This year’s budget ie 2023 is likely to contain additional initiatives and policy changes to make the process of filing tax returns by NRIs more convenient. The government could even be offering more tax sops to NRIs who have come back to India or planning to.
Firstly, the government will take extra efforts to make NRIs understand the entire process of taxation. For example, offer clarity on when to file a tax return in India, launching digital initiatives to present all returns and forms.
Tax Liability In Case Of Property Sale
Also, in the event of a non-resident selling a residential property to an Indian resident, the latter must withhold 20 percent tax (apart from the relevant surcharge and cess) on the sale if it happens to be a long-term capital asset, or 30% (other than applicable surcharge and cess) if it is a short-term capital asset. But if the seller feels his tax liability should be lower or zilch then he or she could apply to the jurisdictional Assessing Officer for a Lower Deduction Certificate by filing Form 13 under section 197 of the Income Tax Act, 1961.
These apart, the government could as well look to offer other reliefs and tax deductions to NRIs who put their earnings in India or provide charity for certain causes in India or offer financial help to develop infrastructure in the country. Also, the government could make some tweaks to the existing laws to offer more exemptions to NRIs from filing tax returns in India in scenarios where they have been subjected to withholding taxes in India.
Finally, it is pertinent in the cases of NRIs to deal with tax liabilities in both India and the country where they are residing presently, otherwise they might face the prospect of double taxation on one income in both countries. NRIs also have the option to avail relief from double taxation as per the provisions of a tax treaty (DTAA) between India and the country where they are residing presently or by utilising the foreign tax credit provisions under Indian tax law.