Should you be an NRI (Non-Resident Indian), you could question whether you should pay taxes in India. The response relies on your income from India, either earned or received. Not only for compliance but also for claiming refunds, avoiding penalties, and preserving your financial records, filing a non-resident Indian income tax return is vital.
Let’s simplify it for you.
An Indian Who is Not a Resident (NRI)?
According to Indian tax rules, you are an NRI if you spend less than 182 days in India within a financial year or:
- You do not spend 60 days or more in India, and you do not spend 365 days in the past four years.
Only residents pay taxes on world income. Only income generated or received in India taxes NRIs.
When in India Should NRIs File an Income Tax Return?
- If your Indian income in a financial year (before deductions) exceeds ₹2.5 lakh, you must file a non-resident Indian income tax return.
- You want TDS (Tax Deducted at Source) refund claimed.
- From Indian stocks, real estate, mutual funds, you have capital gains.
- For future tax advantages, you want to carry forward losses.
Forms of Income NRIs are Taxed On
- Property rent from India
- Interest earnings from Indian bank deposits or NRO accounts
- Capital from property, mutual funds, or shares
- From Indian corporations, dividends
- Any business income generated in India
File ITR as an NRI: How
- Decide on the correct ITR form.
- Most NRIs—if they have no business income—use ITR-2.
- Use ITR-3 if your Indian business income is taxable.
- Report just Indian income.
- Unless it comes from India, never include foreign pay or income.
- Claim deductions.
- Section 80C, 80D, 80G, etc. let NRIs claim deductions.
- Pay taxes or claim a refund here.
- File to be refunded if tax is already deducted (TDS) and exceeds your actual tax.
File Before Timeline
Unless extended, the deadline is usually July 31.
Typical Mistakes NRIs Should Not Make
- Using the incorrect residential status
- Not registering income from Indian real estate
- Ignoring to claim a TDS refund
- Not filing; Indian residents only need to
Why Is Filing ITR a Good Idea?
Although it is not required, completing a non-resident Indian income tax return benefits:
- It helps you create your Indian financial record.
- Needed when seeking visas or house loans.
- Required should you intend to go back and settle in India later.
- Assists with carry forward losses and TDS returns.
In Summary
Not as difficult as it sounds is filing a non-resident Indian income tax return. NRIs who have a basic knowledge and some planning will remain tax-compliant and gain financially. Make sure your Indian earnings are correctly stated; else, you risk losing your money and peace of mind. Remember the deadline.
