• NRI tax compliance

Hi, 

I'm an NRI for many years and all my income is earned outside India. I transferred some funds from my NRE account to other saving account and made some deposits in this savings account, which attracted 10% TDS. I have already paid more tax than required, as if I had made NRE FDs, I would not have paid any taxes on these FDs, but I had to pay 10% TDS because I transferred these funds to savings accounts. Since these are all foreign income, do I need to file ITR or I can just response on Compliance portal that I'am an NRI and these funds are already taxed outside India and hence need not file return ? Even if I have to file ITR, do I need to pay any further tax ? Can I take advantage of 115G section for NRIs ? 

Recently I got a Compliance SMS on this for FY2017-18. 

What would be the solution for FY2018-19 ? Should I transfer all these funds to NRO->NRE account with 15CA/CB form to reduce tax ?

Thanks
Rajib
Asked 6 months ago in Income Tax from KOLKATA, West Bengal

 

The income earned outside India is not taxable in India.  The income earned into the saving account and FD account has accrued in India and hence taxable in India.  IN case your taxable income in India exceeds the limit of 250,000 you are supposed to file tax return. In case you have paid additional tax and want to claim refund it is possible by filing tax return.  If no taxable income, you are not required to file ROI. ON compliance portal you can say NRI and income below exemption limit.

Your bank will gladly help you convert your Indian savings accounts into NRO savings accounts. You cannot change these accounts into NRE accounts directly; NRE accounts are supposed to be funded via deposits made from foreign currency accounts. Under the liberalized schemes available, you can transfer the money in your regular savings account into your account abroad, converting it into foreign currency, if you (and your CA) provide proof to your bank (and the Reserve Bank of India) that you have paid all applicable taxes on the money in your savings account. And then you can transfer it all back into your NRE account.

Jasmina Jain Shah
CA, Greater Mumbai
336 Answers
4 Consultations

5.0 on 5.0

Dear Rajib,

 

Hope you are doing well !!

 

NRIs don’t have to pay taxes when they transfer money to India. Since they already pay tax on the amount earned in the country where they are working, they are not required to pay further tax on the same money. This is irrespective of whether they keep the money in Indian Rupees or US Dollars.

 

There are few other things that you need to consider when transferring money to India.

For instance, if you are sending money for investment, it is recommended to open an NRE savings account for fund transfer. This is because interest earned on fixed deposits in NRE (Non-resident External) accounts are free from taxation in India.

If you wish to send money to  saving account and open a fixed deposit,then the interest earned on this deposit will be taxable. The bank will be deducting TDS at the rate of 20% if there is no PAN number available otherwise 10%.

But if you open a fixed deposit from funds available in the NRE savings account, you won’t have to pay taxes on the interest earned on this deposit.

 

Thanks & Regards,

Payal Chhajed

 

 

 

Payal Chhajed
CA, Mumbai
2601 Answers
34 Consultations

5.0 on 5.0

Hi Rajib

Please check whether you are liable to file ITR. If your gross total income earned in India exceeded 2.5 lacs, you need to file the ITR.

There is no tax on transfer of funds. No TDS could be deducted on such transfer. However, TDS could be deducted on interest earned on investments.

In case you have NIL tax liability in India and your TDS has been deducted, you should file ITR and claim the refund of TDS so deducted.

 

We may help you with the compliances and return filing.

Lakshita Bhandari
CA, Mumbai
3334 Answers
161 Consultations

5.0 on 5.0

Hi,

- As TDS was deducted therefore you were required to file ITR. If the total tax liability on the income earned is more than TDS deducted then you need to pay difference. For F.Y. 2017-18, there is still time left for filing of ITR. For F.Y. 2018-19, you can remit the proceeds to NRE account otherwise you need to file ITR if TDS will be deducted.

 

- It is better to file response to old comolicompl also. It is required either you did not filed ITR in those years inspire of having income or income is not matching with the ITR or sources of funds for investments/payments exceeding threshold limit.

