NRI Tax Filing Last Date 31.07.2024 . Should You File Tax Returns Or Not ? CA Sanketh Nayak

Summary

In this episode of 'Experts Speak', chartered accountant Sanket Nikam discusses tax filing for Non-Resident Indians (NRIs). He addresses common doubts, such as when to file tax returns, the importance of considering basic exemption limits, and the implications of transactions like TDS and TCS. Sanket also covers the necessity of updating contact information with the tax department, the use of power of attorney for tax matters, and the taxability of funds in NRE and NRO accounts. He advises on responding to tax notices and the process for filing revised or belated tax returns, ensuring NRIs are well-informed about their tax obligations.

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Q & A

What is the basic condition for an NRI to file tax returns in India?

The basic condition for an NRI to file tax returns in India is if their income crosses the basic exemption limit, which is currently 2.5 lakhs under the old regime and 3 lakhs under the new regime.

Are there any exceptions to the basic exemption limit for filing tax returns?

Yes, exceptions include dividend incomes or incomes under short-term or long-term capital gain that enjoy a special rate of tax, where the basic exemption limit does not apply.

What are the other conditions that may require an NRI to file tax returns even if their income does not exceed the basic exemption limit?

Other conditions include having transactions or deposits in bank accounts exceeding 50 lakhs in a financial year or having a TDS or TCS of 25,000 or more.

What is the misconception about TDS that many NRIs have, and what is the correct understanding?

The misconception is that once TDS is done, it is the final tax payment. However, the correct understanding is that TDS is just a preliminary tax deduction, and the final obligation is fulfilled only after filing the tax return, where one may claim a refund if the tax payable is less than the TDS deducted.

What is the role of TCS in the context of tax obligations for NRIs?

TCS, or Tax Collected at Source, is similar to TDS and is a collection of tax for high-value transactions to be detected by the income tax department. NRIs can claim credit for TCS at the time of filing their tax returns.

What are the implications for NRIs who have not applied for an Aadhaar or PAN?

NRIs who have never been to India or have not applied for Aadhaar are not obligated to apply for it. However, if they have an Aadhaar, it is advisable to link it with their PAN to avoid any complications.

Why is it important for NRIs to update their email IDs and addresses with the income tax portal?

It is important because most notices are sent through email, and updating contact information ensures that NRIs receive all communications from the tax department, including notices and demands.

Can NRIs give a power of attorney to someone for handling their tax-related matters?

Yes, NRIs can give a general or special power of attorney to an immediate relative or a friend for the specific purpose of filing tax returns or signing off on documents related to tax returns.

What should NRIs do if they have received funds directly into their NRE or NRO accounts from abroad?

NRIs should ideally receive the funds in their foreign bank accounts first and then remit it to India to avoid being taxed in India. Directly receiving income in Indian bank accounts may be subject to tax.

How can NRIs benefit from Double Tax Avoidance Agreements (DTAA)?

NRIs can benefit from DTAA by applying for a Tax Residency Certificate (TRC) from the tax authorities in their country of residence, which may allow them to claim reliefs such as exclusions, lower deductions, or tax credits on their income.

What should NRIs do if they have filed their tax return with errors or omissions?

NRIs can file a revised tax return up to the 31st of December to correct any mistakes or include any missed items. This helps to avoid future penalties or issues with the income tax department.

What are the options for NRIs who miss the deadline for filing their original tax return?

If an NRI misses the 31st July deadline, they can still file a belated tax return by 31st December, which may attract some additional late fees or interest. Beyond this, they can file an updated tax return for the past two years, subject to certain conditions and additional taxes.

How can NRIs claim a refund for excess TDS deducted?

NRIs can claim a refund for excess TDS by filing their tax returns by the original due date or by 31st December if they miss the initial deadline. It is advisable to file as early as possible to ensure eligibility for a refund.