Income Tax for NRI is quite a complex subject. We receive numerous tax queries everyday and one such query of NRIs concerning NRI Tax is the process of e-verifying their returns. In this blog post, we will discuss how NRIs can e-verify IT return from abroad, and the steps that need to be taken to ensure that the process is smooth and hassle-free.
How can NRIs e-Verify IT Return from Abroad?
NRIs are often in a dilemma as to how to file their returns. This is because the e-verification involves the use of OTP (One-Time Password) and messages cannot be delivered abroad. However, there is a solution to it. NRIs can file their income tax return online from wherever they are based and verification of IT return can be done via netbanking, which does not require an OTP.
Steps to File ITR for NRIs
Given below are the steps to file income tax return for NRIs:
- Determine your Residential Status
The first step in filing income tax returns by NRIs is to determine their tax residency status. This has to be determined with respect to a financial year. The residential status is determined u/s 6 of the Income Tax Act 1961. NRIs are individuals who do not reside in India for more than 182 days in a financial year or do not reside in India for 60 days or more during the previous year and 365 days or more during the four preceding years.
- Reconciliation of income and taxes with Form 26AS
Under tax treaties, NRIs are eligible to receive benefits, and they can also claim refunds if their income has had TDS (Tax Deducted at Source) deducted. To do so, they must ensure that the TDS credit and advance tax reported in Form 26AS are reconciled.
- Calculate your Taxable Income
NRIs are subject to taxes in India on various types of income, including interest earned on NRO accounts, capital gains or dividends from Indian shares, and rental income from property. Further, eligible deductions, such as those under section 80C, can be applied to reduce the taxable income.
- Determining Tax Liability
The tax obligation for NRIs is established as per the NRI tax slab rates that are relevant to individuals, with a basic exemption limit of Rs 2.5 lakh applicable to all NRIs prior to the application of deductions or exemptions.
- Claim DTAA Benefit
Double Tax Avoidance Agreement (DTAA) allows NRIs to avoid dual taxation on the same income. Under the DTAA, income may be either exempt from tax deduction in one country or taxed at a reduced rate in the home country. For example, if you have already paid tax in India, you may obtain a tax credit in your country of residence, which will be based on the tax paid on the same income.
- Verify IT Returns
After filing the income tax return form, it is essential that you verify the income tax return within a period of 30 days.
How can NRIs e-Verify IT Return from Abroad? In Detail
Given below are the steps for NRIs to e-Verify IT Return from Abroad through Net Banking:
- To begin with, log into your e-filing account on the website of the IT Department.
- Once you’re logged in, you’ll be taken to your dashboard. From there, navigate to the e-file section and choose ‘Income Tax Returns’.
- Finally, select ‘e-verify return’ to proceed.
- There will be a list of returns that will appear on the screen. You need to select the ITR to be verified.
- Then, select the option of ‘Net Banking’ by clicking on the button ‘Through Net Banking’.
- After clicking on the button, choose the bank with which you want to verify your income tax returns.
- Next, you will be redirected to the Net Banking page where you need to log in to your account using your net banking user ID and password.
- Under the ‘Tax’ tab, select the ‘e-Verify’ option.
- After this, you will now be redirected and logged in to the e-filing portal.
- You then need to select the relevant ITR and click on the ‘e-verify’ button.
- Your tax return will be e-verified successfully. You will receive a confirmation message on your e-mail id and mobile number registered on the income-tax portal.
Taxable Incomes of NRIs
Given below is the list of taxable incomes of NRIs in India:
- Salary received in India.
- Salary received for services in India.
- Rental income received from a property in India.
- Capital gain if there is any transfer of property or asset in India.
- Income from deposits in India.
- Interest received on savings bank accounts, etc.
Do NRIs have to File Income tax Returns in India?
NRIs (Non-Resident Indians) are required to file an Income Tax Return (ITR) in India if their income in India exceeds the basic exemption limit of Rs 2.5 lakh in a financial year. NRIs must also file ITR in India if they have earned income from India that is subject to TDS (Tax Deducted at Source) but their total income is below the basic exemption limit. Additionally, if an NRI wishes to claim a refund for any TDS deducted, they must file an ITR.
Is Verification of ITR Necessary?
Yes, verification of Income Tax Returns (ITR) is a crucial step. NRIs need to verify it to complete the return filing process. If NRIs fail to verify it within the stipulated time, an ITR is treated as invalid.
Due to a complicated tax system, understanding tax laws can be confusing and NRIs may miss claiming deductions and other benefits or miss filing ITR on time. At SBNRI, we have tax experts to resolve any queries that NRIs may have related to NRI income tax. You can download SBNRI App to connect with our NRI Income Tax Experts and get end-to-end assistance related to NRI tax filing. SBNRI will also help you get a lower TDS Certificate.
You can also click on the button below to ask any questions. Visit our blog and YouTube Channel for more details.
Given below are some points that show the importance of filing of ITR in India for NRIs:
1. Filing ITR on time can help NRIs avoid penalties for non-compliance.
2. If TDS (Tax Deducted at Source) has been deducted on an NRI’s income, they can claim a refund by filing an ITR.
3. Filing ITR can help NRIs establish their financial credibility in India, which can be useful for future financial transactions.
4. If an NRI needs to apply for a loan or credit card in India, having a filed ITR can increase their chances of getting approved.
5. NRIs must comply with Indian tax laws, and filing ITR is an essential part of meeting this obligation.
6. Filing ITR can help NRIs avoid scrutiny from tax authorities and potential legal issues in the future.
7. An ITR can serve as proof of income for NRIs, which can be useful for various purposes, such as visa applications, immigration, and residency permit requirements.
The basic exemption limit for NRIs (Non-Resident Indians) in India is the same as it is for resident individuals who opt for the old tax regime. The basic exemption limit for NRIs is Rs. 2.5 lakhs. This means that if an NRI’s income from all sources in India does not exceed Rs. 2.5 lakhs in a financial year, they are not required to file an Income Tax Return (ITR) in India. However, if their income exceeds the basic exemption limit or if they want to claim a refund of TDS (Tax Deducted at Source), they must file an ITR in India.