With the recent shift in the US Government from Trump to Biden, NRIs stranded in India are optimistic about moving back to America. With over 800,000 Indian nationals in the green card backlog in the US, Joe Biden has made reforms in green cards an election agenda. With Biden as the president of the US, NRIs are looking forward to better news. In this article, let’s discuss what impact your overstay in India might have had concerning your tax implications and prepare a brief checklist for the same.
Moving Back to the US
Many NRIs were in India and had stayed for a much longer time than anticipated which has affected their residential status which can further affect the taxes being collected in India. Unplanned presence in India has led to various implications from an income-tax point of view. For example, days of unexpected stay in India influences the residential status and thereby the scope of income chargeable to tax, which in turn will further influence income tax return filing (ITR) in India. There is an obligation to file ITR in India, if the individual’s total income is above the basic exemption limit. The Indian Government has however given some relaxations in determining the Residential Status for stranded NRIs. Let’s first explore that.
Relaxations in residential status for NRI: Moving back to America
The GOI has announced relaxations in determining residential status for FY 2019-20, by excluding numbers of days spent (subject to certain conditions) in India between March 22, 2020 to March 31, 2020, similar relaxations are yet to be announced for the FY 2020-21.
Accordingly, if you need to file your tax returns in India, you should ensure that you have a Permanent Account Number (PAN), else follow our article on PAN Card for NRI for more details on the application process for NRIs. Also, once the PAN is obtained, an account needs to be created in the e-filing portal of the income tax authorities in order to file the tax return using appropriate ITR form for NRI.
Moving to USA Checklist
Before you move back to the USA, keep in mind certain factors that will help you sort your taxes in India. Let’s take a look:
- Calculate your Residential Status: Based on the number of days you stayed in India, the very first thing would be calculating your Residential Status. Also, make sure you benefit from the RNOR Status if you fall in the specific criteria. Make sure you understand what happens to your NRI Status after Returning to India.
- Inform Banks and Fund Houses: If your residential status undergoes a change from NRI to Resident. One of the very first things you need to do is inform the banks for switching your bank accounts accordingly and fund houses where you have invested your money in so that appropriate steps can be taken to ensure you get taxed correctly on the benefits generated form your investments. To understand more about such changes with respect to your residential status, you can get in touch with our expert using the button at the bottom of the article.
- Understand the Tax Implications: Based on the number of days you stayed in India, your residential status will be calculated and further based on that you need to keep in check the tax implications. What income will be taxable and what will be exempted needs to be taken care of to file the Income Tax Return successfully. Our experts can help you with your residential and financial profiling along with assisting you in filing your returns perfectly. Just click on the button at the bottom of the article to get in touch with our expert.
- Be Document Ready: For filing a tax return, you need your PAN Card. If you don’t have one, make sure you read our article on PAN Card for NRI to understand the step by step process to apply for a PAN Card. If you have an Aadhar Card, you can get your PAN Card in 10 minutes. Read the article to know how.
- Take Care of your Remittances: Many NRIs stranded in India have been sending money to the USA for one reason or the other. As per the latest guidelines under the Liberalized Remittance Scheme (LRS), a TCS (Tax Collected at Source) of 5% is induced on remittances above 7 lakhs per financial year. This rate goes up to 10% if you don’t have a PAN Card. Although this TCS under LRS isn’t applicable to NRIs. But a status change as a result of overstay can cross lanes with the TCS. So make sure you consult an expert before remitting large sums abroad. You can know more about TCS on Outward Remittances through the video below. Click on the button at the bottom of the article to get in touch with our expert.
Also Read: Moving back to India from USA Checklist
Moving back to America: The Sentiment
Moving back to America after a long stay back home is difficult. It involves so many emotions. You need to take care of all your personal feelings, feelings regarding your family and home and what not! The least we can do is help you sort your technical difficulties like your Residential Status, Banking, Taxation, etc.
Our experts at SBNRI are always available to solve your problems. If you have any doubts regarding moving back to America and what else you need to do before you move back. Any problem at all, just click on the button below and get in touch with our expert. Also, visit our blog and Youtube Channel for more details.