Suppose you are a non-resident Indian (NRI) or a person of Indian origin (PIO) with income sources outside India. In that case, you may wonder how to file your income tax returns in India. This article will explain the basics of e filing of income tax return for international income sources.
What are the Income Tax Return Forms Applicable for Non-Residents?
The income tax return forms applicable for non-residents depend on their income type and source. The following are the main forms that non-residents can use:
- ITR-2: This form applies to non-residents with income from salary/pension, house property, capital gains, other sources, foreign assets/income, etc. This form does not apply to those who have income from business or profession.
- ITR-3: This form is applicable for non-residents who have income from business or profession, along with other sources of income.
How to E-File Income Tax Return for International Income Sources?
There are two ways to ITR filing for international income sources:
- Online mode: This mode allows the taxpayer to fill and submit the ITR form online through the e-filing portal of the Income Tax Department. This mode is available only for ITR-1 and ITR-4 forms.
- Offline mode: It allows the taxpayer to download the ITR utility (Excel or Java), fill the form offline, save the generated XML file and then upload it on the e-filing portal. This model is available for all various ITR forms.
For e-filing of income tax return for international income sources, the taxpayer needs to follow these steps:
- Register on the e-filing portal with a valid user ID and password.
- Link PAN and Aadhaar (if applicable).
- Pre-validate at least one bank account and nominate for a refund (if applicable).
- Choose the appropriate ITR form and assessment year.
- Fill in the required details in the ITR form, such as personal information, contact details, filing status, residential status, bank details, income details, deductions, taxes paid, etc.
- Review and verify the pre-filled data from various sources, such as Form 26AS, Form 16/16A/16B/16C/16D/12BA/12BB etc.
- Compute the tax liability or refund and pay the tax due (if any).
- Submit the ITR form and verify it using any available methods, such as Aadhaar OTP, net banking, bank account number, demat account number etc.
What are the Schedules to Be Filled for Reporting International Income Sources?
Depending on the nature and source of international income earned by the non-resident taxpayer, they may need to fill some of these schedules in the ITR form:
- Schedule FSI: This schedule is used to report the details of income accruing or arising outside India which is taxable in India.
- Schedule TR: This schedule reports the details of taxes paid outside India on income taxable in India and foreign countries.
- Schedule FA: This schedule reports the details of foreign assets and income from any source outside India.
- Schedule PTI: This schedule reports income from business trusts or investment funds, including income outside India.
- Schedule 5A: This schedule reports the apportionment of income between spouses governed by the Portuguese Civil Code.
What are the Due Dates and Penalties for E-filing Income Tax Return for International Income Sources?
The due date for filing income tax returns for non-residents is 31st July of the assessment year unless extended by the government. For example, for the income earned in the financial year 2022-23, the due date is 31st July 2023.
If the taxpayer fails to file the income tax return within the due date, they may be liable to pay a late fee under section 234F of the Income Tax Act, 1961. The late fee is as follows:
- ₹5,000 if the return is filed after the due date but before 31st December of the assessment year.
- ₹10,000 if the return is filed after 31st December of the assessment year.
However, the late fee shall not exceed ₹1,000 if the total income does not exceed ₹5,00,000.
In addition to the late fee, the taxpayer may also face other consequences or penalties for late filing of ITR, for not filing or filing incorrect income tax returns.
It is advisable for non-residents who have income sources from outside India to complete the e filing of income tax return in India on time and accurately and to comply with the relevant provisions of the Income Tax Act, 1961 and the Double Taxation Avoidance Agreements (DTAAs) with foreign countries.