Despite being NRI you will taxed as Indian resident if your income in India is above this; Know what else NRIs to watch out while filing ITR Read what else is required to be watched while filing ITR
If you are a non-resident Indian (NRI), it's important to be cautious when filing your income tax return (ITR), as there are several provisions and laws to consider. In general, the initial step in filing ITR for NRIs involves determining whether your income is subject to taxation in India or the country where you currently reside.#sr_widget.onDemand p, #stock_pro.onDemand p{font-size: 14px;line-height: 1.28;} .onDemand .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:12px;font-weight:600;line-height:18px;top:9px} #sr_widget.onDemand .sr_desc{margin:0 auto 0;} #sr_widget.onDemand .sr_desc{color: #024d99;margin-top:10px;} #sr_widget.onDemand .crypto .live_stock .lb-icon{8px 6px 5px 3px !important} #sr_widget.crypto.onDemand a.text{border-bottom:1px solid #ccc;padding-bottom:5px;display:block;width:100%} #sr_widget.onDemand .sr_desc .text p, #stock_pro.onDemand .sr_desc .text p{font-size:12px;font-weight:400;}
ET Guide to ITR
Made a mistake in your filed ITR? Check the revised ITR filing last date
How to file ITR after July 31 deadline?
What is the penalty for filing ITR after the July 31 deadline
What is the ITR filing deadline for NRIs
The deadline for filing income tax returns (ITR) for the financial year 2023-24 (assessment year 2024-25) has been set as July 31, 2024 by the income tax department. This deadline applies to all, including non-resident Indians (NRIs) who are not subject to income tax audit. All ITR filing dates and timelines are based on Indian Standard Time (IST).What is the deemed residency law applicable to NRIs
NRIs must also analyse the deemed residency provisions in the income tax laws to determine their accurate residential status. "The Finance Act, 2020 has also introduced new Section 6(1A) which is applicable from Assessment Year 2021-22. It provides that an Indian citizen earning total income in excess of Rs 15 lakh (other than income from foreign sources) shall be deemed to be Resident in India if he / she is not liable to pay tax in any country," says the Income tax department on its website."Where a NRI becomes deemed resident under the provisions of section 6 (1A), then his income is taxable in India as a resident but not ordinary resident (RNOR). Accordingly, even income from foreign sources shall be subject to tax in India if such income is derived from a business controlled or profession set up in India," says Parul Aggarwal, founder, Parul Aggarwal and Associates.
How residency status is classified in India for individuals
According to Vishal Gehrana, Advocate on Record, Karanjawala & Co, the residency status is classified into three categories:You Might Also Like:
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Ordinary resident, (OR)Resident but not ordinarily resident (RNOR),Non-resident Indian (NRI)
What is the difference between various residency status
According to Gehrana, here is the difference between the three-residency statuses:Ordinary Resident: An individual is categorised as an Ordinary Resident if he meets any of the following conditions as per Section 6(1)
a) He/she is in India for at least 182 days during the financial year, or
b) He/she is in India for 60 days or more during the financial year and has been in India for at least 365 days in the 4 years preceding the financial year.
An Ordinary Resident is liable to pay tax on his global income, i.e., income earned worldwide, irrespective of the source of such income.
Resident but Not Ordinarily Resident: As per Section 6(6) of the Act, an individual qualifies as Resident but Not Ordinarily Resident (RNOR) if he/she meets one of the following conditions:
a) He has been a non-resident in 9 out of the 10 preceding years, or
b) He has been in India for 729 days or less during the last 7 preceding years.
RNOR is taxed only on income that is earned or accrued in India or income that is received in India, and income from a business or profession controlled or set up in India.
Non-resident Indian (NRI): A Non-Resident Indian is defined under Section 2(30) of the Act to mean a person who is not a 'resident' and for the purposes of Section 92, 93, and 168 includes a person who is not ordinarily resident within the meaning of Section 6(6).
"If the individual does not meet any conditions for ordinary residents and RNOR, then he shall be a NRI," says Ritika Nayyar, Partner, Singhania & Co.
How is the taxability for NRIs determined in India
NRIs' taxes in India are determined based on their residency status, as defined under Section 6 of the Income Tax Act, 1961. The residency status is primarily based on the number of days an individual stays in India during the given financial year and the preceding financial years."An individual is considered a NRI if they have spent more than 182 days outside India, or if they have spent more than 365 days in India in the previous four years and less than 60 days in India in the current year. This limit of 60 days is extended to 182 days for individuals leaving India for employment purposes. For NRIs (Non-Resident Indians) or PIOs (Persons of Indian Origin) visiting India, the limit of 60 days is replaced with 120 days if their income from India exceeds Rs 15 lakh," says Pallav Pradyumn Narang, Partner, CNK, a CA firm.
"The taxation of NRIs is primarily determined by the residential status of the taxpayer in India. The Income tax act normally based on the number of days a taxpayer has spent in India categorises them as either OR, RNOR and NRI for tax purposes in India. For NRIs, tax treatment may depend on specific circumstances, however, usually only income 'received in India' or source of income 'received from India' is taxable. However, income earned outside India, having no connection with India, is not taxable.," says Nayyar from Singhania & Co.
According to Mudit Vijayvergiya, Founder, SBNRI, a NRI focussed platform, "Following are the types of income leviable for taxation in India for NRIs:
Salary for services rendered in India.Income from residential propertyCapital gains or dividends from Indian shares.Any investments in IndiaIncome from other sources in India
What if you are a Portuguese citizen born and brought up in Goa?
According to Gehrana, as a Portuguese citizen, your taxation in India will depend on your residency status, not on your place of birth. If you meet the residency criteria, you will be classified as a resident (ordinary resident or RNOR) under Section 6. In such a case, your global income (which includes income earned or accrued both within and outside India) will be taxable in India. If you do not meet the residency criteria under Section 6, you will be classified as a non-resident for tax purposes in India. In such a case, you will be taxed in India under Section 5(2) only on the income that is received or deemed to be received in India (e.g., rental income from property in Goa), or accrued or arisen or deemed to accrue or arise in India (e.g., income from a business operated in India).
"Whether you are a resident or a non-resident, you can benefit from the Double Taxation Avoidance Agreement (DTAA) between India and Portugal. The DTAA helps in avoiding double taxation on the same income, and enables you to claim relief if you are liable to pay tax in both countries," says Gehrana from Karanjawala & Co.
Vijayvergiya from SBNRI shares his insights about DTAA. "Under the purview of Income Tax law, NRIs must obtain a Tax Residency Certificate (TRC) to claim DTAA benefits in India. NRIs should furnish a TRC along with relevant information in Form 10F to claim DTAA benefits."
Vijayvergiya explains with a example: let's say you're a US resident with taxable income in India. If you had to pay 20% tax in the USA and the same income was taxed at 15% in India in the form of TDS defined under DTAA with the USA, then you have to pay only the remaining 5% tax in the USA.
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This story originally appeared on: India Times - Author:Faqs of Insurances
