Introduction
I get this question most of the time from my NRI clients and from my viewers whether there is a mandatory requirement for NRI to file income tax returns.
You can answer this question in 2 ways
- Theoretically
- Practically
Approach
So, if I say theoretically, which you get most of the time from other people who are related to taxation, then the answer will be like
If your income is not more than 2.5 lakhs rupees in a year then you should not file your return.
However, as I handle litigations and NRI notices, then it’s my obligation to give you this answer in a more practical way.
Simply, if you understand, the income criteria are not the only criteria that mandate you to file an income tax return.
If you do certain types of expenditure, if you do a certain level of high-level transactions in a particular year then still you will need to file the return and it is mandatory.
For Example: So, if you are NRI and you bought property or sold a property in India in a particular year or you have done some credit card payment which is more than a certain limit which keep changing every year and if you have transferred some money from outside India or you are trying to transfer some money from India to outside India. These are the transactions that keep changing every year as per the requirement of the government. So, all these conditions mandate you to file the return.
It is practically not possible to keep checking every year whether you are qualifying to file a return or not and there’s a very high chance that you may miss out on the filing of a return when you should do.
So, another important point about the NRI taxation is, the Notice can be issued to NRI up to 14 years as against notice which is issued to residents in a period of 4 years.
Examples
You received a notice for a year which is 10 years earlier and you don’t have documents for that particular year and it’s highly possible and it has happened with quite some of my clients because 10 years is almost a decade and in a decade you might have shifted to maybe a different country and it might be possible that you may not have the access of all such documents which you need to file your return and what will happen to your case if you don’t have the documents to support your claim, simply whatever notice and whatever taxation or penalty is issued by the department, you have to accept and you have to pay even, theoretically, you should not be paying that. So, that can be the scenario.
Conclusion
What can be a simple solution to this complex problem? If I say, simply file your return. Even you don’t have any income to report then also file a nil return and it does not cost much. So, by paying very few fees, you may have peace of mind and all these notices and litigation and letter which happened from the department.
There is a reason for that as an NRI, you do transactions a lot of time and because if you don’t file your return, it will not mention anywhere so the big question arises, how they come to know whether you are NRI or not. 1st, they can issue a notice out of curiosity also but that notice can create a problem for you because you have to hire a chartered accountant and you have to spend time on that on a fruitless exercise which you can avoid by simply filing your return.
So, hope this answer is more practical and if you agree with this answer and still if you had not filed your return for last year, you can file your return now with us and following is our link for any NRI consultation
https://rzp.io/l/akt-nri-tax-consulting
Here, you have to provide some information and our team will contact you and file your return. So, it’s a very simple exercise. Maybe for 1st year, you have to provide more information but after that, you just have to send your bank statement and our team will file the return. Wherever you are in the world, simply you have to do this exercise one time a year and you can avoid all this. Not only that when we file your return, but we also prepare a balance sheet. A Balance Sheet is simple a statement of assets and liabilities. So, each year when you buy some assets or sell some assets, it keeps changing. It’s very useful when some notice or some litigation comes because you can show Income tax department year to year movement of funds of your assets and liabilities statement and its very easy way to convince them that whatever fund you have received, is form sources or from any source from earning which is tax-free. So, this simple exercise will keep away from this litigation.
Hope you will appreciate this information and take some action on that before you have to face some unnecessary hassle from the department.
In Case you have any further inquiries or any questions related to your NRI taxation or you need a consultation about selling your property in India, you can put a comment in recommending section and I will reply to you if it’s a personal question, please don’t put it on the comment section, you can send us a mail on ID https://rzp.io/l/akt-nri-tax-consulting
and if it is a simple question then we will reply to you without any problem but in questions in which we have to do some research and we have to do some calculation, there will be a nominal fee for that