How to File Income Tax by NRIs?

First of all, let us start with knowing what or who an NRI is? Well, NRI is an acronym for Non-Resident Indian. These are the people who are citizens of India but are doing their jobs and mending their careers overseas. However, the definition of NRI is different under the IT act. The NRI taxation system is a lot different from the normal taxation system for the people residing and working in India. This requires the special attention of concerned persons and experienced professionals. They help differentiate between different categories such as residents, non-residents, etc. 

Definition of NRI under the FEMA act:

FEMA, an acronym for Foreign Exchange Management Act, has its rule stating that if a person stays in the country for a period less than 182 during the ongoing financial year, then he or she is to be rendered NRI. Typically financial year starts 1st of April and lasts till 31st March of the next year. 

Additionally, the following persons are also included in the list of NRIs:

  • People employed in organizations and the ones carrying businesses overseas.
  • People staying outside India due to some constraints for an unfixed period.

  • Government servants deputed by the government to be stationed overseas.

Definition of NRI under the IT Act:

Currently, a person is considered to be NRI under the IT Act if he or she fulfills the following conditions.

  • If the concerned person is absent for more than 182 days in the current financial year.

  • If the concerned person has not been present for a period of 365 days or more during four preceding financial years.

NRI tax consultants come in handy in cases like these. They provide services in the sector of advisory, consultation, analyzing residential status, consultation on paying and filing IT returns, investment advice, checking eligibility for femmes residency, etc.

The Deemed residency provision:

According to the finance bill of 2020, a person is to be considered as a resident of India if that person is not being taxed in any other country. This bill has been introduced as a countermeasure to stop the tax evaders. These people go on and settle in countries that have little to no tax-paying requirements. This saves their money from tax-paying.

Umpteen numbers of misinterpretations of this bill have surfaced, such as a person working in a country like Dubai or Qatar if he/she does not pay tax in that country, then they need to pay tax in India. This is completely baseless and wrong.

In accordance with the new bill, a person shall pay tax in India after settling outside if he/she makes money from India itself.

Conclusion:

Taxation is a subject that has haunted people for a long because of its complex structure and ever-changing rules. Add to it being an NRI that is not saying in India, it becomes almost impossible to manage taxes, so expert help of CAs, CFAs is highly recommended in matters like these.

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