Expat Tax Preparation

The income tax department has mandated to file the return to individuals only in case their income is above the basic exemption limit or if they meet specific criteria like expenditure on foreign travel is more than Rs 2 lakh and electricity consumption of Rs 1 lakh or more, deposits of an amount/aggregate of an amount above Rs 1 crore in one or more current accounts, and other conditions that the government will notify.

Later, the government provided additional conditions via a notification dated 21st April 2022. It has notified below conditions where the taxpayer is required to file ITR: 

• Total business turnover/sales/gross receipts during the FY exceeds Rs 60 lakh.
• Total gross receipts of the profession exceed Rs 10 lakh during the FY.
• The aggregate of TDS and TCS during the FY is Rs 25000 or more (for senior citizens, there is an increased limit of Rs 50,000).
• Total savings bank account deposits are Rs 50 lakh or more during the FY.

Other scenarios where it is mandatory to file ITR includes:

In the case of a resident whose asset is located outside India or has signing authority for an account based outside India. It is always good to file your ITR even if you are not eligible due to the benefits.

• Filing of ITR creates a valid proof of income.
• ITR is required for applying for any loan in the future.
• Banks require ITR even for applying for credit cards.
• ITR is required for VISA applications, etc.
• Hence it is advisable to file ITR even if your income is below the basic exemption limit.

Income tax is a direct tax on your income. It means a portion of your income is paid to the government. The government charges this amount for expenditures related to health, education, providing subsidies to agriculture, infrastructure etc. It is paid by an individual/HUF/any taxpayer depending on income levels or gains in a financial year. A company has to pay income tax irrespective of the level of income. The government passes laws prescribing the rate of taxation on your income from time to time.

You have to pay your taxes before filing your tax return. If you are a salaried individual, then most of your tax liability is deducted from your salary by your employer in the form of TDS and paid to the government on your behalf. If you are liable to pay advance tax, you have to pay 90% of it before the 31st of March every financial year. You can file your ITR once the financial year ends.

The window to file ITR is generally open till the 31st of July of the relevant assessment year. However, the due date to file ITR may get extended, and the IT department will notify the same through notifications. It is always advisable to file your ITR within the due date. It’s worthwhile noting that you attract a late filing fee of Rs 5,000 on failing to file ITR within the due date of the assessment year.

There are many ways to save income tax through proper tax planning. Income tax Act provides certain deductions and exemptions that can be claimed, reducing your total taxable income and tax outflow. Below are some of the most common deductions and exemptions:

• Deduction up to Rs 1.5 lakh under 80C – Investment in tax saving options like 80 C- investing in ELSS, LIC, mutual funds, the deduction for tuition fees for children, the deduction for the principal amount of home loan, etc.
• Additional deduction of Rs 50,000 above Rs 1.5 lakh in 80 CCC(1B) for a contribution towards the National Pension Scheme of the Central government.
• Section 80D allows deduction of the medical insurance premium paid for self, spouse, dependant children (Rs 25,000/50,000 ) and dependent parents (Rs 25,000/50,000)
• 80G allows a deduction for donations made to recognised institutions and trusts as per specified limits.
• House rent allowance exemption is allowed partially or fully under Section 10(13A).
• Deduction for higher education loan under Section 80E.
• Deduction for a home loan paid under Section 24 up to Rs 2 lakh for the self-occupied and full amount if rented property

For salaried individuals, advance tax is mostly taken care of through TDS by employers. But other forms of income such as interest on savings bank accounts, fixed deposits, rental income, bonds, or capital gains increase the tax liability. One's tax liability needs to be estimated beforehand. If tax amounts to more than Rs.10,000/- per year, taxpayers need to pay advance tax in quarterly instalments (June, September, December and March).

Yes, any excess tax paid by you can be claimed as refund by filing your Income Tax Return. After your return is processed, ITD checks and accordingly accepts your refund claim, and then the amount is credited to your bank account. You will also get a message on your email ID registered on the e-Filing portal.