July 31, 2024 Deadline: Important due date for filing tax returns in India.
Common Myths: Many NRIs live under misconceptions about their tax obligations.
Potential Penalties: Ignorance or neglect in filing taxes can result in penalties.
Expert Advice: Chartered Accountant Mr. Shamra provided insights on common mistakes by NRIs.
Common Mistakes by NRIs
Country of Residence Misconceptions: Many NRIs assume income is only taxed in the country of residence. However, income from India (NRO and NRE accounts) is also subject to Indian taxes.
NRO Account: Taxable in India.
NRE Account: Interest income is exempt in India but taxable in the resident country.
TDS Myths: Belief that tax deducted at the source (TDS) is the end of tax obligations. Filing tax returns is still mandatory.
Disclosure Requirements: Failing to disclose global income can result in complexities and penalties.
Income Thresholds: Misunderstanding that income below a certain threshold does not require tax filing.
Reinvestment of Capital Gains: Assuming no need to file tax returns if gains are reinvested. Filing is mandatory for claiming benefits/exemptions.
Chapter VI-A Deductions: To claim deductions, filing tax returns is necessary.
Loss Carry Forward: Filing is necessary for carrying forward losses to offset against future profits.
Compliance and Documentation
Profile Update: Importance of updating email, mobile number in IT portal.
Suggestion to maintain a permanent Indian mobile number linked with PAN and Aadhaar.
Jurisdiction: Updating residential status and jurisdiction with the IT department helps avoid issues.
Limitation Period: Maintain records for up to 15 years for compliance and future reference.
Pending Actions: Regularly check the IT portal for pending actions or notices.
Specific Obligations and Recommendations
Update Profile: Maintain up-to-date email and mobile contact in the IT portal.
Link PAN and Aadhaar: Helps avoid PAN becoming inoperative.
Bank Account Validation: Regularly revalidate bank accounts to ensure smooth transactions.
Annual Information Statement: Regularly check and respond to any discrepancies.
Address Notices Promptly: Respond to notices with proper documentation to avoid complications.
Myths About NRE Accounts: Only interest earned is exempt from tax; other earnings are taxable.
Fund Source Justification: Be prepared to justify the source of large funds in NRE accounts.
Importance of Professional Guidance
Consult Charter Accountants: Regular consultations can help stay within compliance and avoid penalties.
Filing Nil Tax Returns: Even if there's no income, filing nil returns can be beneficial.
Proactive Approach: Addressing tax matters timely to avoid last-minute complications.
Conclusion
Stay Informed and Compliant: Better to prevent issues than cure them later.
Professional Help: Seek guidance from chartered accountants to ensure proper compliance.
Additional Resources
NR Clinic Support: Offers a network of chartered accountants for NRI tax matters.
Contacting NR Clinic: Use the provided WhatsApp link for support.