1. How to determine residential status in India?

If a person satisfies any of the two conditions mentioned below then he/she is a Resident Indian. Else, he /she is a Non-Resident Indian (NRI).

• When the stay in India for a year is 182 days or more or
• When the stay in India for the immediately 4 preceding years is 365 days or more and60 days or more in the relevant financial year.

There are few exceptions to the conditions of Residential Status.

• In case of an Individual, who is a citizen of India and who leaves India in any Financial year for the purpose of employment outside India, then only the condition of 182 days or more would be applicable.
• In case of Indian citizen or a Person of Indian origin (PIO) outside India and coming to India on visit (whose Indian Income is less than Rs 15 Lakhs) then only the condition of 182 days or more would be applicable.
• In case of Indian citizen or a Person of Indian origin (PIO) outside India and coming to India on visit (whose Indian Income is more than Rs 15 Lakhs) then the number of days is reduced to 120 days.

 

2. Income taxable in India?

 

For Resident Individual the Global Income earned is taxable. However, for Non-Resident Individual (NRIs) the taxability of Income depends upon the following points.

 

• Income received or deemed to be received in India.
• Income which accrues or arises or is deemed to accrue or arise in India.
• Income which is earned outside India is not taxable in India.

 

An NRI’s income taxes in India will depend upon his residential status for the year. For NRI income which is earned or accrued in India is taxable in India. Salary received in India or salary for service provided in India, income from a house property situated in India, capital gains on transfer of asset situated in India, income from fixed deposits or interest on savings bank account are all examples of income earned or accrued in India. These incomes are taxable for an NRI. Income which is earned outside India is not taxable in India. Interest earned on an NRE account and FCNR (Foreign Currency Non-Resident) bank accounts are tax-free. Interest on NRO account is taxable for an NRI.

 

3. When should an NRI file his return of income in India?

 

An NRI, like any other individual taxpayer, must file his return of income in India if his gross total income received in India exceeds Rs 2.5 lakhs for any given financial year. The basic exemption of Rs 3 Lakhs and Rs 5 Lakhs for Senior Citizen and Super Senior Citizen respectively is not available for NRIs. Further, the due date for filing returns for an NRI is also 31 July of the assessment year (succeeding year).

 

4. What if NRI don’t file Income Tax Return in India?

 

The penal provisions for not filing the return are same for non-resident as those of residents. A late fee of Rs.5,000 will be charged if the return is filed after 31st July but upto 31^st December.

 

Please note that due date for FY 2019-20 has been extended from 31^st July 2020 to 30^th Nov 2020. Hence, no late fees will be levied till 30^th November 2020. After 30^th Nov 2020 but upto 31^st Dec 2020 a late fee of Rs 5,000 will be levied.

 

Further, the late fees liability of Rs.10,000 will be levied if the return is filed after 31^st December but before the end of the relevant assessment year i.e., between January to March. Also, interest under section 234A, B and C will be levied at the applicable rate as for resident individuals.

 

Furthermore, Income Tax Department may issue Notice to furnish Income Tax Return along with all the details & related documents. NRI need to respond to Compliance Notices / Non-Filing Monitoring System Notices / e-Scrutiny notices / e-Assessment notices through the e-filing portal of the income tax department. After cross verifying all the details by tax department, you would be required to pay additional tax, interest, penalty as may be applicable.

 

 

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