When should NRI file income tax returns in India?

When should NRI file incomWhen should NRI file income tax returns in India; NRI filing income tax returnse tax returns in India?

As an NRI you might be getting some income in India and you may be ignoring about income tax part. If you are Non-Resident Indian (NRI) and wondering whether you should file income tax returns in India or not, this article is for you. NRI may get various incomes including interest income, capital gains from sale of shares or mutual funds, capital gain from sale of property etc. It does not mean that since you do not have salary or business income in India, you cannot file income tax returns. In this article, I would discuss about when would an NRI file income tax returns in India and what are the exemptions available for NRI to file IT returns in India.

Also Read: How to file Income tax return online in India

Who is an NRI?

I would not go much details about this definition. Any individual termed as Non-Resident Indian (NRI) as per Income tax Act is NRI for the purpose of this article.

When NRI need to file Income Tax Returns (ITR) in India?

There are various instances where NRI may need to file ITR.

1) Total taxable income > Rs 2 Lakhs: If you are NRI, but you have earned income in India and your total taxable income exceeds Rs 2 Lakhs, then you need to file ITR in India.

2) Capital Gains in India: If you have any long term capital gain or short term capital gain on sale of shares or mutual funds, you should file returns even if your income is below the taxable income limit.

3) Senior Citizens or Women: If you are NRI, you do not have special exemption limits available for Senior Citizens or Women for resident Indians. All NRI’s would be treated as common and same exemption limit applies.

4) Income tax refund claim: If there are income tax / TDS deducted on your investments and want to claim IT refund, NRI need to file income tax returns in India.

When NRI need not file income tax returns in India?

1) TDS already deducted on Interest income or capital gain: If TDS is already deducted on interest income or capital gain, as an NRI you need not file income tax returns.

2) Long term capital gain realization: If you have realized long term capital gain on equity or mutual funds or shares in India and no tax liability exists, NRI is free to file income tax in India.

What IT forms an NRI should use to file IT Returns?

ITR-1 – If you have interest income only

ITR-2 – If you have capital gains (on sale of shares, mutual funds, etc.)

Also Read: Which IT Form to use for income tax filing?

Is there any specific time limit for NRI to file ITR in India?

There are no special time limits for NRI. Like any other individual, even NRI need to file income tax returns by 31st July every year. This date can be extended by Govt. of India for any year for any reason.

What happens if NRI does not file ITR in India?

If necessary TDS has been deducted from taxable income of NRI, an NRI can file ITR after this due date but before the end of the assessment year (31st March) without any penalty.

If TDS has not been deducted and NRI has tax liability, then NRI need to pay 1% per month as interest on tax liability along with penalty charges which would be at the discretion of the income tax officer.

Is there any step-by-step guide on how to file income tax return online?

Yes, please refer our earlier article on how to file income tax return online which has more details.

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Suresh
When should NRI file income tax returns in India

12 comments

  • Thangaraj

    Dear sir,
    Thanks for your blog it is really helpful. i need one query about Tax . 1 ) i am NRI . I am sending money to india through NRI account . That money i transfer to my wife account (house wife) ( My wife have demat account+Trading account) . uptil now my wife invest SIP method for MF last 1.5 years ( per month 15000 or 1.8 laks/year) this money can i submit income tax file from My wife name( my wife Have pan card) 2) My demat account +trading already invest some money in shares. around ( 2 lakh pa) this also taxable? 2) I am Planning to increase SIP shares market in my wife account Please give me some idea and your advice. Once Thanks for valuable feed back and support.
    Thangaraj

    • Thangaraj, 1) You are investing in your wife name, hence any capital gains, you need to pay income tax 2) In your name, any short term capital gain  < 1 year, you need to add this to your income and pay tax. 3) If you can invest in equity funds, that too for more than 1 year and any returns are tax free.

  • Muralidhar

    Dear Suresh,

    I am an NRI, I have few NRE fixed deposits where in the interest earned is exempt from tax, some NRO fixed deposits on which
    Tax is deducted at source on interest earned. Now I am planning to invest in ELSS mutual funds. Do not have any other
    Income in India.

    Do I need to file tax returns.

    Please let me know.

    Regards
    Muralidhar

    • Muralidhar, If you have taxable income in India, you need to file IT returns. NRO FD scheme attract tax. ELSS funds on other hand have 3 years lock in period, anything redeemed after this does not attract tax. Hence you should check NRO FD scheme interest is crossing your income tax limit, if yes, you should pay necessary tax and file ITR

  • sonia

    Hi Suresh,

    I am currently posted outside India and have only Salary income on which tax is paid in that country itself. Am I required to file ITR in India?

  • dr.p.sudhakar

    Thank you mr.suresh.

  • Hiren

    Hi Suresh

    I have an NRE tax free account, and bank told me that I would not need to pay tax on any income I have through interest gained. After reading your article, I wonder if that could be true?

    Regards, Hiren

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