Do NRI need to disclose foreign bank account information in tax returns Archives

Online Process to file ITR by NRI having Interest and Rental income in India

As the Income tax filing season has started the taxpayers are busy with the compliance process. Non-resident taxpayer earning income through rent from house property and interest from savings bank or fixed deposit are required to file ITR 2.

The process of filing ITR 2 is fully online at the same time it is offline, as you need to download government utility provided by the Income tax department. Fill it offline and then upload online

In this article we will enable you to understand how to file ITR of NRI having interest & rental income.

Procedure to File ITR of NRI:

In Income tax filing there are three steps:

1. Downloading the prefilled xml

2. Downloading the ITR utility

3. Filing the ITR utility

4. Final Submission

Below is the procedure to file Income Tax Return by NRI having income from interest and rental income:

1. Downloading the prefilled xml

Step 1: Go to https://www.incometaxindiaefiling.gov.in/home and login to the portal using Login credentials

Step 2: Now go to ‘My Account” tab and select “Download Prefilled XML” option.

It will redirect you to “Download Prefilled XML” page.

Step 3: Now, Select the following:

a. Assessment year for which return is to be filed

b. ITR form number as “ITR 2”

and click on “continue” button. Now, select the account for refund credit and click on “Download XML” your xml will get downloaded.

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2. Downloading the ITR utility

Step 1: Go to https://www.incometaxindiaefiling.gov.in/home and select “IT return preparation software” under “Download”

Step 2: Now, download ITR 2 Java utility

3. Filing the ITR utility

Step1: Extract the file downloaded in “Part 2: Downloading the ITR utility” and open file having name- “ITR-2_AY202021_PR1.3”.

The Income Tax Return utility will get open.

Step 2: Now, click on “open” button and open the xml file downloaded

Step 3: Filing the ITR form

The ITR form has the following tabs:

1. Part A General Information

a. In this tab the assessee is required to fill his basic details like communication details and PAN details.

b. Also, select, yes or no from the drop down, whether you are eligible for filing return under 7^th proviso of section 139(1).

c. Select “Non-resident” from the drop down under “Residential Status” and enter the following:

(i) Please specify the jurisdiction(s) of residence during the previous year along with Taxpayer Identification Number.

(ii) In case you are a Citizen of India or a Person of Indian Origin (POI), please specify – Total period of stay in India during the previous year (in days) and Total period of stay in India during the 4 preceding years (in days).

d. Select, whether this return is being filed by a representative assessee? If yes furnish the information of the representative assessee.

e. Whether you are Director in a company at any time during the previous year? If yes, furnish the information relating to the company.

f. Whether you have held unlisted shares at any time during the previous year? If yes, furnish the details of the unlisted shares.

2. Computation of Income tax:

A. Income from house property:

Where the assessee is earning interest income from house property than he has to enter the details of such income under Schedule HP and enter the following details:

a. Enter the address of the property

b. Select the Owner of the property from the drop down i.e. whether self, spouse, minor or others.

c. Now, select whether the property co-owned? If yes, than enter the details of co owner along with share of co-owner and self.

d. Select the type of house property i.e. whether the property is let out or self occupied or deemed let out property.

e. In case the property is let out enter the Name of the tenant and enter the amount of rent income received during the financial year in point (a) and Enter the amount of home loan interest paid during the financial year in point (h).

B. Interest income: Where the assessee is earning interest income from savings bank or deposit than he has to enter the details of such income under Schedule OS.

Enter the amount of interest received during the financial year under part b of Schedule OS..

C. Deduction details: The assessee has to provide the deduction details under chapter VIA in Schedule VIA

3. Tax details: It provides the details of TDS deducted by the deductor and advance tax paid during the financial year. The assessee has option to edit the details in case incorrect details are being displayed in Schedule “TDS”. The TDS details are prefilled in the ITR xml from the e filing website.

4. Tax paid and verification

This is done through Part B- TTI tab. This tab displays the amount of tax payable or refund and also the verification form where the assessee has to select the bank in which the assessee wants to credit the refund. And under “Verification” tab the assessee has to select the capacity from the drop down.

5. Schedule 80D: The assessee has to select “Schedule 80D”. In this tab the assessee has to provide mediclaim made during the year and provide the amount of premium paid during the year. The assessee as to enter details in either select option 1 or option 2 accordingly.

After entering the above details click on “Save” button and save the ITR xml.

4. Final Submission

The taxpayer can submit the ITR either through ITR utility or through e filing portal online.

a. Submission through ITR utility:

Click on “Submit” button and enter the e filing password.

Now, select “no” option under Do you want to digitally sign? And click on “submit” button the ITR will finally get submitted.

b. Submission through e filing portal online:

1: Go to https://www.incometaxindiaefiling.gov.in/home and login to the portal using Login credentials

2: Now go to ‘E file” tab and select “Income tax return” option, it will redirect you to Income tax return page.

