Exception:

It shall not be necessary for a Non-Resident Indian to furnish a return of income if -

1. his total income in respect of which he is assessable under this Act during the relevant financial year consisted only of investment income** or income by way of long -term capital gains **or both; and
   
   

2. the tax deductible at source has been deducted from such income.

   ** - "investment income" means any income derived [other than dividends from Domestic Company] from a foreign exchange asset;

   "Long -term capital gains" means income chargeable under the head "Capital gains" relating to capital asset, being a foreign exchange asset which is not a short - term capital asset;

   "Foreign exchange asset" means any specified asset which the assessee has acquired or purchased with or subscribed to in, convertible foreign exchange;

Thus, if you don’t have any income which is chargeable to tax, you are not required to file return of income.

Also, if you have only Investment Income or Income from Long Term capital gains or both (as explained above) and the tax has also been deducted at source from such income, then you are not required to file Return of income.

However if you have short term capital gains on equity shares or units of equity oriented mutual fund (even if less than Rs.1,10,000/-i.e. the basic exemption limit )yet you are liable to file ROI.

Legal Compliance

1) Income Taxable in India:

A person who is Non Resident under the Provisions of The Income Tax Act, 1961 is charged to tax on the following Incomes:

1. Income earned from any source in India e.g. Interest from investments in India, capital gains from investments and immovable property in India etc.
   
   

2. Any other Income earned or received in India.
   
   

3. Income other than the above is not taxable in India.

2) Every person who is not carrying on business is required to submit return of income by 31st July every year for the income earned during the prior year ending 31st March provided his income exceeds the maximum amount not chargeable to tax i.e.1,10,000/-

For Example

Income for the year ending	Actual Income Earned	File the ROI by
31st March 2005	More than Rs 100,000	31st July 2005
31st March 2006	More than Rs 100,000	31st July 2006
31st March 2007	More than Rs 100,000	31st July 2007
31st March 2008	More than Rs 100,000	31st July 2008

3) If you do not file the ROI by the prescribed date,

1. You can file the ROI within subsequent 20 months

2. You are liable to pay interest at 1 % p.m. on the tax payable.

4) If the Tax is deducted at source from your Income in the Past years and you have not filed the Return of Income within the prescribed time, you may apply to Income Tax Department to condone the delay and accept delayed return and thus claim Refund of Tax.

Implications of non-filing of ROI:

It may result in to penalty of Rs5, 000 for each year.

Also, one may be subject to prosecution u/s 276CC.

Provided that a person shall not be proceeded for penalty or prosecution for failure to furnish return of income, if---

1. the return is furnished by him before the expiry of the assessment year; or
   
   

2. the tax payable by him on the total income determined on regular assessment, as reduced by the advance tax, if any, paid, and any tax deducted at source (TDS), does not exceed three thousand rupees.

   i.e. his balance tax liability after considering TDS and Advance Tax does not exceed three thousand rupees.

Why the NRI should file the ROI?

1. The tax deduction at source for NRI is prescribed at maximum rate in the Income –tax Act (11% to 34%). However, the actual liability to tax for the year computed in accordance with the provisions of the Act is generally lower for following reasons –
   
   

   1. Income up to the basic exemption limit of Rs.1,10,000/- (other than capital gains) earned by NRI is not liable to taxation.

      However, the tax is deducted at source at 33.99% from such income.
      
      

   2. The income earned may not be liable to tax but the Payer in following cases deducts the tax.
      
      

      1. The Capital losses can be set off against Capital Gains but tax is deducted at source from capital gains without setting off the losses.

      2. The rate of TDS on NRO Account is 33.99 % (for Financial Year 2007-08) but tax chargeable on Income as per Double Taxation Avoidance Agreements (DTAA) with the country where NRI resides, may be lower.

      3. The reinvestments of capital gains, as prescribed may exempt it from tax but the tax may have been deducted from the capital gain received.

      In view of above, NRI should file Return of Income if his tax deducted at source is more than his actual tax liability. He is entitled to claim refund of Tax with interest at 6 %p.a.

   
   
   

2. Sometimes, NRI may incur short-term or long term capital loss on sale of investments. He can setoff such loss against long term capital gain from sale of investments in subsequent year or years provided he has filed Return of Income within the prescribed time for the year in which he has incurred loss. Hence the NRI should file the return of Income declaring loss in such a situation
   
   

3. NRI may file Return of Income in some years and may not file in some years .But if he receives a notice from the Tax Department to file the Return of Income, he must respond by filing return of Income.
   
   

4. The updated tax information / records helps NRI to comply with the procedural documentations for repatriation of Income and Assets held in India. It also helps him to have ready records as & when he returns to India.

Procedure

We can assist you to file your Return of Income in following manner:

1. We shall mail you an Annexure of Income, which you are required to fill and mail it to us. On the receipt of the information of Income, we shall mail you the list of documents /information required
   
   

2. On receipt of this information we shall prepare the Return of Income (ROI).
   
   

3. We shall then email you the ROI duly completed for your verification and confirmation.
   
   

4. On your confirmation, you shall download, sign it and send it to us along with the enclosures.

On receipt of the said papers and documents we shall file the Return of Income with the Income Tax department

Further for your information it is mandatory to quote your Permanent Account Number (PAN) while filing your return of Income: In case you have not applied /allotted PAN you need to apply before filing the Return of Income to claim the refund of TDS.

More on NRI Taxation/Planning
Returning Indians	Investments
Repatriation	Who is a Non-Resident Indian?
Why a NRI should file the return of income?	Got a query?