When should NRI file income 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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When should NRI file income tax returns in India
I read so many blogs written by you, all of them are really very very usful. Thanks for your all guidelines.
I am really in a horrible situation right now and don’t know perfectly how to come out from it ! I have filed last in March,2005 and in April,2005 went abroad as got married. In December 2009 I’ve returned in India. In these period I’ve not filed anything due to misguidance of my I.T consultant in India. Anyways, within these long period from my husband’s NRE account I made so many investments in my name as well as in my mother name like mostly KVPs, Postal MIS, Bank FD’s etc.. Some of them have matured and re-invested, some them spent already. In this situation, please advise me what to do now to update all this problem immediatley. It will also be very much helpful for me if you will suggest any consultant name in Kolkata. Awaiting to hear from you asap
Hi Nilma, You can consult a tax consultant in Kolkata. You can still file tax returns, however you may need to pay penalty + interest for delayed tax payment.