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When is it mandatory for an NRI to file an ITR in India?
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Criteria that make filing ITR mandatory for NRIs, PIOs and OCIs
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Benefits of filing an ITR even when it is not mandatory
The below content is purely for informational purposes and is not intended to constitute advisory of any kind. Please note, these are in-depth articles which are best viewed on large screen devices like laptops, desktops and tablets. The position reflected in this article has been updated as of January 15, 2024.
All Non-Resident Indians (NRIs), Persons of Indian Origin (PIOs), or Overseas Citizens of India (OCIs), are recommended to file an Income Tax Return (ITR) when they have taxable income in India. Although, as per the Income Tax Act, 1961, NRIs/PIOs/OCIs are mandated to file an ITR in India only if their total annual income in India exceeds:
₹2.5 lakh* as per the existing tax regime or
₹3 lakh** as per the new tax regime.
*As per the Finance Act 2023
**Section 115BAC of the Income Tax Act, 1961
Did you know?
Rebate (under Section 87A) is only available to residents.
If you opt for the existing regime, the total income, as defined above, is the income before considering the following:
a) Deductions such as premiums towards life insurance policies tuition fees, investments in Equity Linked Savings Scheme (ELSS) under Section 80C, mediclaim under Section 80D, donations under Section 80G.
b) Specified exemptions such as long-term capital gains from assets like new residential houses, investment into specified bonds, etc., when they are reinvested.
Even in cases when your income does not exceed the mentioned income threshold in a given Financial Year (April–March), you are required to file an income tax return as an NRI if you have*:
Deposited more than ₹50 lakh in a savings bank account in India.
Deposited more than ₹1 crore in a current account with a bank or cooperative society in India.
Tax Deducted at Source (TDS)/Tax Collected at Source (TCS) of more than ₹25,000.
Incurred a travel-related expenditure from India** of more than ₹2 lakh for yourself or anyone else travelling to a foreign country.
*Section 139 (1) and rules 12 AB of the Income Tax Act, 1961.
**Travel does not include travel to Bangladesh, Bhutan, Maldives, Nepal, Pakistan or Sri Lanka and places of pilgrimage such as Saudi Arabia on Haj Pilgrimage and China for Kailash Manasarovar.
To learn more about NRI taxation and the existing and new tax regimes, click here.
It is important to know that you need not file a tax return if you choose to be taxed under special provisions relating to certain incomes of non-residents under Chapter XIIA of the Income Tax Act, 1961. However, this is subject to two conditions:
Your total income consists only of investment income, income from long-term capital gains or both.
The tax should have been deducted at source.
Did you know?
If you face taxation for the same income in your resident country and India, check whether your country has signed a Double Taxation Avoidance Agreement (DTAA) with India. If so, you can avail yourself of a treaty benefit/Foreign Tax Credit (FTC) in your resident country under the relevant DTAA. You should consult a tax expert to understand the implications of DTAA.
Even though filing an ITR may not be compulsory for everyone, doing so brings several benefits. For instance, you can:
Maintain consistency in your tax return filing records.
Claim a foreign tax credit in your country of residence, as per the applicable tax laws of the resident country. For e.g. for claim of FTC in India, you need to file online Form 67 with the Income Tax Department. To understand more on applicability of FTC, please click here
Claim your TDS/tax refunds in India (if applicable).
Build your creditworthiness in India.
Easier visa application/renewal process.
If you want to avail yourself of these benefits and are wondering how to file ITR for NRI, you should know that the process and deadlines are similar to that of resident Indians.
Conclusion
As an NRI, PIO, or OCI, you may be required to file tax returns in India if your Indian income surpasses the specified threshold or if you seek to claim refunds for excess tax deductions. While filing an ITR is mandatory only under certain circumstances, voluntary filing can be beneficial in many ways. You should regularly consult with your tax expert to ensure adherence to Indian tax regulations and keep abreast of the latest NRI income tax filing rules.
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Disclaimer:
The contents of this article/infographic are meant solely for informational purposes. The contents are generic in nature and are not intended to serve as a substitute for specific advice on any matter whatsoever. The information is subject to updation, completion and verification and the applicable norms may keep changing materially from time to time. This information is also not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to applicable laws or would subject ICICI Bank Limited/its affiliates to any licensing or registration requirements. ICICI Bank Limited/its affiliates and their representatives shall not be liable for any direct or indirect losses or liability incurred arising in connection with any decision taken by any person on the basis of this content. Please conduct your own due diligence and consult your financial advisor before making any decision. Terms and conditions of ICICI Bank and third parties apply. ICICI Bank is not responsible for third party services. Nothing contained herein shall constitute or be deemed to constitute an advice, invitation or solicitation to avail any products/ services of third parties.
