A Perfect Guide for Returning NRIs on Tax Implications

Overview :-

When NRI coming back to India, various Tax provisions has to comply to adhere with Income Tax Provisions or Rules.

When the citizen of India or a person of Indian origin whose total stay is less than 182 days in the relevant tax year then he will be regarded as the NRI.

Tax structure :-

Income may be the Rental income from House property outside India, Long term Capital gains, Short term Capital gains, interest from the Bank or the dividends, etc. accrues or arises in India or outside India, its taxability depends upon the Residential status of the Person to whom Income is accrued or Received.

For Instance,

Income which accrues or arises outside India and received outside India to the NRI status then it will not be taxable on his returning to India.

However, it will be taxable to the person whose status is in Resident and ordinarily Resident or the Resident and Non Ordinary Resident.

Action to be taken by NRI on his returning to India :-

Steps to be taken by NRI upon Returning to India that are :-

1. Firstly, BANK account of the NRI should be designated as the Indian / Domestic Resident Account or another route can be adopted by transferring the balance in your NRE/FCNR accounts to Resident Foreign Currency (RFC) accounts/ NRO account.
2. Next, NRI has to comply all Income Tax provisions along with the Recent Amendments that are required to be adhered with.

Overseas Assets :-

If the NRI sell his overseas assets and receive the sales proceeds (money) in your overseas bank account, you do not have to pay any taxes in India.

NON- NRI status Lapse :-

When the NRI loose his status of being NRI and become an ordinary resident after satisfying the certain specified conditions then even NRI global income will be taxed in India.

Double Taxation Avoidance Agreement :-

If the NRI taxable Income becomes Global Income (either earned or accrued in /outside India ) then actually his all income will be taxable and in both country Tax required to be levied. So to avoid this situation or avoid double taxation levy in both country, DTAA provisions will be applied.Accordingly, as per DTAA provisions, one has to pay tax only in one country on the Global Income and no need to pay tax in another country.

Conclusion :-

In all, when the NRI status become Residential status either ordinary or Non Ordinary then his income will be taxable in India (subject to DTAA provisions ).

Applicability of DTAA provisions depend upon the Government agreement with the another Foreign Country.

For claiming the relief of the DTAA provisions, TRC certificate has to be produced by the NRI while filing the Income Tax Return for the relevant Financial Year.Otherwise Non Production of TRC certificate lead to Non Deduction of DTAA relief.

So TRC certificate should be kept in mind for claiming the DTAA deduction for the relevant Financial Year for which Relief is required to be claimed

https://aktassociates.com/blog/nri-selling-property-in-india/

Https://aktassociates.com/business-compliance/tax-compliance/tax-notice-reply