NRI Tax Filing in India has come under scrutiny: here’s all you need to know
NRI Tax Filing The Indian Income Tax Department has made strides of improvement over the years when it comes to its processes. Thus, there are higher chances of your tax filing or lack of filing coming under the radar of the Income Tax Department. Here are some prominent reasons why you might receive a notice from the Income Tax Department.
- Delay in Filing IT Return
If you fail to submit your IT return by the deadline set by the IT Department, you will most likely receive an intimation from the department.
- Misreporting of Capital Gains
The IT department expects its taxpayers to report all the short term and long term capital gains that they have made. Failing to do so might add extra scrutiny to your returns.
- Mismatch with Form 26AS
There ideally should not be any mismatch when it comes to Form 26AS, your TDS, Form 16 or Form 16A. Any mismatch between these would warrant notice from the department.
- Failing to disclose income
Any taxpayer who fails to disclose income to the IT department would also come under the lenses of the department.
All You Need to Know
If you are an NRI, here is all that you need to know when it comes to tax filing in India.
- Residential Status
India, like most other countries that rely on income taxes, depends heavily on the residential status of an individual to calculate income taxes. Individuals satisfying any of the following conditions would qualify as a resident Indian, otherwise a Non-resident.
- You have spent a minimum of 182 days during the financial year in question.
- You have spent a minimum of 60 days during the financial year in question and cumulative of 365 days in the previous four years.
- Taxable Income
For resident Indians, their global income is taxable in India as per the applicable tax slabs. However, if you are a non-resident Indian, you are liable to pay taxes only on the income generated in India. This could include salary received for consultation, rental property in India, interests earned on fixed deposits, capital gains on shares, selling of capital assets, etc.
- When to File
NRIs or any individual for that matter, need to file their income tax returns only if their annual income exceeds the minimum threshold of INR 2,50,000 for a fiscal year. For example, if you have only one source of income in India and it is interest earned on your fixed deposits, you would be taxed accordingly. If the interests earned for a year is INR 80,000 you do not have to file your tax returns. On the other hand, if you have one or more sources of income and together, they add up to INR 3,00,000 for a financial year, you will have to pay taxes and file your returns.
- Tax Filing Timeline
The standard deadline for NRIs for filing their taxes and returns is 31st of July. Should there be any changes in the dates, the IT department would notify everyone of the same.
- Advance Tax
The concept of Advance taxes come into the picture when the tax liability of an individual exceeds INR 10,000 for a financial year. This is in general to avoid tax evasion. Failing to do so will warrant fines and penalties under Section 234B and 234C.
Staying a step ahead and being aware of the various intricacies of the income tax will help you avoid any notices or fines from the IT department or even coming under their lenses as well.