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The below content is purely for informational purposes and is not intended to constitute advisory of any kind. Please note, these are in-depth articles which are best viewed on large screen devices like laptops, desktops and tablets. The position reflected in this article has been updated as of January 15, 2024.

All Non-Resident Indians (NRIs), Persons of Indian Origin (PIOs) and Overseas Citizens of India (OCIs), are recommended to file an Income Tax Return (ITR) when they have taxable income in India. Although, as per the Income Tax Act, 1961, NRIs/PIOs/OCIs are mandated to file an ITR in India only if their total annual income in India exceeds:

  • ₹2.5 lakh* as per the existing tax regime or

  • ₹3 lakh** as per the new tax regime.

*As per the Finance Act 2023

**Section 115BAC of the Income Tax Act, 1961

Did you know?

Rebate (under Section 87A) is only available to residents.

 

If you opt for the existing regime, the total income, as defined above, is the income before considering the following:

a) Deductions such as premiums towards life insurance policies tuition fees, investments in Equity Linked Savings Scheme (ELSS) under Section 80C, mediclaim under Section 80D and donations under Section 80G.

b) Specified exemptions such as long-term capital gains from assets like new residential houses, investment into specified bonds, etc., when they are reinvested.

Even in cases when your income does not exceed the mentioned income threshold in a given Financial Year (April–March), you are required to file an income tax return as an NRI if you have*:

  • Deposited more than ₹50 lakh in a savings bank account in India;

  • Deposited more than ₹1 crore in a current account with a bank or cooperative society in India;

  • Tax Deducted at Source (TDS)/Tax Collected at Source (TCS) of more than ₹25,000;

  • Incurred a travel-related expenditure from India** of more than ₹2 lakh for yourself or anyone else travelling to a foreign country.

*Section 139 (1) and rules 12 AB of the Income Tax Act, 1961.

**Travel does not include travel to Bangladesh, Bhutan, Maldives, Nepal, Pakistan or Sri Lanka and places of pilgrimage such as Saudi Arabia for Haj Pilgrimage and China for Kailash Manasarovar.

To learn more about NRI taxation and the existing and new tax regimes, click here.

It is important to know that you need not file a tax return if you choose to be taxed under special provisions relating to certain incomes of non-residents under Chapter XIIA of the Income Tax Act, 1961. However, this is subject to two conditions:

  1. Your total income consists only of investment income and income from long-term capital gains or both.

  2. The tax has been deducted at source.

Did you know?

If you face taxation for the same income in your resident country and India, check whether your country has signed a Double Taxation Avoidance Agreement (DTAA) with India. If so, you can avail yourself of a treaty benefit/Foreign Tax Credit (FTC) in your resident country under the relevant DTAA. You should consult a tax expert to understand the implications of DTAA.

 

Even though filing an ITR may not be compulsory for everyone, doing so brings several benefits. For instance, you can:

  • Maintain consistency in your tax return filing records.

  • Claim a FRC in your country of residence, as per the applicable tax laws of the resident country. For e.g. to claim FTC in India, you must file online Form 67 online with the Income Tax Department. To understand more about the applicability of FTC, please click here

  • Claim your TDS/tax refunds in India (if applicable).

  • Build your creditworthiness in India.

  • Enjoy an easier visa application/renewal process.

If you want to avail yourself of these benefits and are wondering how to file an ITR as an NRI, you should know that the process and deadlines are similar to that of resident Indians.

Conclusion

As an NRI, PIO, or OCI, you may be required to file tax returns in India if your Indian income surpasses the specified threshold or if you seek to claim refunds for excess tax deductions. While filing an ITR is mandatory only under certain circumstances, voluntary filing can be beneficial in many ways. You should regularly consult with your tax expert to ensure adherence to Indian tax regulations and keep abreast of the latest NRI income tax filing rules.

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