Tax filing for NRIs
It’s July again, the time of the year when people get busy with their Tax returns filing process. In most of the offices the main discussions are about tax filing, how to go about it, Form 16, etc are the few common words doing the rounds in the office circles now a days. But it’s not only the Indians residing or having their source of income in India who are worried about their Tax filing, the NRIs too have to go through the Tax filling process. It is also their responsibility to file their taxes in India, if they have any taxable income back home.
The income that an NRI have in abroad is not taxable in India, but if an NRI have some income in any form in India, then they have to file a tax return. But tax deduction on this income is exempted up to Rs. 2 lakh.
The income can be in any form, it can be from the interest earned from the bank deposits or from property rent. It can also be from transactions in mutual funds or shares or from mutual securities, or from selling off properties in India. All will fall under taxable income. The due date for filing the tax for NRIs is 31st July.
But which NRIs are eligible for tax filing? FEMA (Foreign Exchange Management Act) and Income tax department have different definitions of NRIs according to Income Tax department a person who has stayed in India for 182 days or more in that specified financial year then they can become a resident of India. Also persons with PIO can be considered as resident of India if they have stayed in India for 185 days or more in the relevant financial year.
How important is it for the NRIs to file the tax return? Well, it helps one to keep an account of one’s money. In case, more tax is deducted, then by filing return it will be compensated.
NRIs do not get tax exemption on basis of age or gender. But if an NRI is above 60 years of age then their tax exemption limit is till Rs.2.5 lakh; other than this, the NRIs do not get the benefits of the tax exemption that the Indian resident citizens get.
Certain NRIs are also taxed on few short-term or long-term financial gains, which might be due to selling off fixed assets or shares, even if the gain is below the tax exemption limit.
There can be certain other exemptions also, like if TDS is already deducted by the source from where the income is generated, then tax return needs not to be filed. But if more tax is deducted, then by filing return, one can claim back the money.
Few important changes have been incorporated for the NRIs filing tax return recently.
If an NRI has an income of over 5 lakhs, then they need to file the tax return compulsorily. Earlier it was up to 10 lakh.
The second change is that from now one can match one’s income tax credits with actual tax return. The tax credit statement is available from 26AS.
To save one from paying taxes NRIs can opt for various ways through which they can get the Tax exemption. They can buy health insurance for their families and dependent parents in India. Thus save up to Rs. 35,000 in the yearly premium that they pay.
They can also get tax benefit if they have invested in investments up to Rs 1 lakh.
Thus, it’s more or less the same for the resident Indians as well as the Non Resident Indians when it comes to the tax return filing season. Everyone is engrossed in the various ways of understanding the policies of filing tax return.
Stay on top of NRI news with the WelcomeNRI.