Do NRI Have to File Income Tax Returns in India?
Yes, an NRI has to file an income tax return in India on income earned in India. NRIs have to pay tax on income that accrues or arises in India. NRIs also need to pay tax on income that is deemed to accrue or arise in India. Money received or deemed to be received in India is taxable. It's essential for NRIs to comply with tax regulations in India, and seeking assistance from tax experts can certainly simplify the process.
NRIs are taxed on specific incomes earned in India:
- Salary earned in India
- Any income received in India
- Revenue from the sale or rent of property in India
- Income earned outside India but received in India
Corp CA tax expert can simplify the tax filing process for NRIs and ensure compliance with relevant regulations. Whether it's understanding your tax obligations, maximizing deductions, or resolving tax-related queries, professional assistance can be invaluable. You can connect with our tax experts via call/whatsapp at 98183 20999.
How are NRI taxed?
How are NRI taxed?
If the annual income exceeds the basic exemption limit of Rs. 2.5 lakh, it's mandatory to file tax returns, whether you're an NRI (Non-Resident Indian) or a resident. Typically, the deadline for filing returns is July 31 of the relevant assessment year.
Further, for the following income, NRI is taxed in India:-
Income from Salary for NRI:
Your NRI salary income will be taxed in India under two situations.
Situation A: If it is received in India- If you are an NRI and you have received any salary in India directly into an Indian Account or somebody else has received it on your behalf in India, then such salary income would become taxable in India.
Situation B: If it is earned in India- Your income is said to be earned in India if it is earned for services rendered in India. Therefore, if you are an NRI and your salary earned is for the services rendered in India, it shall be taxed in India.
You will be taxed at the slab rate to which your income belongs.
Income from House Property:
Any income from a property situated in India, either rented or lying vacant, is taxable income for an NRI.
- A standard deduction of 30%,
- To deduct property taxes,
- To take benefit of interest deduction if there is a home loan and
- To claim principal repayment of the loan as a deduction under section 80C. Also, stamp duty and registration charges paid on the purchase of a property can also be claimed under section 80C.
It is important to note that even if the income is received directly into the non-resident's account outside India or in his NRE account, still the income would be liable to tax in India as the source of income, i.e., the property is situated in India.
NOTE:
Where a resident is required to pay rental to a Non-Resident Indian, a TDS at the rate of 30% is required to be deducted before transferring the money to the Non-resident’s account. A person making any payment to a non-resident is required to submit Form 15CA/15CB online to the Income tax department.
Income from Other Sources:
Indian-sourced income in the form of interest on fixed deposits and savings accounts that are held in Indian bank accounts is taxable in India. Interest received on NRE and FCNR accounts is tax-free, whereas interest received on NRO accounts is fully taxable.
Income from Capital Gains:
Any capital gain arising on the transfer of capital assets situated in India shall be taxable in India. Capital Gains on investments in shares and securities shall also be taxable in India.
If you sell a capital asset, a house property, then
A. TDS of 20 percent is applicable on Long-term capital gains.
B. TDS of 30 percent is applicable on Short-term capital gains.
The buyer, even if he is an individual, is responsible for deducting tax at source and paying it to the Government. Since the onus of deducting tax on payments made to non-residents is on the buyer, he must get a Tax Deduction Account number (TAN) and issue a TDS certificate for the same.
Like residents, even Non-Resident Indians are allowed to claim exemptions under section 54, section 54EC, and section 54F on long-term capital gains from the sale of a house property. The long-term capital gain can be invested under:
| Section | Asset sold/ transferred | Asset to be invested in | Time period for Investment | Quantum of exemption |
|---|---|---|---|---|
| 54 |
|
|
|
|
| 54F |
|
Cost of the new house x Capital Gains
Sale Receipts
|
||
| 54EC |
|
|
|
|
NOTE:
Relevant proofs should be shown to the buyer so that no TDS is deducted by him.
In case, the buyer deducts TDS, the benefit of these exemptions can be availed at the time of return filing by NRI, and refunds of such TDS can be claimed.
Rental Payments to an NRI
- A tenant paying rent to an NRI owner is required to deduct TDS at 30% while making the payment, whether to an Indian account or to an NRI account.
- The TDS deductor has to submit Form 15CA prepared and submit it online to the Income Tax Department.
- In some cases, the tenant is also required to furnish Form 15CB, which is a CA-certified form. Form- 15CB is not required in cases where the remittance is less than Rs.5,00,000 in a year and if the AO orders a lower deduction of TDS or if the transaction falls under Rule 37BB of the Income Tax Act.
