Should NRIs file IT Return in India?

• As a thumb rule you must file an IT Return in India for AY 2014-15 if your Gross Income is more than Rs 2,00,000 (assuming you are less than 60 yrs old. Rs 2,50,000 if 60-80yrs old and Rs 5,00,000 if more than 80 years old). This is irrespective of what your Residential Status is – therefore the rule applies to NRIs too. However, NRIs are only taxed in India for Income that is earned in India. Your Income outside India is not taxed in India.
• If you want to claim an Income Tax Refund you must file a return.
• Or if you have losses that you need to carry forward – a return must be filed by you.

Let’s understand ‘what does Income earned in India’ mean – Any Income received by you in India or income which is deemed to be received in India on your behalf is ‘Earned in India’. Or Income that accrues or arises in India is also ‘Earned in India’. Let’s look a few scenarios where you as an NRI would have ‘Earned’ Income in India.

• You have Fixed Deposits and Savings Bank accounts in India. Any returns in the form of interest in these accounts is income earned in India. If your Gross Income (from all sources ) is more than Rs 2,00,000 – you must file your IT Return.
• You moved abroad during the financial year 2013-14 and you are an NRI for purposes of Income Tax for this financial year. Prior to your move, you spent a few months in India and earned salary in India, your employer has provided you a Form 16 and all taxes are duly deducted by your employer. If your Gross Income from this employer and including all your incomes in India for the entire financial year exceed Rs 2,00,000 – you are required to file a return in India.
• You have a house property in India which you rented out for an annual rent of Rs 3,00,000. That is your only income from India. As per rules of House Property – deduct 1/3^rd of the rent and municipal taxes paid, if the resulting amount is greater than Rs 2,00,000 – you are required to file a return in India.
• You own two or more than two house properties in India, though none of these is let out. There is no rental income. In such a case – as per Income Tax Act – only one house property shall be considered to be self occupied and its income shall be considered nil and all others will be considered deemed to be let out properties – and therefore you will have resulting Income from House Property and you will be required to file a return in India, if your income exceeds Rs 2,00,000.
• You have Fixed Deposits in India and bank deducted TDS from your deposits – while your total Income in India is less than Rs 2,00,000. File a return in India to claim refund for the excess tax deducted.
• You have been settled abroad and you decide to sell your only house property in India which was given to you by your parents – any capital gain on this house property is liable to be taxed and therefore a return must be filed by you.
• You decide to buy a car for your parents who reside in India – no return of income is required to be filed by you – there is no tax on gifts to your parents.
• You have a bank account in India to which you transfer Rs 1,00,000 each month to pay for ongoing insurance & health costs for your parents and to pay your home loan installments. As long as your Incomes in India are within Rs 2,00,000 you are not required to file an IT Return.

If you are still unsure about what incomes are taxed in India and whether as an NRI you are required to file a return, reach out to us support@cleartax.in. We have specific NRI IT Return services https://cleartax.in/meta/NRI.