Many Individuals from India have settled abroad. Moving to another country does not necessarily mean Good-Bye to the Home Country India. Many NRIs have invested in India in the form of Purchase of Mutual Funds, Life Insurance Policies, Shares, Securities, ancestral land/property, Unit Linked Insurance Plans (ULIPs), FCNR Fixed Deposit, holding of NRO & NRE Accounts etc. Thus, Non Resident may still have Incomes in India and need to get PAN card & accordingly file Income Tax Return in India. Non filing of Income Tax Return in India may bring penal consequences in the form of Interest, late fees, penalties, prosecution & attachment of Invested Assets. You may be having lot of doubts regarding Income Tax on Non Resident Indians (NRI) & these have been summarized in the form of Frequently Asked Questions (FAQs) in this article.

1. Who is Non Resident as per Income Tax Law in India?

‘Non-resident Indian’ is an individual who is a citizen of India or a person of Indian origin and who is not a resident of India. Thus, in order to determine whether an Individual is a non-resident Indian or not, his residential status is required to be determined under Section 6.

As per section 6 of the Income-tax Act, an individual is said to be non-resident in India if he is not a resident in India and an individual is deemed to be resident in India in any previous year if he satisfies any of the following conditions:

1. If he is in India for a period of 182 days or more during the previous year;

or

2. If he is in India for a period of 60 days or more during the previous year and 365 days or more during 4 years immediately preceding the previous year.

However, condition No. 2 does not apply where a an individual being citizen of India or a person of Indian origin, who being outside India, comes on a visit to India during the previous year.

2. What is Tax incidence in case of Non-resident?

√ Income which accrues or arises in India >Taxed in India

√ Income which is deemed to accrue or arise in India >Taxed in India

√ Income which is received in India >Taxed in India

√ Income which is deemed to be received in India >Taxed in India

√ Income other than above (i.e. income which has no relation with India) > Generally not taxed in India

3. Why it is necessary to compute number of days stay in India? (Because I work outside India and come to India only for meeting my family)

It is essential to determine residential status of taxpayer to determine taxability of income earned by such taxpayer. (Residential Status is determined on the basis of criteria mentioned in FAQ 1, based on number of days stay in India)

In case of resident taxpayer all his income would be taxable in India, irrespective of the fact that income is earned or has accrued to taxpayer outside India. However, in case of non-resident all income which accrues or arises outside India would not be taxable in India.

4. How can I get PAN (Permanent Account Number) card in India?

A non-resident Indian (‘NRI’) can apply for PAN by submitting the relevant form along with the requisite documents and prescribed fees at the PAN application center of UTIITSL or NSDL. One can also make an online application through the website of UTIITSL or NSDL.

5. What are the Documents to be enclosed along with PAN application Form?

NRI is required to submit the copy of passport (along with PAN application Form) as proof of identity.

NRI is also required to submit any of the following documents (along with PAN application Form) as proof of address:

a) Copy of passport /OCI Card (with address mentioned); or

b) Copy of the bank account statement in country of residence; or

c) Copy of NRE bank account statement (showing at least two transactions in last six months period and duly attested by Indian Embassy / Consular office / high commission or Apostille or by the manager of the bank in which the account is held. The applicant may be a joint holder).

d) Copy of Aadhar Card of Relative (if you want to get the PAN card delivered at your relative’s address in India)

6. How would PAN card be delivered to Non Resident?

PAN card would be delivered by post to the address mentioned in the PAN card application form. It can be Indian Address or Foreign Address.

7. Whether PAN card would be sent over email as well?

Yes, valid e-PAN card would be sent to the email ID as mentioned in the PAN card application Form.

