The obligation to file income tax return in India is dependent on the residential status of the person. So, if you fall in the NRI category as per the Income Tax rules in India and have earned income in India here are listed below cases and eligibility criteria in respect of which you are obligated to file income tax return in India for a financial year..
1. If you as an NRI have earned income in India and your total taxable income for the financial year exceeds exemption the limit of Rs. 2 lakh.
2. If you as an NRI individual have realized short term capital gain (STCG) or long term capital gain (LTCG) on account of sale of some assets including immovable assets or investments. The tax return has to be filed regardless of the amount of gain i.e. even in the case when the gains are far below the exemption limit provided, NRIs are bound or obliged to meet their income tax return filing commitment in India. The tax rate however differs for short term and long tern capital gain which is 15% in case of short term capital gain and 10% or 20% otherwise.
Rules concerning filing of income tax return by NRIs infer that NRIs unlike ordinary Indian residents are not granted exemption with respect to income tax return filing on the basis of gender or age.
Return Filing also required in case of claiming Income Tax Refunds
In a case when TDS by different concerns exceeds the total tax liability of the NRI tax payer, NRI individual can file the income tax return and claim for the refund amount. Likewise, NRIs need to file income tax return in a case when they want to adjust capital losses against capital gains and reduce their tax liability.
Exceptions when NRIs earning income in India are not obliged to file Income Tax return
1. When the income earned by an NRI individual in India includes only the interest income and capital gain and tax has been already deducted from such income at source then NRIs are no longer liable to pay tax on such income.
2. In a case when an NRI realizes long term capital capital gain from the sale proceeds of equity mutual funds or equity shares in India then no tax liability exists for the NRI which in turn sets the NRI free from filing the income return.
Last date to file the income tax return for NRIs
Similar to ordinary Indian residents the last date for tax return filing for NRI individuals is 31st July for the current assessment year. For instance, tax return for the income earned during the F.Y 2012-2013 had to be filed by the income tax authorities by 31st July'2013. However, there are instances in which delayed tax filing is allowed with or without levy of penalty.
1. In a case, when an NRI individual is not liable to pay any tax i.e. TDS is deducted on the earned income, tax return can be filed until the end of the assessment year in which the income earned for the previous financial year is assessed without levy of penalty.
2. In a case when NRI has no tax liability, late income tax return filing is allowed but at an extra cost of 1% that is charged on a monthly basis from 31st July' 2013 until the time tax return is filed.