Non resident Indians or NRIs are required to file their income tax return in India if either of the following conditions are fulfilled;
- Taxable income during the previous year (i.e. financial year) is above the basic exemption limit; or
- During the financial year, NRI has earned short term or long term capital gains by selling investments or assets. or
- NRI wants to claim refund from income tax department
- To set off capital losses against capital gains
Second option will be applicable even if income from a NRI does not exceed the basic exemption limit i.e. irrespective of NRI’s income, short term or long term capital gain will be taxable in India if it’s earned during the financial year in India.
However, there are certain exceptions in which non resident Indians are not required to file their income tax return;
- Where TDS has been deducted from NRI’s investment income and/or capital gains.
- long term capital gain has been earned by selling equity shares or equity mutual funds in India
Last date of filling income tax return for NRIs
For a NRI, last date or due date of filling income tax return is 31st July of the assessment year. However, if such NRI is not liable to pay tax then he or she can file his or her income tax return on or before 31st March of the assessment year.
If NRI wants to file his or her income tax return for the income earned from 1st April 2014 to 31st march 2015 (previous year 2014-2015) then due date for filling income tax return is 31st July 2015 (assessment year 2015-2016). Last date of 31st July 2015 has been extended to 31st auguest 2015. If NRI missed the due date of 31st august 2015 then the next date on or before which he or she must file his or her income tax return is 31st March 2016.
If NRI is liable to pay tax but have not filed his or her income tax return before 31st July of the assessment year then he or she will be liable to pay interest @1% per month for every month starting from 31st July of the assessment year till the date of actual filling.
For non filling of income tax return, before 31st march of the assessment year, assessee may be charged penalty of Rs.5000 for every year of such delay.
If after setting off of TDS amount with tax liability, NRI’s net tax payable is Rs. 10000 or more for the previous year then such NRI is required to pay tax in advance.
As per income tax act 1961, advance tax has to be paid in advance in three installments during the financial year. If it’s not paid by the NRI then interest is generally paid @ 1% per month for the default amount and to be paid till the date of payment.
NRI can also claim income tax deduction under section 80C by investing in eligible list of investments or by spending on special listed expenses.
How NRI can file income tax return in India
Income tax return can either be filed online or offline. It’s mandatory to file income tax return online if NRI’s taxable income is over Rs 5,00,000 during the financial year or else income tax return can be filled offline i.e. in paper format by physically submitting the ITR at local income tax office.
NRI can also take CA assisted service or paid e-filling service based on his or her requirements. Income tax return can also be filled for free if the NRI knows how to file it online.