Non-Resident Individuals (NRIs) in India are not required to file regular Income Tax Returns (ITRs), if their income does not exceed the Basic Exemption Limit. However, before taking any decision to file or not, you should consider the following:
- Amount of deduction of withholding taxes because it may lead to potential refund
- Assets purchased from exempt foreign income remitted to India, which in turn may lead to mismatch in Income vs Assets and can invoke notices from the Income Tax Department.
- Remittance of foreign income to relatives in India.
Income Taxable in India for NRI’s and Applicable ITR Forms:
Incomes taxable in India: If an NRI’s has income accruing or arising in India, they might need to file an ITR. This income could include:
- Rental income from property in India, including inherited property.
- Interest income on bank deposits in India
- Capital gains from sale of assets in India (e.g., Equity Shares, Property)
- Pension income from India
Key Points:
- Identify your residential status to determine your tax liability.
- Determine all sources of your income and ensure they match the eligibility criteria of the chosen ITR form. NRI’s are excluded from filing ITR -1 & ITR-4.