8. Whether getting Aadhar Card is necessary for Non Resident Indians to file Income Tax Return in India?

Non Residents have been exempted from quoting Aadhar card for the purpose of Income Tax Return. (Thus aadhar card is not required)

9. What are the documents required for computing Income Tax in India for my Incomes earned/generated in India?

Income Related Proofs

√ Rental Income (Residential or commercial) > Rent Deed

√ Business Income > Balance Sheet and Profit & Loss Account

√ Bank Interest > Interest Certificate from Bank & Account Statement of all the Bank accounts held in India

√ Dividend Income > Statement/Proof of Dividend received from Company

√ Capital Gains (Shares/Securities) > Demat Transaction Statement & Capital Gain Statement Report

√ Capital Gain (Mutual Fund) > Mutual Fund Transaction Statement & Capital Gain Statement Report

√ Capital Gain (Sale of Property) > Sale Registry (Title Deed), Purchase Registry & Valuation Report from registered Valuer, certifying value as on 01.04.2001 (if Property acquired/held before 01.04.2001)

√ Redemption/Surrender of Life Insurance Policy/ULIP > Redemption Statement & Exemption Statement stating Income exempt u/s. 10(10D) from Life Insurer

√ Pension Income> Form 16 from employer

√ Agriculture Income> Form J & Lease Deed of Rental Income of Agriculture Land

√ Any other Income> Documentary Evidence of such Income

Deduction/Rebate related Proofs

√ 80C Deduction Proof> Life Insurance Premium Receipts/Certificate

√ 80G Deduction Proof> Donation Receipt

√ Any other Deduction/rebate> Documentary Evidence

Other Documents required

√ Copy of PAN Card

√ Copy of Passport along with pages of immigration stamps

√ Copy of Address proof for Permanent/Communication Address to be mentioned on Income Tax Return form

√ Detail of Assets & Liability (for taxpayers having income above Rs 50 lakh)

√ Tax Payer Identification Number (TIN) in the country you are Resident (e.g. Social Security Number in some countries)

√ Tax Residency Certificate (TRC) from the resident country tax authorities to claim applicable relief under the DTAA

10. How can Non Resident file Income Tax Return in India?

Income Tax Return be filed online on the website of income tax department i.e. https://www.incometaxindiaefiling.gov.in/ Thus, you need not visit any income tax office in India.

11. I don’t remember Income Tax E-filing Portal Password, can I reset it?

Yes, following six alternatives are available for resetting Password:-

√ Using Aadhar OTP

√ Upload Digital Signature Certificate (DSC)

√ Answer Secret Question

√ Using E-Filing OTP

√ Using Login through Internet Banking

√ Placing request through Email to E-filing Helpdesk

12. What are tax implications on the Interest Income from the Bank?

√ Interest received on FCNR Deposits > Exempt from Tax u/s. 10(15) (iv)(fa)

√ Interest received on NRE account > Exempt from Tax u/s. 10(4)(ii)

√ Interest received on NRO account > Taxable in India

13. My Excess TDS has been deducted & income tax refund is due, can I get my refund in the bank account maintained in the foreign country?

Yes, you may opt to receive refund in the foreign bank account & not in the Indian bank account.

14. I have already paid tax on my certain incomes in the foreign country, do I need to pay tax in India as well?

Income is taxed in India based on the criteria mentioned in FAQ 2 above. In case Tax is due in more than one country then you may get benefit of Double Tax Avoidance Agreements (DTAA) between India & Other Countries.

15. What are Double Tax Avoidance Agreements (DTAA)?

The Double Tax Avoidance Agreement (DTAA) is a tax treaty signed between two or more countries to help taxpayers avoid paying double taxes on the same income. A DTAA becomes applicable in cases where an individual is a resident of one nation, but earns income in another.

16. Where can I get DTAA entered by India with other countries?

DTAAs are available on the website of Income tax department on the link below:

https://www.incometaxindia.gov.in/pages/international-taxation/dtaa.aspx

17. Whether any Tax is deducted on the Incomes due to Non Residents (TDS/Withholding Tax)?

Yes, TDS is deducted at the applicable rates before payment of any income to Non residents. e.g. 20% TDS is deducted at Long Term Capital Gains on the Sale of Immovable Property / 30% TDS is deducted on the Interest Income of NRO account. Even if entire tax has been deducted on the income, you still need to file Income Tax Return in India showing details of Income earned & TDS deducted.

