What NRIs Need to Know About Filing Income Tax Returns?

Since filing an income tax return has different provisions and laws applicable to the NRI, one has to be cautious while filing the return. The first aspect of registration for ITR for Non-Resident Indians is whether the earned income is eligible for tax in India or the country of present residence. When you deal with NRI taxation issues, Flyopedia will ensure that you avail correct residency status, important filing dates, and other records and documents regarding NRI taxation in India and other countries. Meanwhile, if you are planning a visit to India, Grab cheap flight tickets to India from USA with us to make your travel more affordable.

Due Date for NRIs to file their ITRs

The Income Tax Department has laid down that for the FY 2023-24 / AY 2024-25, ITR filing is required to be completed before July 31, 2024. This deadline is for all, confirming that NRIs who are not required to get their Income Tax Audit also abide by this rule. Note that all ITR deadlines are based on Indian Standard Time.

The Deemed Residency Law for NRIs

NRIs need to review the deemed residency rules in income tax laws to determine their correct residential status. According to Section 6(1A), introduced by the Finance Act, 2020 and effective from Assessment Year 2021-22, an Indian citizen earning more than Rs 15 lakh in total income (excluding foreign income) will be considered a Resident in India if they are not liable to pay tax in any other country.

Categories of Residency Status in India

In India, residency status is divided into three categories:

1. Ordinary Resident

According to Section 6(1), an individual qualifies as an ordinary resident if they meet one of the following conditions:

1. a) They are in India for at least 182 days during the financial year,

or

1. b) They spend 60 days or more in India during the financial year and have been in India for at least 365 days in the past 4 years.

Ordinary Residents must pay tax on their global income, regardless of where it is earned.

2. Resident but Not Ordinarily Resident (RNOR)

According to Section 6(6), an individual is considered RNOR if they meet one of the following criteria:

1. a) They have been a non-resident in 9 out of the last 10 years, or
2. b) They have been in India for 729 days or less over the last 7 years.

RNORs are taxed only on income earned or accrued in India, or income received in India, as well as income from a business or profession set up in India.

3. Non-Resident Indian (NRI)

As defined under Section 2(30), an NRI is someone who does not meet the criteria for being a resident or ordinarily resident, including those not ordinarily resident under Section 6(6).

How Taxability for NRIs is Determined in India

The tax position of an NRI in India has been explained by the provisions of section 6 contained in the Income Tax Act, 1961 of India. This status depends on the number of days that such a person has spent in India in the current financial year and the immediately preceding financial year.

An individual qualifies as an NRI if they:

• If somebody has stayed for more than 182 days in a foreign country in the calendar year or
• Present in India for 365 days in the prior four years and not more than 60 days in the present year.
• For those proceeding to India for employment, the duration is sixty days while the famine tick limit is 182 days. To cover the Indian income in the annual tax computation, if an NRI or PIO is visiting India and his specific Indian income during the financial year exceeds Rs 15 lakh, the 60-day limit increases to 120 days.

In general, the income tax law applied to NRIs is that they are taxed only on income earned and received in India. Earnings received outside the territory of India which have no source of income linkages with India are usually exempted from Indian taxation. Also, if you are considering a trip to India, you should book your last minute flight tickets to India through Flyopedia.

Also Read: Insights into the India-US Tax Treaty: How NRIs Leverage Tax Benefits in Both Countries