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NRI Tax Services In India – What You Must Know Before Filing Your Return

Discover essential insights on NRI tax services in India, including AIS reporting, filing requirements, disclosures, and expert guidance to ensure accurate, compliant, and hassle-free income tax return filing.<br>

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NRI Tax Services In India – What You Must Know Before Filing Your Return

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  1. NRITaxServicesInIndia–WhatYouMustKnowBefore FilingYour Return • NavigatingtheIndiantaxsystemcanbecomplex,especiallyfor Non-ResidentIndians(NRIs)whooften haveincomestreamsinmultiplecountriesandassetsacrossborders.Withevolvingcompliance requirementsandincreasedscrutinybythe IncomeTaxDepartment,itiscrucialforNRIsto understand whatisreported,howreturnsmustbe filed,andhowtostaycompliant.Inthis blog,wepresenta comprehensiveoverviewofNRItaxservicesinIndia,coveringcriticalaspectsliketheAnnual InformationStatement(AIS),howtofilereturns,andthemandatoryinformationrequiredbytheIncome TaxDepartment.Whetheryou’reanNRIplanningtofileyourtaxesorsomeoneadvisingone,this guide ensuresyouareontherighttrackwith yourfinancialcompliance. • High-ValueTransactions–MandatoryreportingunderAIS • TheAnnualInformationStatement(AIS)isacomprehensivefinancialreportintroducedbytheIncomeTaxDepartmentofIndiatoenhancetransparencyandensureaccuratetaxcompliance.Itcapturesdetailsof varioushigh-valuetransactionsconductedbyindividualsorentitiesduringthefinancial year.These transactionsarereportedtothedepartmentbythirdpartiessuchasbanks,mutualfundcompanies,sub- registrars,andauthorizeddealers.TheAIShelpstaxpayerscross-verifyfinancialdataandensuresthatall substantialfinancialactivitiesaredulyreflected intheirincometaxreturns. • Tohelpyouunderstandwhatgetsreported,herearethekeytypesof high-valuetransactions thatmustbe mandatorilyreportedtotheIncomeTax Department. • CashdepositsinaSavingsAccountinayearofRs.10lakhsormorebythebank • Paymentsincashforpurchaseofbankdraftsorpayorderor pre-paidinstrumentsinayearof Rs.10Lakhsormorebythebank • Creditcardbillpaymentexceeding 10Lakhsormore byanymodein ayearorpaymentincash of Rs.1Lakhsormore • MutualFundinvestment in aschemeofRs.10Lakhsormorebythemutualfundcompany

  2. InvestmentinbondordebenturesofRs.10Lakhsormorebythecompanyissuingthe security • InvestmentinsharesofRs.10Lakhsormorebythecompanyissuingshares • PurchaseorsaleofanimmovablepropertyofRs.30Lakhsormorebytheregistraror sub- registrar • CashDepositsorwithdrawalsinayearofRs.50Lakhsormorefromcurrentaccountsbythe bank • BuybackofsharesofRs.10Lakhsor morebythelistedcompany. • ReceiptfromsaleofforeigncurrencyofRs.10 LakhsormorebyauthorizedpersonunderFEMA • CashpaymentofRs.2Lakhsormoreinrelationtogoodsorservicesbypersonliable under section44ABforaudit • Timedeposit(otherthanrenewal)ofRs.10lakhsormoreina financialyearbythebank • Beingawareofthesereportabletransactionsisessentialformaintainingfinancialtransparencyand ensuringtaxcompliance.Whetheryou’reanindividualinvestor,businessowner,orNRI,trackinghigh- valuefinancialactivitiesandreconcilingthemwithyourincometaxreturniscritical. Leveraging professionaltaxadvisoryservicescanhelpyoustayalignedwithevolvingregulationsandavoid unnecessarynoticesorpenaltiesfromtheIncomeTax Department. • Filingofreturn • NRIsarerequiredtofileincometaxreturnsinIndiaiftheirtotalincomeexceedsthebasicexemptionlimit.Thisincludesincomefromsourcessuch asrentfrompropertyinIndia, capitalgainsoninvestments, dividends,oranyothertaxableIndianincome.Timelyandaccuratefiling helpsavoidpenalties,ensures compliancewith Indiantaxlaws,andenablesseamlessrepatriationoffundsifneeded.Filingalso becomes essentialtoclaimrefundsorcarryforwardlosses.NRIsmustusetheappropriateITRformandverifytheir residentialstatustoensureproperreporting. • Howtofileincometaxreturn • Thereturncanbefiledphysically(paperreturn)orelectronically. FromA.Y.2019-20,onlyresident individualsabove80 yearsofageusing ITR-1orITR-4formscanfile manualreturns.Everyoneelseis mandatorilyrequiredtofilethereturnelectronically.This ruleappliestomostNRIs,making e-filingthe standardrouteforNRItaxservicesinIndia.Usingtheofficialincome taxportalorauthorized software solutionsmakestheprocessseamless. • Pre-filledincometaxreturn • Thankstothegovernment’sdigitalpush,incometaxreturnfilingisnoweasierthrough pre-filled forms. TheJSON fileforAISUtilitycanbedownloadedfromtheincometaxportal.Thesamecanbeimportedto theAISutilityorincometax softwareandapre-filledincometaxreturnbasedonJSON filecanbe populated.Thetaxpayerwillreviewandupdatethenumbersasrequiredandwillbeabletofilethetax return.ThishelpsNRIsavoidmanualerrorsandmakesiteasiertomatchAISdatawiththeir actual transactions. • InformationtobesubmittedintheITR • TheIncometaxdepartmentrequiresfollowinginformationtobesubmittedintheincometax return. • Detaileddisclosureofresidentialstatusbasedonnumberofdaysofstayin India • NameandTaxIdentificationNumber(TIN)ofcountryofresidence(e.g.SSNforUSA,NIfor UK,TFNforAustralianresident).IfTINisnotavailable (e.g.personsfromUAE,Qatar, etc.), passportnumberistobeusedinsteadofTIN.

