Income Tax Rules for NRIs

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If you are an NRI, your taxability depends on NRI status for a particular year.

 

Checkout the 5 income tax rules that you must know:

1. You must pay tax on all incomes that arise or accrues within or is received in India. Therefore, your Indian salary, interests earned from FD's and savings accounts, rental earnings, capital gains on all assets sold within India, are taxable income. If your earnings are more than the basic exemption limit for the particular year, you must file a return in India. Again, if you intend to claim a tax refund, or carry forward your losses to future years, you must file a return.

 

2. If you return permanently to your country after being abroad for few years, your earnings overseas do not become taxable immediately. If you have lived out of the country for nine years or more, you remain an RNOR (Resident but Not Ordinarily Resident) for the next two years. It is the transitional status between being an NRI and turning into a permanent resident of India. This is the phase when your earnings outside India are not taxed within India. However, if the earnings come from a profession or business that you control from India, it becomes taxable income. As soon as you become a permanent resident of the country, both your Indian and Global income become taxable within India.

3. If you return to India and turn ordinary resident of the country for a particular year, you must disclose all foreign income and assets in your tax returns. There are rigid regulations under the Undisclosed Foreign Income and Assets Bill, 2015, for evading foreign income in your tax returns. All undisclosed foreign income and assets are taxed at 30%. You cannot claim for deductions, offsetting against losses or allowances for such income. Again, such earnings and assets will never be subject to regular domestic income tax laws. A penalty of INR 1,000,000 will be levied under the following scenarios:

• Not furnishing tax return with the time specified under the income tax laws
• Not furnishing information or offering inaccurate information while filing returns

Based on the severity of the offence, the bill also has stringent penalties of upto 300% tax deduction or amounting to 10 years or more of imprisonment.

4. In Indian Budget 2016, it was declared that NRI's without a PAN would not be deducted at a higher rate. However, you will still have to provide alternative documents to avail this benefit. There was no change in this rule in the 2017 budget.

 

5. You cannot open a PPF account. However, you had an existing PPF account before leaving the country; you can still operate the account until the time of its maturity. Once the PPF matures, you must remit the proceeds in your country of residence. However, you will not be able to avail the option of extension beyond the 15 years lock-in period. In case you leave the account unattended after maturity, it will be considered "extended without contribution".

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e-filing of Income Tax Returns is necessary for Tax Payers

Filing your tax return is one way of having a legitimate proof of your income. It also helps you establish a good record with the I-T Department.

Paying your income tax and filing tax returns provides on time is a must for all individuals. Doing so makes it less likely for you to fall foul of the Income Tax Department which might issue notices to you.

Being tax complaint has other benefits too. If you are looking for housing, vehicle, education loans, etc. it is important that you provide your income tax return receipts that you have filed for the loan to be processed. If you haven't filed your returns, banks will not provide any loan if the return stays to be NIL for three years

Here are few other scenarios where filing ITR becomes necessary for tax payers:

=>Filing returns are also important for VISA processing.

=>Immediate registration of immovable properties is possible if you have filed your tax returns on time.

=>Unless you file your return regularly, banks may not issue a credit card to you.

=>Filing your tax return is one way of having a legitimate proof of your income, and it helps you establish a good record with the I-T Department.

Chandak said that in case you fail to file your income tax returns, you will have to deal with certain consequences like business loss and capital loss (short term or long term), which are to be carried forward but you will not be eligible for it. Therefore, if you fall into a certain section of income and you are eligible to pay taxes, make sure that you file your tax returns as well because paying your taxes isn't enough. Keep your return receipts safely so that you can avail several benefits that come with filing tax returns.

Here are some of the benefits of e-filing your income tax returns:

Faster Processing of Tax return and Refunds

E-filed returns gets processed at a faster speed than physically filed returns. More importantly, refunds, if any, are processed faster than paper-filed returns.

Better accuracy

Paper-filings can be prone to errors but E-filing software comes with built-in validations which minimizes errors considerably.

Convenience

E-filing facility is available 24/7 and you can file your return anytime, anywhere at your convenience.

Confidentiality

In case of paper filings details of your income can fall in the wrong hands at your chartered accountant's office or in the Income Tax Department's office. But under e-filing your data is not accessible to anyone either by design or by chance so it provides better security than paper filings.

Easy access to past records

E-filing applications store data in a secure manner and allow you to access your past returns and other forms on the go. You can access this data anytime and from anywhere.

Ease of use

E-filing is user friendly and the detailed instructions make it easy even for individuals not very conversant with the internet.

Invest Rs 1,50,000 and Save Tax up to Rs 46,350 under Section 80C. Get Great Returns by Investing in Best Performing ELSS Funds. Save Tax Get Rich

For further information contact SaveTaxGetRich on 94 8300 8300

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Long Term Capital Gains Tax

 

Long-term capital gains tax

Long-term capital gains tax is nil for all equity mutual funds schemes

 

Long-term capital gains tax is 10% for all equity mutual funds schemes. The investor has to hold his equity investments for more than 12 months to qualify for long-term capital gains tax. If investments are sold before a year, short-term capital gains are taxed at 15 per cent.

 

You have to fill ITR-2 form to file Income Tax returns and show your long-term capital gains.

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FILE RETURNS IF INCOME EXCEEDS BASIC LIMIT

 

Do you have to file your tax return? Taxpayers hold many misconceptions about this.

Some think if their income is not taxable, they needn't file their return. Others believe that if tax has been deducted at source, their tax compliance is taken care of. The rules say that an individual has to file his tax return if the gross taxable income is above the basic exemption limit. This limit is `2.5 lakh for general tax payers, `3 lakh for senior citizens (above 60) and `5 lakh for very senior citizens (above 80). Remember, the gross income is computed after taking into account exemptions such as house rent, conveyance and other allowances, but before the deductions.

As the table shows, Taxpayer A does not have any tax liability because deductions will reduce his tax to zero. But he still has to file his tax return because his gross total income is above `2.5 lakh. Similarly, the very senior citizen is not obliged to file his return because his income is below the `5 lakh exemption limit. But he will need to file his return if he wants to claim refund of the TDS on his fixed deposits and bonds.

Invest Rs 1,50,000 and Save Tax up to Rs 46,350 under Section 80C. Get Great Returns by Investing in Best Performing ELSS Funds. Save Tax Get Rich

For further information contact SaveTaxGetRich on 94 8300 8300

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FILE Income Tax BEFORE DEADLINE AND VERIFY RETURN

If you have followed all the commandments, here is one last rule you cannot afford to ignore. File the return before the 31 July deadline. Till last year, there was no penalty for filing delayed returns. One could even file returns of the previous two years without a hitch if all his taxes were paid. But the rules have now been changed.

Earlier, belated return could be filed at any time before the expiry of one year from the end of the relevant assessment year. So, the returns for the financial year 2014-15 (assessment year 2015-16) could be filed till 31 March 2017. However, now, belated returns may be filed before the end of the relevant assessment year. This reduces the time window by a year.

A new section 234F inserted in the Income Tax Act has fixed a penalty for delay in filing. It is applicable from the assessment year 2018-19. For now, the penalty is `5,000 if the return is not filed the return before the end of the relevant assessment year

Invest Rs 1,50,000 and Save Tax up to Rs 46,350 under Section 80C. Get Great Returns by Investing in Best Performing ELSS Funds. Save Tax Get Rich

For further information contact SaveTaxGetRich on 94 8300 8300

OR

You can write to us at

Invest [at] SaveTaxGetRich [dot] Com

OR

Call us on 94 8300 8300