18. How can I check detail of TDS deducted in my name?

Detail of TDS deducted is available in the Form 26AS available in the e-filing portal of Income Tax. Form 26AS can also be accessed through Internet Banking of designated Banks for this purpose.

19. Whether any information is furnished to the income tax department before any payment to Non Resident?

Yes, Information is furnished in the Form 15 CA & Form 15 CB for payments to Non Resident. (To be filed by person who is making the payment)

20. Whether any certificate is required for transfer of funds from NRO account to NRE account?

Yes, Bank may require certificate from Chartered Accountant (CA) in India regarding source of Funds & Income Tax has been paid on the incomes earned in India.

21. Whether any certificate is required from Chartered Accountant (CA) in India for embassy purpose for fulfilling VISA requirements?

Yes, at the time of applying for VISA from India, person is required to submit to embassy , Networth Certificate duly certified by Chartered Accountant (CA) of India, depicting all the movable & immovable assets held and liabilities relating to such assets.

22. Is it mandatory for Non Residents to file Income Tax Return, even if entire TDS has been deducted on the Income earned in India?

Except for certain specified Incomes, all Non Residents need to annually file Income Tax Return in India if they have Taxable Income in India.

23. I missed to file my income tax return in India within prescribed deadline , can I file the return after due date & get my Income Tax Refund?

Central Board of Direct Taxes has given the powers to income tax authorities to accept the income tax return for a financial year even after the expiry of due date of the same by using its powers as laid down under section 119(2)(b) of the Income Tax Act. Sometimes taxpayers may face a genuine delay in filing the tax returns within the specified time frame. The income tax department issued a circular dated 09/06/2015 pardoning such delays and has laid down the procedure to be followed in such situations. { CIRCULAR 9/2015 [F.NO.312/22/2015-OT], DATED 9-6-2015 }

Thus, you can file Income tax return & get the Refund due only after getting condonation order from the Tax Department.

24. Whether rebate u/s. 87A of the Income Tax Act is available for Non Resident Indians?

No, NRIs are not eligible to claim such relief/rebate available u/s.87A of the income tax act.

25. Whether deductions u/s. 80TTA is available for Saving Bank Interest to NRIs?

Yes, deductions upto Rs.10,000 is available u/s.80TTA for Saving Interest earned by NRI in his/her NRO account.

26. Whether slab benefit (i.e. Basic Exemption Limit upto 2.50 Lacs) is available for non residents in case of Long Term Capital gains on the sale immovable property?

 No, Basic exemption limit benefit is not available to non-resident for the purpose of computing Income Tax @20% on the long term capital gains on the sale of immovable property in India.

27. What if I don’t file my Income Tax Return in India?

Income Tax Department will issue Notice to furnish Income Tax Return along with all the details as per FAQ 9 & related documents. You 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.

28. In case Tax Officer has issued demand notice to pay additional amount of Tax/Interest/penalty which is not sustainable as per provisions of Income Tax law in India, what is the remedy available to non residents?

You can file online appeal to CIT(Appeals) against the order of Tax Officer/assessing Officer for such unjustified tax liability.

Please refer all the relevant section, rules, notifications and amendments as applicable. The Author is not responsible for any losses incurred. Content is merely for sharing knowledge & Educational Purpose only. Author can be reached at casagargambhir@gmail.com for any queries, issues & recommendations.

