July 22 2022
Most NRIs, due to their residential status, think that filing Income Tax Returns in India is unnecessary. However, this may not always be the case.
The first and best reason to file returns is to get back your hard-earned money. The Government deducts a lot of money by way of TDS (Tax Deducted at Source). This is especially true for NRIs who are subject to TDS on more incomes and at significantly higher rates. What does this mean for you? Simply put, a lot of the money that you paid to the Government by way of TDS is waiting to be refunded to you, if only you would file your Tax Returns on time.
Secondly, it has been my experience that upon their return back to India, NRI citizens usually run into some sort of trouble with the Income Tax Authorities. Most of these troubles could have been easily solved had they simply filed regular Income Tax Returns for the periods during which they were abroad.
It is important to know that an assessing officer can open an assessment relating to any foreign assets or income earned thereon for a period of 10 years from the year in which the income is earned. Because most NRIs don’t file returns, it can be very difficult to respond to any sudden notice from the Income Tax Department regarding transactions that had taken place over the last 10 years.
That is if you are able to see the notice at all! Most NRIs are not even registered with the income tax portal wherein communication with the department is available. This lack of awareness can be costly. Failure to respond to an Income Tax Notice usually results in much Tax liability including interest and penalty.
This easily avoidable scenario can result in payment of up to 3 times the initial liability. All of these can be avoided by simply filing Tax Returns and engaging a CA specializing in NRI Tax matters to look after your every Tax need.