What precautions NRIs should take before completing their ITR

If your income in India exceeds this, you will be taxed as an Indian resident even if you are an NRI; Find out what other precautions NRIs should take before completing their ITR. When completing your income tax return (ITR), you must exercise caution if you are a non-resident Indian (NRI) because there are several regulations and provisions to take into account. Generally speaking, the first step in completing an ITR for an NRI is figuring out if your income is taxable in India or your present place of residence.

When is the NRI deadline for submitting their ITR?

The income tax department has set July 31, 2024, as the deadline for filing income tax returns (ITR) for the financial year 2023–24 (assessment year 2024–25). Everyone must meet this deadline, including non-resident Indians (NRIs) who are not audited for income taxes. Indian Standard Time (IST) is the basis for all ITR filing deadlines and dates. The deadline is July 31, 2024, at 12 a.m., regardless of where the return is being submitted from. For the purpose of submitting their Indian tax returns, all NRIs must link their Aadhaar Pan; if not, verification may be completed by attaching a valid DSC.

To ascertain their precise residence status, NRIs must also examine the income tax rules’ presumed residency requirements. New Section 6(1A) was also included by the Finance Act of 2020, and it will take effect for the Assessment Years 2021–2022. According to the Income Tax Department’s website, “it provides that an Indian citizen earning total income in excess of Rs 15 lakh (other than income from foreign sources) shall be deemed to be Resident in India if he / she is not liable to pay tax in any country.”

When an NRI is considered a resident for the purposes of section 6 (1A), his income is subject to Indian income taxation as a resident, but not as an ordinary resident (RNOR). As a result, even international revenue that comes from a business or profession established in India would be liable to tax in that country.

How are people’s residence statuses classified in India?

Three criteria are used to classify the resident status:

1. A regular citizen, or OR

2. Non-resident Indian (NRI),

3. Resident but not ordinarily resident (RNOR) What distinguishes the different residence statuses?

Gehrana states that the three residence statuses differ as follows: Typical Homeowner:

According to Section 6(1), a person is classified as an Ordinary Resident if he satisfies any of the following requirements:

a) He or she must be in India for at least 182 days during the fiscal year; or

b) He or she must be in India for 60 days or more during the fiscal year and must have spent at least 365 days in India in the four years prior to the fiscal year.

Regardless of the source of their income, an Ordinary Resident is required to pay taxes on their worldwide income, or global income.

Living but Not Usually at Home:

According to Section 6(6) of the Act, a person is considered Resident but Not Ordinarily Resident (RNOR) if they fulfill one of the following criteria:

a) They have been a non-resident for nine out of the ten years before, or

b) They have spent no more than 729 days in India during the course of the previous seven years. Only income that is generated, accumulated, received, or derived from a business or profession controlled or established in India is subject to RNOR taxation.

A Non-Resident Indian (NRI) is someone who does not meet the criteria to be considered a resident under the law. As per Section 2(30) of the Act, an NRI includes a person who is not “ordinarily resident” as defined in Section 6(6).

If an individual does not fulfill the requirements for being an ordinary resident or a Resident but Not Ordinarily Resident (RNOR), they are classified as an NRI.
The taxation of NRIs in India depends on their residential status, as outlined in Section 6 of the Income Tax Act, 1961. This status is largely determined by the number of days they spend in India during the current financial year and the previous four years.

An individual is deemed to be an NRI if they have stayed outside India for more than 182 days, or if they have spent more than 365 days in India over the past four years and less than 60 days in the current year. However, this 60-day limit is extended to 182 days for individuals leaving India for employment purposes.

Here is a paraphrased version of the given text, with the same length as the original:

The taxation of non-resident Indians (NRIs) primarily depends on their residential status in India. The Income Tax Act typically considers the number of days an individual spends in the country to determine their tax liability. This includes income from various sources, such as:

1. Salaries earned for work performed in India.
2. Rental income from properties located in India.
3. Capital gains or dividends generated from Indian stock investments.
4. Income from other investments made within the country.
5. Earnings from any other sources within India.

If you’re a Portuguese citizen who was born and raised in Goa, your tax situation in India will be based on your residency status, not your place of birth. If you meet the residency criteria, you’ll be classified as a resident, and your global income (both domestic and foreign) will be taxable in India. However, if you don’t meet the residency requirements, you’ll be treated as a non-resident, and you’ll only be taxed on income that’s received or deemed to be received in India.

Earnings generated within India, such as profits from running a company there, can be accrued or accumulated.