Author Bio

Qualification: CA in Practice
Company: N/A
Location: Ludhiana, Punjab, IN
Member Since: 29 May 2019 | Total Posts: 19
In case of article related queries, kindly write email : casagargambhir@gmail.com View Full Profile

My Published Posts

More Under Income Tax

9 Comments

  1. Zacharia Mathews says:

    Kindly advise amendments to Section 195(6), Section 204 (iii), Rule 37 (BB) in the Finance Bill 2020 and on any other related Section related to Section 196(6)

    1. CA Sagar Gambhir says:

      Proposed amendment to Sec 6 Expl 1 clause (b) provides that in case of Indian citizens or a person of Indian origin having total income, other than income from foreign source, exceeding Rs. 15 lakhs, the period of stay would be considered at 120 days as against 182 days as provided in Expl 1(b). Further such person would be treated at RNOR if his stay is India is less than 182 days.
      Proposed provision deeming the Indian Citizen as resident of India where he is not liable to tax by residence, domicile etc would apply only when such person has income other than income from foreign source, exceeding Rs. 15 lakhs during the previous year. Further such person who is deemed to be resident of India would be treated as RNOR.
      Additionally explanation is proposed to be added to Sec 6 to define the term ‘income from foreign source’ to mean income which accrues or arises outside India (except income derived from a business controlled in or profession set up in India)
      Further earlier amendment proposed to RNOR provision under su-section (6) has been omitted.

  2. Murthy says:

    Re FAQ-20. Is there any exemption from the requirement of a certificate from a CA regarding the source of funds when I want to move my money from NRO to NRE a/c? Even if that money has been lying in the NRO a/c for many years? I am up to date in paying income tax and advance tax in India for all my India-sourced income. I can understand that limits based on FERA/RBI guidelines may apply.

    1. CA Sagar Gambhir says:

      There is no specific exemption as such. However your bank may not require that certificate in case banker is satisfied about tax paid source of the money. Kindly check with your Relationship officer of the concerned bank.

  3. Kanchan says:

    My question is from CA SAGAR GAMBHIR THAT MY SON GO TO ENGLAND ON STUDY BASIS IN 2012. HE HAS FIXED DEPOSIT & RECEIVED NOTICE FOR INTEREST. INTEREST WAS APPOX.RS. 21000/- ONLY. LOCAL CA’s Asstt. FILED ITR AS RESODENT STATUS.AS REGULAY AS RESIDENT STUTUS BY SHOWING SOME SALARY INCOME.i.e Gross Taxable income appox. Rs.150000/- which was below taxable income. AND TAKING FROM ME FILLING FEES. NOW I READ YOUR ARTICAL LIKE IT VERY MUCH. NOW MY QUESTION IS THAT WHAT TO DO IN FUTURE TO AVOID FILLING OR PENALITY. MY SON HAS SAVING BANK WITH ME 2nd Jt. & fixed deposit in his first Name only interest income which appox.Rs.50000/-only. Please guide me at the earliest. For TDS DEDUCTION HE IS SUBMITTING 15 G FORM ALSO.

    1. CA Sagar Gambhir says:

      Your son being Non Resident, kindly update your Son’s saving account & FDR account to NRO Status. Form 15G not applicable for Non Residents. As TDS will be deducted on NRO Saving account & NRO FDR interest, the same will be refunded after Filing of Income Tax Return. In case you don’t want to get TDS deducted , transfer the funds to NRE Account . Interest earned on NRE is not taxable in India. Funds kept in NRE account are easily repatriable.

  4. Vipan says:

    Good Blog was described by C A SAGER GAMBHIR .IT IS VERY USEFULE FOR NRI.
    MY QUESTION IS THAT IF NRI HAS INCOME FROM FIXED DEPOSITS & FILLING ITR AS RESIDENT STATUS. TOTAL INCOME IS BELOW RS.90000/- WHAT STEP HE SHALL TAKE IN FUTURE FOR FILLING ITR AS NON RESIDENT STATUS. NO ANY INCOME EXCEPT INTEREST INCOME ONLY.

    1. CA Sagar Gambhir says:

      In case NRI have not updated his/her bank accounts to NRO/NRE status, kindly get the same done at the earliest. TDS deducted will be refunded after filing of ITR. In case He/she don’t want to get TDS deducted on interest income, transfer the funds to NRE Account . Interest earned on NRE account is not taxable in India. Funds kept in NRE account are easily repatriable to any country.

Leave a Comment

Your email address will not be published. Required fields are marked *