As a Chartered Accountant (CA), I often find myself in a challenging position when assisting my Non-Resident Indian (NRI) clients with the income tax filing process in India. The complexities and constraints of the current system can sometimes leave both my clients and myself feeling helpless. I want to highlight few challenges which I feel in the whole process of filing annual income tax return of my NRIs (individual) clients.
1. The Issue of Incomplete Information
The Income Tax Department has enabled the Income Tax Returns (ITRs) for the Assessment Year 2024-25. While this is a positive step forward, there are significant issues that hinder the timely filing of these returns. One of the primary obstacles we face is the delay in updating crucial financial details on the income tax portal. The Annual Information Statement (AIS), Taxpayer Information Summary (TIS), and Form 26AS (which provides details of TDS) are often not updated for the last quarter of the Financial Year. This delay means actual filing can only start in month of June. Due date of filing tax return for individual is 31st July. After which tax payer has to face late filing fees, penalties, interest etc.
2. Misunderstandings and Frustrations
My NRI clients frequently contact me, expressing their frustration and concern. They often perceive this delay as a lack of interest or responsiveness on our part. However, the reality is quite the opposite. We, as CAs, are waiting eagerly, hoping for the updates to be made so we can commence the filing process. NRIs are particularly anxious to file their returns as soon as possible because they often face high rates of tax deduction at source (TDS). They are eager to claim their substantial refunds, which were deducted at these higher rates, and any delays in the filing process directly impact their ability to receive these funds promptly.
3. The Risks of Incomplete Information
Filing tax returns with incomplete information can invite notices from income tax department in future. It is essential to have all the details updated on the portal to compute tax returns accurately. Without this, the risk of mistakes increases, leading to further complications down the line.
4. Limited Timeframe for Filing
We are given a very narrow window of just two months to complete the filing for all our individual NRI clients. This compressed timeframe is further strained when the necessary information is not available on time. If the ITRs are not verified before the due date, the provisions of belated returns apply, which can lead to higher tax liabilities and penalties.
5. Challenges in E-Verification for NRIs
For NRIs, e-verification of tax returns can be particularly challenging. Some banks, like Citibank and Standard Chartered, are not compatible with the income tax portal. Additionally, many NRIs hold accounts in nationalized banks but lack access to net banking. Sending a signed ITR V from a foreign country to the department is a time-consuming process, adding another layer of difficulty.
My humble request to the Income Tax Department
Given these challenges, I would like to make a few requests to the Income Tax Department to alleviate these issues:
1. Timely Updates: Implement changes in provisions to ensure that all details on the income tax portal are updated by April itself.
2. Extended Deadlines: If timely updates are not feasible, consider extending the due date for filing ITRs from July to September, at least for NRIs.
3. Bank Compatibility: Ensure that all banks in India are compatible with the income tax portal and make nationalized banks more efficient and responsive towards NRI customers.
4. Extended Submission Deadlines: Extend the due date for sending the signed ITR V to the income tax department.
To encourage taxpayer compliance, the department should also work towards removing the hurdles that make the process difficult. By addressing these points, the Income Tax Department can significantly improve the filing process for NRIs and ensure a smoother, more efficient system for all parties involved.
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Disclaimer: This article reflects my personal views and experiences as an individual. It is not intended to represent the views of the ICAI or any other entity. It is a constructive suggestion and I have no intention of demeaning or disrespecting anyone. I can reach out at [email protected] or [email protected].
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