Therefore, understanding of residential status of any person is very important to determine the requirement of filing of NRI Tax return.

We at EzyBiz India, provides expert NRI Tax Return service through our team of chartered accountants, company secretaries and finance professionals.

Two common misconceptions in mind of NRIs are as under.

  • In case their number of days of visit in India exceeds prescribed limit say 182 days or 60 days, they will become automatically liable to pay tax in India.
  • In case they become liable to tax in India, they would also have to pay tax on foreign income

As mentioned earlier, just because number of days of stay in India exceeds 182 days or 60 days, NRI would not become liable to file tax return. Tax return is required to be filed only in following situation:

  • Either they have income under head capital gains or
  • Their total income exceeds maximum amount not chargeable to tax or
  • They have refund under the provisions of the Act

Therefore, in case a person makes visit to India and has no Income chargeable to tax in India, then He is not required to file Income Tax Return in India.

Further, once they become liable to pay tax in India, it does not mean that they would also have to pay tax on foreign income. Foreign income would become taxable in India only in case of Resident assesse and not in case of Non Resident assesse.

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Author: Anil Agrawal
EZYBIZ India Consulting LLP, New Delhi. The firm is business and tax consultancy firm providing consultancy in Taxation, Regulatory, Transfer pricing, Valuation, Corporate funding and Business set up matters. He may be reached at 9899217778 or anil@ezybizindia.in.
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