Are NRIs required to file tax returns?

Before determining the income tax filing requirements for NRIs, it's important to understand the concept of tax residential status. Your residential status in India is determined based on the number of days you spend in the country during a financial year (April 1 to March 31).

Filing Requirements for NRIs

1. NRIs are required to file income tax returns in India if they have any taxable income in the country including  income from property, capital gains, business/profession, or any other income earned in India.
2. NRIs are eligible for the same basic exemption limit as resident individuals.The basic exemption barrier for people under 60 years old for the fiscal year 2022–2023 is Rs 2.5 lakh.
3. NRIs must file income tax returns in India in the following scenarios:
   1. If their total income in India exceeds the basic exemption limit.
   2. If they want to claim a refund of excess taxes withheld or paid in India.
   3. If they have earned capital gains from the sale of assets in India, regardless of the income amount.
   4. If they have earned income from any business or profession set up in India.
   5. If they have income from Indian sources that is subject to TDS (Tax Deducted at Source) but is below the basic exemption limit.

Tax Treaties and Double Taxation Avoidance Agreements

NRIs should also consider these agreements that India has with their country of residence. It provides relief from double taxation and impacts the tax filing requirements in India.

Due Dates and Forms

NRIs filing income tax returns in India have the same due dates and forms as resident individuals which is generally July 31st of the assessment year. NRIs can use the appropriate income tax return forms, such as ITR-2 or ITR-3, based on their income sources and complexity.

While NRIs may not always be required to file income tax returns in India, it depends on their taxable income and specific scenarios outlined above. Consult with a tax professional or refer to the Income Tax Act for personalized guidance and accurate filing.

Look up more articles here for a smooth first time tax-filing process. All the best!