The below content is purely for informational purposes and is not intended to constitute advisory of any kind. The position reflected in this article has been updated as of November 15, 2023.
 

When do you need to file income tax returns in India?

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* (if they are less than 60 years of age) 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

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, mediclaim, donations, etc.

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.

*Source: 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

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:

1. Your total income consists only of:

   • Investment income

   • Income from long-term capital gains or

   • Both

2. The tax should have been deducted at source.

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.

• 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.