Any individual who is not a resident of India is deemed as a non -resident of India. They are classified to be a resident if they reside for 182 days in the following year, 60 days or more and 365 days in the preceding four years. If the conditions are not fulfilled they would be referred to as a NRI. It is necessary for a NRI to file income tax in India if their income exceeds 2.5 lakhs in the preceding year. A NRI investment consultant Pune can guide you further on the process.
An important feature of filing TDS for an NRI, is an option of claim TDS at source. It is possible for a NRI to have bank accounts in India as they can be NRO, NRE and FCNR accounts. The NRO would be taxed at 30 % with cess and surcharges. Such taxes would be deducted in the form of TDS according to the tax slab of NRI. A NRI may be investing in multiple class of assets in India relating to the investment options.
Foreign tax credit claim
Since NRI obtain income from two countries they are forced to pay double the taxes. A concept of double tax avoidance agreement is signed between two countries as it prevents paying double taxes on income from two countries. Indian has the agreement signed with 85 odd countries. The best way to get exemption in one of the countries is to file an ITR in India while filing tax returns in another country. After obtaining from the country you need to obtain the tax residency certificate. Apart from this the self declaration regarding the submission of TRC, attested copies of passport, PAN and visa is important. NRI tax planning firms in Pune suggest various measures on how to go about the process.
Losses carry forward
Being a NRI, the loss reported from the sale of mutual funds or profit is to be carried forward to the next year. This is to be offset against the profit of the coming years. But before the due date if you fail to file the ITR, then you would not be carrying forward the losses. An NRI may feel that nothing happens when lose is reported and if they do not file the annual returns there is a possibility where they fail to redeem the losses next year.
For a NRI sanctioning loans like home loans or retirement loans, requires basic type of documentation to be submitted in the form of income tax returns. For a bank to validate the residential status the ITR is a basic document and with sanctioning of loans is a must.
According to section 80 C of the income tax act deductions are available. Such a section has around 25 asset classes but all such deductions would not be applicable for a NRI. Though there are some sections where you can claim deductions under the income tax act.