Personal Finance

When NRIs should file tax returns

Archit Gupta | Updated on January 17, 2018 Published on July 24, 2016

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Only the income that is earned in India is taxable in India

With the tax filing season in full swing, it makes sense for you to check if you need to file your returns, even if you are an NRI.

Tax laws say that you will be treated as an NRI if you don’t satisfy any of the below mentioned conditions: Stay in India for at least 182 days in a financial year; or stay in India for 60 days or more in a financial year and for 365 days or more in the four years before that financial year.

For the second condition, the period of 60 days is increased to 182 days if you are an Indian citizen working abroad, member of a crew of an Indian ship or a Person of Indian Origin (PIO) visiting India.

When IT’s taxable

For NRIs, only the income that is earned in India is taxable in India. This could include income from salary received in India, remuneration received on service provided in India, house property located in India or interest from fixed deposits or savings bank account in India.

However, the basic tax exemption limit of ₹2.5 lakh applies to NRIs as well. That said, it makes good sense for NRIs to file tax returns in the following cases — if they have short-term or long-term capital gains from investments or assets in India, even when the gains are less than ₹2.5 lakh (but not if the gains are your only income in India and TDS has been deducted on it); if you want to get a tax refund; if you want to carry forward losses to be adjusted later.

Taking cover

Under Section 80C, NRIs can claim deductions on the life insurance premium paid in India and the ULIP or ELSS investments made in India.

Health insurance premiums paid for parents are also allowed to claim.

NRIs can further claim deductions on house property towards the property tax paid or interest on home loan.

There is also something called the Double Tax Avoidance Agreement that NRIs can take advantage of not to pay taxes on the same income in their country of residence as well as in India.

The writer is founder and CEO, ClearTax

Published on July 24, 2016
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