Stay Compliant and Avoid Tax Hassles: A Guide for NRIs in India

The Indian Income Tax department has been vigilant in recent years, issuing notices to Non-Resident Indians (NRIs) for various reasons. These can include suspected failure to file tax returns, missing information, or discrepancies in residential status.

Here’s what you, as an NRI with investments in India, can do to avoid these notices:

Keep Your Information Current:

• Ensure your PAN card reflects your Non-Resident (NRI) status.

• Update your address on your Aadhaar card. Both updates can be done online conveniently.

• Pro Tip: Always opt for changes on existing cards instead of applying for new ones.

Understand Tax Residency Rules:

• Know the residency and source rules for taxation in India.

• Staying in India for more than 182 days in a financial year makes you a tax resident. As a resident, your global income is taxable in India.

• As an NRI, only income generated in India (e.g., rental income, dividends, interest) is taxable.

• Understanding your tax liability helps with financial planning and ensures compliance.

• Pro Tip: Retain old passports to document your days spent in India.

File Your Income Tax Return (ITR):

• While not mandatory for all NRIs, filing an ITR is beneficial if you have income from India.

• Filing simplifies processes like claiming lower tax withholding or NIL withholding on income subject to higher TDS due to your residency status.

• Pro Tip: Choose the correct ITR form (usually ITR 2 for NRIs) and accurately declare your residential status.

Avoid Double Taxation:

• Take advantage of India’s Double Taxation Avoidance Agreements (DTAAs) with over 90 countries.

• These agreements determine which country can tax specific income and offer tax credits to prevent double taxation.

• This ensures income is taxed only once, with credit given for tax paid in one country.

• Pro Tip: Consult a qualified tax professional to navigate international tax obligations.

Respond Promptly to Notices:

• If you receive a notice from the Income Tax department, respond promptly.

• Notices and replies are issued and filed online through the I-T portal.

• Consider a tax notice as an inquiry and submit the requested documents. This can prevent penalties and lengthy legal disputes.

• Pro Tip: Keep your income tax profile on the portal updated, especially your email and phone number for communication.

By following these steps, NRIs with investments in India can stay compliant and avoid unnecessary tax hassles.

Apart from this, if your family back in India needs any kind of help with a task or Government related task, each out to https://www.rootrs.com/ and we can have a professional sort it out for you!

Article source: https://www.financialexpress.com/money/income-tax-tax-talk-nris-must-update-status-on-pan-3352149/