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Are NRI required to declare their Assets and Liabilities held in India in Income Tax Return?

Non-resident Indian’ is an individual who is a citizen of India or a person of Indian origin and who is not a resident of India. Thus, in order to determine whether an Individual is a non-resident Indian or not, his residential status is required to be determined under Section 6. In this article we will discuss whether NRI are required to disclose their Assets and Liabilities held in India in Income Tax Return.

What is section 6 of the Income Tax Act?

As per section 6 of the Income-tax Act, an individual is said to be non-resident in India if he is not a resident in India and an individual is deemed to be resident in India in any previous year if he satisfies any of the following conditions:

1. If he is in India for a period of 182 days or more during the previous year;

2. If he is in India for a period of 60 days or more during the previous year and 365 days or more during 4 years immediately preceding the previous year.

However, condition No. 2 does not apply where an individual being citizen of India or a person of Indian origin, who being outside India, comes on a visit to India during the previous year.

When does Non Resident are required to disclose their asset details?

Those assesses including salaried employees (i.e., Residents or Resident Not Ordinary Residents or Non-Residents) whose total income (after all deductions) in India exceeds Rs.50 Lakhs have to mandatorily disclose the details of movable and immovable assets held in India along with liabilities like Bank Loan, incurred in relation to such assets.

To give further clarity on this, please note the Non Resident Individuals or Resident but Not Ordinary Resident or OCI Cardholders, having over Rs.50 lakhs income in India have to disclose only the details of their Assets and Liabilities located in INDIA

Immovable Assets include land and building, bank deposits, shares and securities, share in partnership firms, Insurance Policies (no need to disclose Term Insurance Policies), loans and advances given to friends and relatives, if any, cash in hand, etc.

Movable Assets include Jewellery, Bullion, Gold Bars and Coins, Vehicles, Boats, Aircraft, painting, sculpture, etc. Personal assets like wearing apparel or Furniture at home are not to be disclosed.

Where should NRI disclose their asset details and what are the information is required to be disclosed?

Non Resident are required to disclosed the Information in Schedule AL of ITR are –

a. Details of Immovable property as below:

i. Description of Immovable property

ii. Address of property

iii. Cost of the asset

b. Amount of Deposits in Bank at the end of the previous year

c. Amount of Share and Securities held currently at the end of the previous year

d. Amount of Insurance policies held currently at the end of the previous year

e. Amount of Loans or advance given, if any at the end of the previous year

f. Cost of Vehicle held currently at the end of the previous year

The Assets and Liabilities held as on the last day of the Financial Year is to be reported and thus means, if any assets are disposed during the year, it needn’t be shown in Schedule AL.

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May, 27
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Income Tax
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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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August, 29
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Compliance Law, Income Tax, Income Tax Circular Notification
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Are NRI’s required to File Income Tax Returns in India?

What do you mean by a NRI?

An Indian residing abroad is popularly known as Non-Resident Indian (NRI). Income Tax Act has not directly defined NRI. Section 6 contains detailed criteria of who is considered as Resident in India and provides that anyone who doesn’t meet these criteria is a Non-Resident.

According to the United Nations Department of Economic and Social Affairs, India remains the largest country of origin for expatriates and immigrant communities with a 28 million-strong diaspora across the world with top 15 countries as

Country	Non Resident Indians
Saudi Arabia	4,100,000
United States	3,852,293
United Arab Emirates	3,425,144
Malaysia	2,987,950
Myanmar	2,009,207
Sri Lanka	1,614,000
South Africa	1,560,000
United Kingdom	1,451,862
Canada	1,374,710
Pakistan	1,100,000
Kuwait	1,029,861
Mauritius	894,500
Nigeria	800,000
Qatar	746,550

Who will be considered as a resident in India?

An individual will be treated as a Resident in India in any previous year if he/she is in India for:

Atleast 182 days in that year, OR
Atleast 365 days during 4 years preceding that year AND atleast 60 days in that year.

An individual who does not satisfy both the conditions as mentioned above will be treated as “non-resident” in that previous year.