  3. ListofcompanieswherethepersonisadirectorwithDIN,whethercompanyis listed or unlisted withcompany’sPAN.AnNRIisalsorequiredtoreportdirectorshipinaforeigncompanyevenif thatcompanyhasnobusinessconnectionin India. • Detailedinformationaboutholdingofunlistedequitysharesatanytimeduringtheyear including nameandPANofthecompany,numberofsharesatthestartoftheyear,anyadditional purchase/salewithdate,facevalue,issueprice,purchasepriceandnumbersharesattheyearend. TheinformationisrequiredtobeprovidedevenifitisincludedinthescheduleFA –reportingof foreignfinancialassetsbyresidents. • Thesedisclosuresmustbeaccuratelyreported,particularlybyNRIsholdingdirectorshipsorequityin Indianorforeigncompanies.Anyincorrectorincomplete informationcantriggerscrutinyfrom the IncomeTaxDepartment,leadingtopotentialnotices,penalties,ordelayedprocessingofreturns.Proper documentationandexpertguidancearestronglyrecommended. • Verificationofincometaxreturn • Onceincometaxreturnisfiledelectronically,verificationofITR isrequired.TheITRcanbeverified digitally,manually,or online. • Availableverificationoptions: • DigitalSignatureCertificate(DSC):PersonhavingDSC(DigitalSignatureCertificate)can verify theITRbyattachingtheDSCwhilesubmittinga return. • Manualverification:Manually,theacknowledgement (ITR-V)canbeprinted,physicallysigned andsenttotheCPC –Bengaluruwithin30daysafterfilingthe return. • Onlineverification:TheITRcanalsobeverifiedwiththe helpofAadhaarOTPorbyEVC(E- • VerificationCode)generatedthroughbankaccountnumber,demataccountnumberor net banking. • WhyprofessionalNRItaxservicesinIndiaarecrucial • Withincreasingcomplexityinglobalfinancialcompliance,NRIsoftenstrugglewithunderstandingthe nuancesofIndiantaxregulations.Areliabletaxserviceensures: • Accurateresidentialstatusclassification • Properdisclosureofforeignassetsandincome • Error-freefilingswithAIS andpre-filleddata • Timelye-verificationandcompliance • Avoidance ofpenaltiesandnotices • Properreportingofhigh-valuetransactionsthatappearinAIS • FilingincometaxinIndiaasanNRIgoesbeyondjustreportingincome;itrequiresnavigating cross- bordertaxrules,disclosingfinancialassets,tracking high-valuetransactions,andverifying returns digitally.TheAnnualInformationStatement(AIS)hasmadecompliancemoretransparentbutalso • demandscarefulreviewandreconciliation.Tomanagethesecomplexities,it’swiseto seekexpertsupport throughNRItaxservicesinIndiafromprofessionalslikeExpertNRI.Theseprofessionalscanguideyou throughaccuratefilings,helpyouleveragepre-filledforms,andensurecompliancewiththelatesttaxlaws.Whetheryou’reearningrentalincome,investingin mutualfunds,orholdingdirectorships,expert serviceshelp youmeetallobligationswhile minimizingtheriskoferrorsorpenalties. • RELATEDBLOGREAD:DoNRIsNeedToFileIncomeTaxReturnsIn India? Resource:NRITaxServicesInIndia–WhatYouMustKnowBeforeFilingYourReturn

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