Filing income tax returns is a necessary obligation for all individuals, including non-residents who have earned income in a particular country. If you are a non-resident individual and need to file your income tax returns, this guide will provide you with the necessary information and steps to complete the process.

Determine Your Tax Residency Status

The first step in filing your income tax returns as a non-resident individual is determining your tax residency status.

As per the Income Tax Act of 1961, there are three main categories:

  • Resident: If you have stayed in India for at least 182 days or more during the financial year, you are considered a resident for tax purposes.
  • Non-Resident (NRI): If your stay in India is less than 182 days during the financial year, you are categorized as an NRI.
  • Resident but Not Ordinarily Resident (RNOR): An individual who is not a resident in the last nine out of ten financial years and has stayed in India for less than 729 days in the past seven financial years falls under this category.

Gather the Required Documents for NRI Tax Filing

Once you have determined your tax residency status, the next step is to gather all the necessary documents needed to file your income tax returns. These documents typically include:

  • PAN Card
  • Passport: Determine your citizenship status.
  • Form 16: If you have worked in India, your employer should provide you with Form 16, which details your income and TDS deductions.
  • Bank Account: Tax refund, if any, is credited to the bank account held in India.
  • Bank Statements: Bank statements for the financial year to check income.
  • Property Documents: If you own property in India, keep documents related to it.
  • Rent Receipts: If you have rented out your property in India, you need to possess the rent receipts.
  • Investment: Statements of investments made in India, such as mutual funds or stocks.
  • Tax Paid Details: Proof of any taxes paid during the financial year.
  • Foreign Income Details: Documentation related to income earned outside India, such as interest earned in foreign bank accounts, investments made outside India, etc.
  • Other Details: You may be asked to provide specific details, based on your unique circumstances, such as the Tax Deducted at Source (TDS) certificate, agricultural income details, etc.

Filing the NRI Income Tax Returns

  • ITR Form: ITR forms for NRIs differ based on their income sources. ITR-2 is applicable for all types of income except business income. For business income, NRIs can use ITR-3.
  • Note: ITR-1 has been discontinued for NRIs.
  • Details to be filled: Provide accurate information regarding your income, deductions, and taxes paid. Double-check all the details before submitting.
  • Deductions: NRIs can claim deductions under sections like 80C, 80D, and 80G, similar to residents.
  • Mention the Exempt Income: Certain incomes and gains, such as LTCG from the sale of house property/listed securities, interest on FCNR or NRE accounts, etc., are exempt from taxation for NRIs.
  • Check and Include Income and Taxes with Form 26AS: Form 26AS provides details of the taxes deducted at source (TDS) and other income sources.
  • Claim Double Taxation Treaty Relief, if any: If your income is taxable both in India and your home country, you may be eligible for relief under the Double Taxation Avoidance Agreement (DTAA) between the two countries. File the necessary forms to claim this relief and avoid double taxation.
  • Note: You can gather more information about DTAA on the Income Tax website.
  • Finalise the Tax Liability: You will have to pay taxes if your tax liability is more than any Tax Deducted at Source (TDS) or taxes paid. The applicable tax amount is calculated based on the various tax slabs determined by the Government.
  • Online Tax Payment: You can pay any applicable tax online through various payment modes, such as internet banking, credit or debit cards, etc.
  • Verify ITR: Verify your income tax e-filing return using your Aadhaar OTP or Electronic Verification Code (EVC) and submit it.
  • Note: If the returns are not verified, your filing can be deemed invalid. If the electronic or online method does not work, you can opt for offline verification by sending a duly signed hard copy of ITR-V to the Central Processing Centre (CPC), Income Tax Department, Bengaluru, India.
  • Acknowledge Receipt: After submission, you will receive an acknowledgment receipt. Keep this for future reference.

Seek Professional Assistance if Needed

Non-resident Indian income tax returns filing can be a complex process, who may be subject to different tax rules and regulations. If you are unsure about any aspect of the filing process or need assistance in understanding your tax obligations, it is recommended to seek professional help.

FINBIZZ has an experienced professional team who can smoothly process your income tax return filing process