Is it mandatory for NRIs to file income tax return in India?

Income Tax Law requires every person to file his return of income in India, if the total income of such person exceeds the basic exemption limit. For NRIs, it is mandatory to submit income tax return in India only if his total income for the previous year has exceeded the maximum amount not chargeable to tax. The threshold limit for Financial Year 2019-20, for individual tax slab exemption is INR 250,000.

Hence, an NRI shall be required to file the Income Tax return in India under the following situations:

  • To claim TDS refund (i.e., excess TDS has been deducted on income in India but the same is not liable tax in India)
  • To claim certain losses (like business loss, capital gain loss etc.) to be carried forward and set off
  • To enable the NRI to claim treaty benefits in the country of his residence i.e., the country in which his global income is consolidated and taxed.
  • To establish his entitlement to claim tax exemption for any income under the Tax Law. The responsibility is on the NRI to submit return to comply with the procedural requirement and adduce proof of his entitlement to such exemption.
  • To assist the Tax authority to reach to a conclusion that, it is only after a NRI has furnished his tax return that his status as a non-resident or resident. Please note that this is not a mandatory requirement, however it helps to substantiate the residential status as Non-resident if later, an NRI receives any show cause notice from the Tax Authority.

However, it will not be necessary for a NRI to file a Return of Income in India if his total income consist only of investment income or income by way of long term capital gains or both and if the tax deductible at source under the provisions of the Act has been deducted from such income. In this regard, please note that the excess deduction of tax, if any shall be refunded only if NRI submit their tax returns. 

Disclaimer: The views / the analysis contained therein do not constitute a legal opinion and is not intended to be an advice. Readers of this document are advised to seek their own professional advice before taking any course of action or decision, based on this document.

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