The advantages of Filing Income Tax Return in India
We had talked about why NRIs should File Income Tax Returns in India and about the advantages of having a PAN Card in India in our previous blogs. In this blog, we will be discussing about the advantages of Filing Income Tax Return in India for NRIs. To understand this, one has to understand exactly what kind of incomes are taxable in India and what constitutes an income. India, like majority of the world economies, follows “Residency” based taxation and not “Citizenship” based taxation.
Indian citizens – Persons of Indian Origin (PIO), Overseas Citizens of India (OCI), or Foreign Citizens who are residents of India for more than 182 days, have to pay tax and file Income Tax Return in India on his/her global income subject to the conditions of DTAA (Double Tax Avoidance Agreement), while for NRIs/PIO/OCI, who have lived for less than 182 days (in any financial year) will have to pay tax and file Income Tax Return only on the Income earned in India.
Some of the advantages of Filing Income Tax Return in India are:
1) For Non-Residents only Income earned in India is taxable
2) They can claim a refund of TDS, if it has been deducted at a higher rate (which is the case for majority of NRIs)
3) To claim benefit under DTAA (Double Tax Avoidance Agreement)
4) To obtain a Lower Deduction of TDS when one is selling a property
5) Repatriation of Funds at the time of sale of assets in India.
6) To get form 15 CA/15CB for remittance of funds from India to their overseas account.
7) If they own more than one property in India, as under income tax rules, there is an incidence of presumed rental income on the second property
8) Claim Exemptions and deductions available under Income Tax
9) Carry forward a loss of Investment
10) To claim benefit under section 54, 54 EC and 54 F for capital gains
It is therefore very important for NRIs to file Income Tax Returns in India, even if they have Nil income or if they want to claim refunds only.