A brief guide for NRIs filing tax returns

NRIsTaxesTax filing deadlines are upon us, and NRIs are hurrying to file before the due date, but some are still worked up about whether they really need to file the Indian tax returns by the deadline of July 31.

Some conditions for filing a return say you must file if you want to claim a refund or if you want to carry forward losses.

Vaibhav Sankla, Director of H&R Block says the laws stipulate that the tax ability of foreign income depends on your residential status. Earnings outside India are taxed only if one qualifies as a resident and ordinary resident of India. As such if one earns income in India they may have to file tax returns within the same due date as is applicable to any other Indian resident.

Archit Gupta, Founder and CEO of cleartax.com says ‘As a rule of thumb you must file an IT Return for FY 2015-16 if your gross income is over Rs.2,50,000, assuming you are less than 60 years old. The numbers change depending on one’s age group, and the rules apply to NRIs as well. However they are taxed in India for income earned in India. Income from outside India is not taxed in India.

If an NRI has to claim a refund he or she must also file a return. If however prior to moving you spent time in India and earned a salary, your employer has provided you a Form 16 and taxes are duly deducted by the employer.

If you have property in India you may need to file a return. The variations on this aspect depend on occupancy, income if rented etc. The bottom line is you must file. Tax Free Income applies only if an NRI has earned long term capital gains from the sale of shares or equity mutual funds he does not have to pay tax and so he does not have to include it in his tax return.

In general an NRI should declare all his India source income but provisions exist in this block as well.

The intricacies are numerous and sometimes inscrutable, which may lead to problems. Therefore one is highly advised to consult with an expert accountant or trusted bank adviser to make sure one is not going to land in a morass of complications.