NRIs or Non-resident Indians are individuals of Indian origin who do not reside in India. However, as citizens of the country, they are required to pay taxes. According to the Indian taxation law, income tax for NRIs is applicable despite the fact that they are earning income outside India. 

 

However, there are slight variations with regard to such taxation laws and perks compared to resident Indians. Remember that you are deemed an Indian resident if you stay in the country for a period of 182 days during a particular financial year. 

 

However, you are also considered an Indian resident in the following instances:

  • If you have stayed for a timeline of 60 days during the previous year 

  • If you have resided in the country for almost 365 days during the last 4 years

 

When you do not meet the required criteria as mentioned, you are considered a Non-resident Indian or an NRI. Hence, it is crucial to understand tax implications pertaining to NRIs that will help you assess the taxes you need to pay.

 

Read on to delve into the nuances of ITR (Income Tax Returns) filing for NRIs.

Taxable Income Sources Applicable for NRIs

Understanding the concept of ITR for NRIs is essential before you file your returns as an NRI. For that, you must be aware of various conditions when your income becomes taxable. Remember that if you have a ‘resident’ status during a particular financial year, your global income becomes taxable, per the Income Tax Act of 1961.

 

However, if you have an ‘NRI’ status, you are eligible to pay taxes only for the income accrued or earned in India. Given that, here are some taxable income sources for which you are deemed to pay a tax per the income tax law in the country.

1. Income You Earn from Any House Property

If you have any property in India and you generate income from it, you are liable to pay income tax for the generated income as an NRI. Remember that the process for calculating tax under such situations is the same as that is for residents. 

2. Income Generated from Salary

One of the most critical factors to remember when discussing income tax for NRIs is that the income you earn outside the country is not taxable as per the Indian taxation law. 

 

However, if you, as an NRI, have earned income for services rendered in the country, that income is taxable. Note that for a Non-resident Indian, income tax returns stay applicable even if the salary is being credited to your Indian accounts.

 

This holds true when your family member receives income on your behalf. Hence, income tax filing for NRIs is a must under these circumstances.

3. Income Earned from Alternate Sources of Investment

If you have invested in the Indian stock market and generated income through the transfer of capital assets in India or mutual fund units, this income is taxable per the Indian taxation law. 

 

On a similar note, if you are earning interest income through fixed deposits or savings accounts within the country, the income is taxable. All these scenarios warrant the filing of the income tax return for NRIs by default.

Key Pointers to Follow During ITR Filing for NRIs

As an NRI, you can easily file your returns hassle free online. However, it is essential to consider these key points:

1. Confirm your Residential Status

This is one of the crucial pointers to keep in mind before filing your NRI ITR form. You can check this by visiting the income tax website. As per Section 6 of the Income Tax Act, your residential status is stated clearly. Once you meet the required criteria, you can complete the process of filing your NRI ITR form.

2. Check Your Double Taxation Avoidance Agreement (DTAA) Benefits

As per this agreement signed by India with other countries, you can avoid paying tax twice on the same income. Thanks to this provision, income taxpayers need to pay tax only in one country. 

 

If you have paid the tax twice on the same income, you can claim the tax credit per this agreement. Hence, when filling out an ITR form for NRI, you must consider this pointer as it helps you save income.

3. Be Aware of Your Taxable Income

Now that you are familiar with the taxable income sources for NRIs, it is important that you calculate the taxable income before initiating the NRI ITR filing process. Remember that your taxable income is your entire income before deducting tax.

 

As an NRI, you are required to file an income tax return if your total income for a particular year exceeds ₹2.5 Lakhs, irrespective of whether you are a non-senior or senior citizen. 

 

However, if TDS has been deducted from your taxable income, you are eligible to claim a refund after submitting a proper reconciliation of the TDS and advance tax. 

 

An advance tax is an amount you pay in advance rather than paying a lump sum tax amount at the end of the financial year. Once you calculate your taxable income, filing an ITR form for NRIs becomes an easy and straightforward task.

4. Assess Your ITR After Filing Returns

While you have a brief idea of income tax for NRI, merely filing your returns without verifying them is of no use. Make sure to check your returns within a timeline of 30 days. This verification step is crucial; else, your NRI ITR form will be deemed invalid.

Procedure to File Tax Returns for NRIs in India

While you can file it electronically, there are other modes for filing your returns. Here is a quick snapshot of the process to follow when filing income tax returns for NRIs via the online mode.

  • Make sure to submit returns after signing them, along with your Digital Signature Certificate

  • Transmit the data electronically using the electronic verification code

  • Submit the verification of your returns using the Return Form ITR-V

  • Print a copy of the ITR-V Form and send the same via post to the Electronic Data Processing Centre after duly signing the copy

  • Provide the returns on paper when filing your income tax returns manually

  • Note that you can file your returns manually only if you are above the age of 80 years

 

Keeping these pointers in mind can help you file your tax returns easily. While taxation laws slightly differ for NRIs, several amendments made by the Indian government have eased the process of filing income tax returns for NRIs.

FAQs on Filing ITR for NRIs

What is the due date of ITR filing for NRIs?

It is mandatory that an NRI must file their returns before 31 July of a particular assessment year. You can file your taxes later, even if you miss this deadline.

Can an NRI claim tax deductions?

Yes, as an NRI, you are eligible to claim a standard deduction of 30% on your income from the house property. Apart from this, you can also claim a deduction on the interest paid towards a home loan. As per Section 80C, this deduction is also applicable to your principal home loan amount.

Is an NRI aged above 60 years with a total gross income of ₹2.8 Lakhs required to file NRI ITR forms?

Yes, whether you are a non-senior or a senior citizen above the age of 60 years, you are required to file your returns in India if the total income exceeds ₹2.5 Lakhs during a particular assessment year. 

What is the ITR form for NRI that needs to be submitted?

When filing returns in India, all NRIs need to submit an ITR-2. You can complete this form by logging in to the income tax website and choosing the specific ITR-2 form.

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