As the financial year comes to a close, Non-Resident Indians (NRIs) must focus on an essential task: filing their Income Tax Returns (ITR). With a significant portion of NRIs already having filed their ITR, and a majority gearing up to do so, it is crucial to understand the nuances and processes involved in this obligatory exercise. This guide provides a detailed walkthrough on everything NRIs need to know about filing their income tax returns in India for the year 2024.
Understanding NRI Taxation
Who Qualifies as an NRI?
An individual is considered an NRI if they reside outside India for more than 182 days in a financial year or if they have been in India for less than 365 days over the last four years combined and less than 60 days in the current financial year. This classification is pivotal as it determines the tax liabilities and the applicable income tax rates.
Taxable Income for NRIs
For NRIs, taxable income includes:
- Income earned or accrued in India
- Income deemed to be received in India
- Income from property or assets situated in India
- Interest on NRE and NRO accounts
Key Dates and Deadlines
Filing ITR on time is critical to avoid penalties. Here are the important dates NRIs should mark on their calendars:
- 31st July 2024: Deadline for filing ITR for the financial year 2023-24.
- 30th September 2024: Last date for filing revised or belated returns.
Step-by-Step Guide to Filing ITR for NRIs
Step 1: Gather Necessary Documents
Before starting the filing process, ensure you have the following documents ready:
- Passport (for proof of residency outside India)
- PAN Card
- Bank statements (NRE/NRO accounts)
- Form 16 (if applicable)
- Investment details (Mutual funds, stocks, real estate, etc.)
Step 2: Determine the Applicable ITR Form
For NRIs, the following ITR forms are generally applicable:
- ITR-2: For individuals not having income from business or profession
- ITR-3: For individuals having income from business or profession
Step 3: Calculate Taxable Income
Calculate your total income by adding income from all sources. Deduct eligible exemptions and deductions such as:
- Section 80C: Deductions on investments up to INR 1.5 lakh
- Section 80D: Deductions on health insurance premiums
- Section 24(b): Deductions on home loan interest
Step 4: Compute Tax Liability
Using the current tax slabs, compute your tax liability. For NRIs, the tax rates are the same as resident Indians for incomes up to INR 15 lakh. For incomes above this threshold, different rates apply.
Step 5: File Your ITR
You can file your ITR online through the Income Tax Department’s e-filing portal. Ensure that all details are accurate and double-check the information before submitting.
Step 6: Verification of ITR
After filing, the ITR must be verified within 120 days. This can be done electronically using Aadhaar OTP, Net Banking, or by sending a signed physical copy to the Centralized Processing Centre (CPC) in Bangalore.
Common Mistakes to Avoid
Incorrect Residential Status
Ensure that you accurately declare your residential status as it directly impacts your tax liabilities.
Omitting Global Income
NRIs must include their global income if they are liable to pay taxes in India. Failing to do so can attract penalties.
Not Claiming Deductions
NRIs often miss out on claiming deductions they are entitled to, leading to higher tax liabilities. Make sure to claim all eligible deductions.
Filing Income Tax Returns is a crucial responsibility for NRIs. By adhering to the correct procedures and deadlines, NRIs can ensure compliance with Indian tax laws and avoid unnecessary penalties. This comprehensive guide aims to simplify the process, making it easier for NRIs to fulfill their tax obligations efficiently.
