In general, there is a wrong perception that NRIs don’t have to file income tax returns if they have no taxable income in India. This is an entirely incorrect view as an NRI holding an Indian Pan card might have to furnish an income tax return under certain circumstances even if he or she has no tax obligations towards the Indian government. Today, we will list out the various situations under which they are required to submit the same.
If Deposits Cross…
In any financial year if an NRI’s overall deposits in a savings bank account (including NRE/NRO account) cross the threshold of Rs 5 million, then he or she has to file an income tax return. The source of deposits could be anything from money remitted from a foreign country to liquidation of an asset in India etc.
If TDS Is Or Breaches…
When the tax deducted as source (TDS) in any financial year is Rs 25,000 or more, then it has to be kept in mind that 30 percent of TDS is applied to an NRO account. Over here as well filing a tax return is imperative as the same cannot be ignored under the pretext of not claiming a tax refund. So, follow the prescribed rules.
If A Property Is Sold…
In case an Indian based abroad has sold a property for an amount greater than Rs 250,000, he or she can get tax relief by ploughing back the sale proceeds into other immovable properties or selected funds. Despite there being no income tax liability under the circumstances, it is a must to furnish an income tax return because the entire income before tax deductions has gone beyond Rs 250,000.
Lastly,
Also, in particular scenarios of foreign travel expenditures, an income tax return becomes a necessity.
Exemptions From Filing Tax Returns For NRIs
In case an NRI’s income from India is zilch or under Rs 250,000, the obligation of an income tax return does not arise. Having said that, a tax return is not essential even if an NRI’s Indian income crosses the threshold of Rs 250,000, provided it comprises only certain prescribed items and sufficient withholding taxes/TDS has been levied on it. The prescribed items include dividends, interest income from specified bonds and/or debt funds, mutual funds purchased in foreign denominations etc.
The Fall Out Of Not Filing Tax Returns
In case the entire income to be taxed exceeds Rs 500,000, the penalty for not submitting an income tax return will be Rs 5,000, or else, the penalty would be Rs 1,000.
