There are many NRIs – Non-Resident Indians who have house property, bank deposits, and other assets in India and are required to file tax returns before the expiration period. The expats once enjoyed tax relief under the agreement of double taxation avoidance in India. Now to continue with the relief, they will have to provide considerable disclosures like the home country’s tax number identification, assets that are held outside the country and certificate of overseas tax residency.
A person who is a shareholder or a director in a company that is unlisted will now have to reveal the details and also the company’s permanent account number. The department of Income Tax had issued the Income Tax return filing forms for the companies and the individual for the year 2019-2020. They must file the ITR at the earliest to avoid any penalties or fines.
The details of the overseas residential along with the tax number identification and India’s residential status must also be provided. India’s overseas citizens and citizens of Indian origin who claim to be India’s non-residents must give their report of days resided in the country along with correct tax year and also the prior four tax years.
Determination of their Residential Status in India
It is essential for the expats to work out their Indian residential tax status depending on the stay period for a specific financial year. This is a relevant checkpoint as the individual’s global income is taxed for the individual who resides in India and for the non-residents, their income source will only be taxed. It is noted under the FEMA – Foreign Exchange Management Act, the residency test is different from that of the Income Tax ACT, and is not pertinent for the purpose of tax.
Changes in the Return of Income for AY 2017-18
To reduce the burden of the agreement, ITR 1 – (SAHAJ) has been initiated replacing the SAHAJ ITR-1 for the individuals. The NRIs who have only a stable income can avail the ITR – 1 to file their tax return.
ITR – 1 is appropriate to those individuals who have one house property, salary income and other income sources like the interests. This form has a new rule which states that the total amount of income must not surpass Rs 5 million.
ITR 2 is initiated that would replace the old ITR 2, 3, and 2A. Those individuals who do not come under the SAHAJ ITR 1 will be counted in ITR 2. This form is also pertinent to HUFs – Hindu Undivided Families. But the HUFs and the individual must not have any profession or business. The NRIs who have income that comes from more than one house property or taxable capital gains must file their returns in the ITR – 2.
ITR – 3 must be filed by the HUFs and the individuals who have income from the gains and profit from the business or the profession.
Sugam or the ITR – 4 is for HUFs, individuals and other firms apart from LLP, who have a total income for up to 50 lakh and also have unconfirmed income from the professional and business sources. It contains a bigger exclusion list which cannot be availed by the non-resident HUFs or individual, non-resident partnership firms, ordinary resident, companies directors or an individual who has an income from the unlisted share of equity or who has more than one property.
Things to be taken care of when filing for Income Tax Returns
- Passive income must be reported. It is important to report all the post office interest, bank interest both fixed and savings deposit in the income returns.
- Make sure to report spared income such as the interest on the FCNR/NRE deposit, dividends, capital long term gains that are security listed, tax-free bonds interest, received eligible gifts and many other similar things.
- To conciliate the advance taxes paid or TDS credit which you have claimed in the Advance tax paid/TDS credit that is shown in the Form 26AS.
- It is also clarified by the CBDT – Central Board of Direct Taxes that it is now not compulsory to quote Aadhar for those individuals who are non-residents of India.