 

Thanks

Vivek Kumar Arora
CA, Delhi
2789 Answers
128 Consultations

5.0 on 5.0

Hi Rajib,

 

It is advisable that to respond to the old compliance cases.

Payal Chhajed
CA, Mumbai
2601 Answers
34 Consultations

5.0 on 5.0

Hi

 

As you mentioned TDS is deducted ,so you should file ITR and can claim refund (adjusted with Tax liability ) if any.You can file ITR for FY 2018-19 now also.

It is advisable to reply to old compliance asap.

 

Hope it helps

Swati Agrawal
CA, Mumbai
1146 Answers
5 Consultations

5.0 on 5.0

Ideally, you should respond to this old cases and close the matter.  IN case, you have not evaded any taxes, there can be no harm to you.

Jasmina Jain Shah
CA, Greater Mumbai
336 Answers
4 Consultations

5.0 on 5.0

First of all you will be required to pay taxes on interest earned on NRO account but no taxes are required to be paid on income earned on NRE account also since they are asking for income tax on interest income which you have earned in India how can it be taxed outside?

If it has been taxed outside then as per DTAA you can claim credit of taxes paid outside but you need to file income tax return.

Yes you need to go through definition of investment income to check if your investment is included in that income and if it does you can claim it under section 115G.

They might have sent older notices on your pan card address as this email and SMS service has begun from last 2-3 years only.

If you comply for this notice they will ask for old notices also just have a look what that compliance is all about and is there any outstanding demand in your account?

Have you changed your status to NRI for income tax?

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you

Naman Maloo
CA, Jaipur
1808 Answers
16 Consultations

5.0 on 5.0

Yes you can claim the if the construction was completed within 5 years and you can claim it in 5 equal installments in 5 consecutive years i.e. if you miss claiming it in 17-18 you can't claim it in 18-19 but yes you can claim it by revising return.

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement

Thank you

Naman Maloo
CA, Jaipur
1808 Answers
16 Consultations

5.0 on 5.0

Dear Rajib,

 

The pre-construction interest incurred on a housing loan is allowed as a deduction in five equal instalments, beginning from the financial year (FY) in which the property has been completely constructed. The allowability of interest is not linked to the existence of the housing loan in each of the five FYs when the deduction is being claimed. But you can claim deduction only if you continue to own the property in each of the said FYs.

 

 

Payal Chhajed
CA, Mumbai
2601 Answers
34 Consultations

5.0 on 5.0

Hi

Pre-construction Interest deduction can be claimed in 5 equal installments ,starting from year in which construction is completed.You must hold the property during this period.

 

 

Hope it helps

 

Swati Agrawal
CA, Mumbai
1146 Answers
5 Consultations

5.0 on 5.0

Yes you can claim pre construction for FY 2017-18 and you must first file ITR and then file compliance that would be better according to me.

 

Naman Maloo
CA, Jaipur
1808 Answers
16 Consultations

5.0 on 5.0

Yes, you can claim it in FY 2017-18.

 

It is advisable to file the ITR and then send response.

 

Payal Chhajed
CA, Mumbai
2601 Answers
34 Consultations

5.0 on 5.0

You must submit the response for the earlier years too.

 

The first installment was to be claimed in FY 15-16. If not claimed, you would not be able to claim it now. The third installment should have been claimed in FY 17-18.

Lakshita Bhandari
CA, Mumbai
3334 Answers
161 Consultations

5.0 on 5.0

You can file the response first and then file the return 

Lakshita Bhandari
CA, Mumbai
3334 Answers
161 Consultations

5.0 on 5.0

Hi,

- Yes you can claim pre-construction period from the date of borrowing till 31.03.2015. Yes, you can claim in next F.Y. 2018-19.

- It is better to file it before responding on compliance portal.

 

Thanks

Vivek Kumar Arora
CA, Delhi
2789 Answers
128 Consultations

5.0 on 5.0

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