Income Tax Return filing

A person of Indian origin living abroad is known as a Non-Resident Indian (NRI). The Income-tax Act, 1961, provides different tax rules for Indian residents and NRIs. Indian-origin individuals are considered residents when they live for a certain period in India. The Act provides the definition of residents and NRIs for tax purposes.

he two main laws that govern and prescribe the rules for NRIs in India are as follows:

Income Tax Act - Governs the tax liabilities of NRIs
Foreign Exchange and Management Act (FEMA) - Governs all transactions and investments, the opening of bank accounts, etc., of NRIs
The definition of NRI is different under these acts. In this article, we have covered the definition of NRIs under the Income-tax Act, 1961.

Non-Resident Indians (NRIs) need to file an income tax return (ITR) in India if their income in India exceeds a certain threshold or if they seek specific tax benefits.expand_more Here's a breakdown of the key points:

Threshold for ITR Filing:

Financial Year 2023-2024 (Assessment Year 2024-2025): NRIs must file an ITR if their total taxable income in India surpasses ₹2.5 lakh for the financial year under the existing tax regime or ₹3 lakh under the new tax regime.

Additional Scenarios for ITR Filing (Even Below Threshold):

Owning Assets in India: If you own any assets in India that generate income, like rental income from property, you might need to file an ITR regardless of the income threshold.
Seeking Tax Refunds: If you have paid taxes in India at source (TDS) on certain incomes (interest on bank deposits, dividends, etc.) and wish to claim a refund, filing an ITR is necessary.expand_more
Carrying Forward Losses: If you have incurred business or capital losses in India and want to carry them forward to offset future income, you'll need to file an ITR.

File Income Tax Returns as an NRI: A Step-by-Step Guide
Here we have summarized the 8-step guide for filing tax returns as an NRI;

Step 1 : Determine the Residential Status in India
Step 2 : Reconciliation of Income & Taxes with Form 26AS
Step 3 : Ascertain Taxable Income and Determine Your Tax Liability
Step 4 : Claim Double Taxation Treaty Relief
Step 5 : Select ITR and File Details about Exempt Income
Step 6 : Disclosure of Bank Account Details
Step 7 : Provide Assets and Liabilities Details in ITR
Step 8 : ITR Verification

Claim Double Taxation Treaty Relief
You can avail of a tax relief called the Double Taxation Avoidance Agreement (DTAA) if your income is held taxable in India and also in a country abroad.

Note this relief is offered based on the type of income.

Also, another point to take note of is that if your income is held taxable even under the DTAA, you would have to pay tax in India and claim the tax credit paid against the liability in your resident country as per the conditions.