Income tax liability and scope of taxable income for any taxpayer depends upon his residential status in the financial year in which income accrues or arises to him. Hence it becomes very important to decide the correct residential status of a taxpayer. Checklist for NRI income Tax Filing is needed before filing tax return of NRI. Taxpayer refers to any person be it individual, firm or company. Financial year in Income tax implies a period of 12 months starting from the 1st day of April of the year. Many NRI stays outside India but investments in India for which they earn income in way of Interest , Capital Gain , Rental Income , Income form Govt Bonds etc. It is import for NRI to disclose Income earned in India via filing Income tax return and pay taxes. Filing NRI Income tax return is complicated hence Its important to work as per check list for NRI income tax filing. This check list can help NRI for Income tax return filing preparation. In this article we will see about conditions for determining NRI Residential status and NRI income tax filing.
Section 6 of Income tax act states provisions related to residential status. Broadly, it gives three categories based on residence; those are– Resident, Non-resident and Deemed resident. Taxability of income depends on a person’s residential status. According to the act, a person who is not a resident of India , is considered as non-resident of India (NRI).
Incase of an individual, a person is considered to be NRI if he stays in India for less than 180 days in preceding financial year or includes people who left India for employment, business or any other reason for indefinite period.
For Hindu Undivided Family, condition will be -if control and management of HUF is wholly situated outside India.
Whereas incase of company , Indian company is always treated as “Resident” but foreign company is treated as non-resident if its control and management is wholly or partially situated out of India.
Similarly, in any other persons case, if its control and management is wholly or partially situated out of India then they will be treated as Non-resident.
NRIs whose total income exceeds INR 50 lakhs are required to furnish cost details of their assets located in India and their concerned liabilities as mentioned in applicable ITR. Disclosure regarding address, amount, type of asset should be given for all types of assets whether movable or immovable. Disclosure of assets and liabilities in India only are required so no need to give details about assets and liabilities not located/arising outside India.If any asset is owned jointly, then such disclosure should also be given. Also, it is to be noted that only the cost of assets is to be disclosed, not fair value.
To avail DTAA benefit for NRI, first it is important to know whether the concerned income is taxable in India or not. DTAA benefit for NRI can be availed only for taxable income in India. Another important point to check is whether India has valid DTAA with the country of residence of NRI. If DTAA is there and applicable for transaction then NRI now is required to give a copy of Tax Residency Certificate (TRC) issued by tax authorities and form 10F (self declaration) if required.
To avail benefit under DTAA following documents are required to submit:
NRIs have to pay tax on income earned in India. NRIs can file their return online through income tax portal using digital signature. Due date of filing NRI Income tax return is on or before 31st July following the financial year by an individual. However, in case an audit is applicable, the due date will be 30th September.
Giving correct information in Income tax return is important.
There are some specific cases where filing of ITR becomes mandatory for NRI, those are-
How can I verify my NRI ITR?
NRI can verify ITR by sending signed acknowledgement to CPC or by e-verifying within 30 days of filing of ITR.
Furnishing Aadhar number is not mandatory for NRI:
As per the CBDT , NRIs living in India are not required to mandatorily quote their Aadhar number details while filing ITR.