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 or
• 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. 

Disclaimer:

The contents of this article are meant solely for informational purposes. The same is generic in nature and is not intended to serve as a substitute for specific advice on any matter whatsoever. This information, along with the applicable regulatory/statutory/ other norms, is subject to updation, completion and verification from time to time. This information is 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/registration requirements. ICICI Bank Limited/its affiliates and their representatives shall not be liable for any direct or indirect liability incurred in connection with decision(s) 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.