Consider yourself an NRI who recently moved to a respectable global company to work after leaving India. Right now, you’re having the best time of your life, working for a reasonable pay with a ton of amazing benefits!
But wait, how are things with your taxes?
Now that you have moved outside of India, would you be completely immune from paying taxes?
Not really.
Non-resident Indians (NRIs) are required by the Indian tax system to pay tax on income that they either earn directly or are assumed to have earned in India.
Money earned outside of India is taxable to nonresident individuals (NRIs); money earned inside the nation is not.
It’s likely already common knowledge that filing income taxes is a tedious procedure. It’s as hard as its name suggests. Moreover, filing taxes as an NRI appears to be a far more challenging undertaking.
But with just a few simple steps, this blog post will answer all of your queries and dispel any doubts you may have about filing income tax returns as an NRI.
Budget 2024
The 2024 Budget amended Sections 42 and 43 of the Black Money Act to eliminate the Rs. 10 lakh fine for revealing movable assets, provided that their aggregate value does not exceed Rs. 20 lakhs.
How Can I Determine my Residential Status?
For the period of the fiscal year, you are considered an Indian resident if any of the following conditions are met:
- When visiting India for at least 182 days or more in a fiscal year
- You were in India for at least 60 days the previous year and for at least 365 days in the last four months of that same year.
Note: Indian citizens who work abroad or who serve as crew members on Indian ships are exempt from the first condition; they become residents of India after completing a minimum of 182 days there.
Persons of Indian Origin (PIOs) who visited India in the year prior and whose gross yearly income (before deducting income from other sources) was at least Rs. 15 lakhs are eligible for the same benefits. These individuals are not subject to the second prerequisite. A PIO is a person who, either via his parents or any of his grandparents, was born in the Indian subcontinent.
If any of the aforementioned conditions are not satisfied, you are a non-resident Indian.
If I Earn Money Abroad, Is It Taxable?
An NRI’s income taxes in India are based on his residency status for the year, as per the income tax legislation mentioned earlier.
In the event that India regards you as a “resident,” they will tax your foreign income. If you are a “NRI,” every money you earn or accumulate while in India is subject to taxation there.
- Pay paid in India or remuneration for services given there, income from a house property located there, capital gains on the transfer of an asset located there, income from fixed deposits, and interest on a savings bank account are a few examples of income produced or accumulated in India. Taxes are due on these earnings for an NRI.
- Income earned outside of India is not taxed in India.
- Interest earned on FCNR and NRE accounts is not subject to taxes. Interest on NRO accounts is taxable in the hands of an NRI.
Does Filing My Income Tax Return Required in India?
If an individual’s income is above Rs 2,50,000 in India, they are required to submit an income tax return.
Steps to File an Income Tax Return as an NRI
Filing an income tax return for NRIs follows a similar process as that for resident Indians. Here’s a simple step-by-step guide:
- Gather Required Documents: Ensure you have all the necessary documents, such as your PAN card, bank account details, Form 16 (if applicable), and other income-related documents.
- Determine the Correct ITR Form: NRIs need to file their income tax returns using Form ITR-2, provided they don’t have income from business or profession in India. If you have income from a business, you’ll need to file ITR-3.
- Report All Indian Income: While filling the return, ensure you declare all income earned or accrued in India, including salary, house property income, capital gains, interest income, etc.
- Claim Deductions: Make sure to claim all eligible deductions under Sections 80C, 80D, and others to reduce your taxable income.
- File Electronically: It is mandatory for NRIs to file their returns electronically through the Income Tax Department’s e-filing portal. If you have any refund claims, ensure your bank account details are correctly mentioned for a direct deposit of the refund.
- Verify Your Return: After submitting the return, you need to verify it within 120 days. You can do this online through methods such as Aadhaar OTP, net banking, or by sending a physical copy to the Centralized Processing Center (CPC).
Why Choose Sachin Gujar & Associates?
At Sachin Gujar & Associates, we understand the unique challenges NRIs face when it comes to tax filing and planning. Our expert team specializes in NRI tax planning in Pune, ensuring that all your tax concerns are handled smoothly, whether you need assistance with filing returns, understanding DTAA, or optimizing deductions.
In addition to tax advisory services, we are one of the top audit firms in Pune. We provide comprehensive audit services to ensure your company’s financial statements comply with all regulatory requirements and present a true and fair view of your business. Whether you are an NRI looking for tax planning or a business owner needing audit services, we offer tailor-made solutions to suit your needs.
Navigating the Indian tax system as an NRI can be a daunting task, but with the right guidance, it can be straightforward and stress-free. Filing income tax returns in India is mandatory for NRIs if their Indian-sourced income exceeds Rs. 2,50,000. Taking advantage of deductions under Sections 80C, 80D, and the benefits of DTAA can significantly reduce your tax liabilities.
At Sachin Gujar & Associates NRI tax advisor in Pune, we provide specialized services in NRI tax planning in Pune and comprehensive auditing solutions. Whether you’re an NRI needing tax advice or a business looking for reliable audit services, our team is here to help. Contact us today for personalized and professional tax and audit solutions.
