NRIs need not disclose foreign assets or income in ITR

BANK ACCOUNT IN INDIA MUST FOR REFUNDS

- SAIKAT NEOGI

NON-RESIDENT INDIANS (NRIs) with India-sourced income must file income tax returns (ITR) for compliance, claiming refunds, and carrying forward losses. While interest earned on Non-Resident External (NRE) and Foreign Currency Non-Resident (FCNR) accounts is exempt from tax, interest on Non-Resident Ordinary (NRO) accounts is taxable.

Income from rental income from property in India, capital gains from Indian assets, dividends from Indian companies are taxable. However, if an NRI's total income consists only of investment income and/or long-term capital gains subject to specific tax rates under Chapter XIIA of the Income-tax Act, 1961, and tax has been deducted at source on such income, then they are not required to file an ITR.

Mandatory disclosures When filing ITR in India, NRIs must disclose their residential status, income earned or sourced from India such as rent, interest, salary, capital gains, and details of Indian assets. Foreign assets and income need not be declared unless the NRI becomes a resident and ordinarily resident, in which case Schedule FA will also be required to be filled.

NRIs must report TDS and tax credits (via Form 26AS), provide Indian bank account details for refunds, and if claiming DTAAbenefits, submit details of foreign taxes paid, country of residence, and a valid Tax Residency Certificate and electronically filed Form 10F.

Sandeep Sehgal, partner-Tax, AKM Global, a tax and consulting firm, says the taxpayer must have a pre-validated Indian bank account, which can include an NRO account, to claim an income tax refund in India. "It is noteworthy to mention that refunds cannot be processed to a foreign bank account."