Definition of Resident is relaxed by dropping Condition 2 given above (i.e. only Condition 1 is applicable), for the following cases:

An Indian citizen who leaves India in any year for the purpose of employment outside India or as a crew member of an Indian ship,
An Indian citizen or a person of Indian origin who resides outside India and who comes on a visit to India.

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What income of a non-resident will be taxable in India?

A person who is non-resident is liable to tax on that income only which is earned by him in India. . Income which is earned outside India is not taxable in India. Income is earned in India if –

It is directly or indirectly received in India; or
It accrues in India or the law construes it as having accrued in India.

For instance income from business arising through any business connection in India, income from any asset or source if such asset or source is in India, income from salaries if the services are rendered in India, Dividend paid by an Indian company even though this may have been paid outside India etc

Nature of income	Taxability in the hands of NRI
Income which accrues or arises in India	Taxed
Income which is deemed to accrue or arise in India	Taxed
Income which is received in India	Taxed
Income which is deemed to be received in India	Taxed
Income accruing outside India from a business controlled from India or from a profession set up in India	Not Taxed
Income other than above (i.e.,income which has no relation with India)	Not Taxed

Is an NRI required to file an Income Tax Return (ITR) in India?

The Income Tax Law provides for mandatory filing of returns in certain cases. Individuals or HUF who are less than 60 years of age and have gross total income of more than Rs 2.5 lakh i.e. above basic exemption limit, have to file income tax returns, according to the Income Tax Act. For senior citizens, the basic exemption limit is Rs 3 lakh, and for those who are more than 80 years old, the basic exemption limit is Rs 5 lakh.

So, NRI’s will have to file ITR’s in India if their gross total income exceeds the basic exemption limit of Rs 2,50,000.

Amendments in Budget 2019-20

The government has amended the income tax law to introduce further conditions which provides for mandatory filing of returns by individual taxpayers whose gross total income is below the exemption limit. Individuals are required to file their returns mandatorily from 2019-20 onwards for the below mentioned cases (even when their gross total income is below the exemption limit)

aggregate amount deposited in current account(s) maintained with a banking company or a co-operative bank is Rs 1 crore or more
has spent Rs 2 lakh or more on foreign travel for himself or any other person
incurred electricity bills of Rs 1 lakh or more in a year
Claimed capital gains tax exemption on investment in house etc

Accordingly, if the NRI’s taxable income is below the maximum amount not chargeable to tax in India (Rs 2.5 lakh) and they are not covered under the specified circumstances mentioned above, they are not required to file tax returns.

When is the Last Date to File Income Tax Return in India?

July 31st is the last date to file income tax return in India for NRIs. With the ongoing COVID -19 pandemic a lot of income tax due dates were extended by The Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 read with Notification No. 35 /2020, dated 24-06-2020. The government announced the extension of income tax return (ITR) filing deadline for FY 2019-20 to November 30, 2020 from July 31, 2020. The tax return can be filed online on the e-filing website of the Indian tax department.

Do NRIs Have to Pay Advance Tax?

If the NRI’s tax liability exceeds Rs 10,000 in a financial year, they are required to pay advance tax. Advance tax needs to be deposited in four instalments (15% by 15 June, 45% by 15 September, 75% by 15 December, and 100% by 15 March). Interest under Section 234B and Section 234C is applicable when they do not pay advance tax.

In case a non-resident had missed filing the tax return, can the same be still filed?

The income tax department notified the taxpayers for late filing of tax returns for A.Y. 2020-21, along with a penalty of Rs 5000 (on filing the return after the due date but on or before 31st December) and Rs 10000 (on the filing of return after 31st December to 31st March). The taxpayer has to file the late filing of tax returns for A.Y. 2020-21 before 31st March anyhow.

However, penalty is applicable even if the taxpayer files the returns before 31st March. If taxpayer’s total income does not exceed Rs 5 lakh, then the maximum penalty levied for delay will not exceed Rs 1000.

Over the last few years the Indian tax authorities have taken various initiatives to simplify the tax compliances and expand the taxpayer base. Most of the tax filings, processing of income-tax returns and issue of refunds are now online and e-assessments of tax returns has also been introduced. It is therefore imperative that Indian income and/ or investments are duly reported and compliances met with by the NRI’s.

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