Now select the assessment year as AY 2020-21, ITR form no as “ITR 2, Filing Type as “Original/ Revised return” and Submission mode as “Upload XML”

In the next page select one of the verification option and select “Continue” button.

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Is it mandatory to disclose all Bank Accounts in Income Tax Returns?

Introduction

An income tax return (ITR) is basically a document that is filed as per the provisions of the Income Tax Act, reporting one’s income, profits and losses and other deductions as well as details about tax refund or tax liability. From AY 2015-16, it has become mandatory for the taxpayers to provide the details of all the bank accounts held by them in India including the accounts with joint names.

Bank statements are statements which detail the transactions in the bank account of an individual or organization. They must be accurate and clear in order to be authentic and valuable. Bank statements are issued for certain period of time, that is, they often display the transactions in a bank account for a month, or so.

Bank statements can also cover the credit card transaction of an individual who possesses the credit card of a particular bank. A bank statement can be used in case of any misunderstanding or financial mismanagement. It serves as documentary evidence in such cases.

A bank statement calls attention to the financial status of a company or an individual. It is often used to judge an individual or a company’s worth or standing as well as for purposes of business. It is an indicator of a company’s suitability in many cases.

CBDT has vide Notification No. 41/2015, dated-15^th April, 2015 notified ITR-1 ITR-2 ITR-4S ITR-V for A.Y. 2015-16 with several changes. In such ITRs, CBDT had for the first time required an assessee to compulsorily provide details of all bank accounts held in India (including in joint names) at any time during the financial year including details of those which were closed during the year.

The following information will be required to be furnished with respect to bank accounts held in India:-

Bank name
Bank account number
Type of account-savings or current
IFS code of the bank
Number of bank accounts held in India (including opened/closed) during the previous year
Names of Joint holders, if any
Details of Dormant bank accounts (which are in-operational since last 3 years) are not required to be disclosed.
Account balance as on 31^st March of the previous year. In case the account is closed during the year, in the column for account balance as on 31st March mention “closed”.

All these disclosures are mandatory; one should not forget to miss the same. While filing Income tax returns, one should make sure they have all these bank details ready with them.

Details of OD account and FD Accounts are not required to be given and also there is no need to submit details of Joint Account holders (Name, PAN etc). It is not compulsory to provide details of accounts which are dormant. For this purpose any accounts which have been non operational for the past 3 years are considered as dormant.

Do NRI need to disclose foreign bank account information in tax returns?

There has been lot of confusion among various NRI’s regarding the disclosure of their overseas accounts in the tax return in India. The Income Tax department in a press release on 24th July,2017 clarified this issue.

It is not mandatory for NRI to disclose the detail of their overseas bank accounts while filing return in India. In case of refund, they should mention the bank account held by them in India.

It is only in case when they do not have bank account in India and they have to claim refund, then they can mention the detail of their foreign bank account to get the credit of such refund.

Therefore, the NRIs who are not claiming refund or who are claiming refund but having a bank account in India are not required to furnish details of their foreign bank account in the return of income. NRI needs to disclose all their NRO accounts and NRE Accounts held in India. The interest income from NRE accounts to be disclosed in Income Tax Returns as exempt income

What will happen if someone does not report their bank account details?

There is no defined specific provision in the Income Tax Act that tells us what will happen in case of non-reporting of bank accounts in ITR. If any interest income is earned from those bank accounts, then the taxpayer has to report it in their ITR.

Non-reporting of interest incomes can attract penalties for under-reporting and misreporting of incomes by the assessing officer. Income tax laws require a taxpayer to provide complete and full information. If a taxpayer has failed to provide information about all the bank accounts held by them, then in that case, the ITR can be treated as a defective return.

AO will send a notice informing that your ITR is defective and rectify the same within the time period as mentioned in the notice. If the AO has reasons to believe that any income chargeable to tax has escaped assessment for any assessment year, he may subject to the provisions of Sec 148 to 153, assess or reassess such income and also any other income chargeable to tax which comes to his notice subsequently in the course of proceedings.

Penalty for Undisclosed Income

Where the income determined includes undisclosed income, a penalty @10% is payable. However, no such penalty will be leviable, if such income was included in the return and tax was paid before the end of the relevant previous year.

Is any procedure available if taxpayer had already filed ITR but forgot to provide any bank details

The taxpayers that have already filed and verified their ITR but have not provided their bank details, have the option to rectify their mistake by filing a revised return.

A revised return can be filed anytime before the completion of assessment year or assessment, whichever is earlier. Even if the ITR is processed by the tax department, then also the taxpayer should file a revised return if they have any additional income to report.

It is always considered a prudent action to file one’s proper income tax return on time. More than any other benefit, being on the right side of law helps. It is recommended to keep the income tax department informed about one’s income and taxability. This communication is only possible when one files their ITR correctly.

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