NRI Guide: How To File Income Tax Returns & What Are The Things To Consider?

Non-Indian residents (NRIs) have to pay tax on income earned in India. This means as per regulations, NRIs must pay tax on income against the money received or deemed to be received in India. 

Recent studies suggest only 2% of NRIs have never invested in India. However, whoever has invested in India, 87% of them had invested in real estate while 39% in equities or mutual funds. 

The survey revealed that almost 48% of NRIs, who had not filed the income tax returns, believed that tax which was deducted on investments or income generated in India was equivalent to the tax paid, and hence they are not required to file tax returns in India. 

Read More: NRI Guide: Can You Opt For Dual Citizenship After Migrating To A Foreign Country?

In addition, nearly 90% of the study respondents who had their tax deducted, however, did not file taxes, could have easily got most of their claimed tax back. 

In India, people are usually liable to pay tax on their salary income, house property-related income, and other sources of income. NRIs, on the other hand, are liable to file tax on their income earned in India from several sources, including fixed deposit accounts and capital gains. Tax on a person’s income depends on such source of income and the residential status in India. The residential status of a citizen of India needs to be determined for every financial year that may vary from year to year. 

NRI or not, any individual of Indian origin whose income exceeds Rs 2,50,000 is required to file an income tax return in India. Moreover, if you file ITR, you can avail of an attractive basic exemption (under Section 80C, Section 80TTA, Section 80G of IT Act) on your income tax. Therefore, you must file your ITR every financial year to get exemptions on your several income sources. 

Here’s a guide on how to file an income tax return in India and before filing ITR what all things you need to consider. 

Before you file your ITR, you need to determine your residential status (under section 6 of the Income Tax Act 1961). Besides, you need to calculate your taxable income earned in India, including interest from deposits in NRO accounts and rental income, to claim double taxation treaty benefits and verify returns. 

As an NRI, you can easily file your income tax return online. Follow the below methods for e-filing of your ITR. 

  • Furnish the return online using a digital signature 
  • Transmit the IT data in return online under the e-verification code 
  • Transmit the data in return and after that submit the verification of the return in Return Form ITR-V 
  • In case you are using Form ITR-V, you must print out a copy of the form after signing it. Then courier the form to the Electronic Data Processing Centre in Bengaluru. 
  • You can also furnish the return offline (manual filing of ITR) 

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