FAQ's

Income Tax

FEMA/RBI Regulations

 

Recently, in a decision, the Mumbai ITAT (an Appellate Authority for Income Tax Litigation Matters in India) has held that just receipt of Salary Income by an employee (working in a Ship plying on Innternational routes, Run by Singapore based Shipping Company), in NRE Bank Account in India, will not trigger a tax incidence in India.

Under the Indian tax laws, the tax incidence arises on the basis of residential status, which in turn depends on the number of days stayed in India. A tax resident of India is subject to tax on his worldwide income. However, a non-resident is subject to tax in India only under two situations, i.e. (i) income accrued in India and (ii) income received in India. Hence, in case of non-resident, income is considered as taxable in India even if it is received in India (though employment done abroad).

In the present case, the ITAT rejected the contention of tax department that the salary amount credited to the bank account in India should be subject to tax. It observed that the employee had a lawful right to receive the salary amount at the place of employment (which is the location of the foreign employer outside India).

The ITAT held: "The connotation of an income having been received and an amount having being received are qualitatively different. The salary amount is received in India in this case but the salary income is received outside India".

In the abovementioned case, The ITAT in this order has highlighted a new aspect relating to income received in India. It has drawn a distinction by holding that salary income was not received in India as the employee had the lawful right to receive salary outside India. The salary amount was at the employee disposal outside India and he merely exercised his right to transfer it to India.

Hence, the Employee agreements should be properly structured. These agreements may bring out the point that the salary for services rendered overseas is being credited to a bank account in India, at the employee request for the sake of convenience, this ITAT decision could help mitigate litigation.

By NRI Tax Service: Dec 20, 2014

The government recently released draft guidelines for its ambitious gold monetization scheme that aims to cut down gold imports in the country. The guidelines have been notified nearly three months after the scheme was announced by Finance Minister Arun Jaitley in the Union Budget.

The salient features of the gold mobilization scheme:

- The scheme is meant to mobilize gold held by domestic households and institutions. Gold collected through the scheme will be made available to jewelers for manufacturing of new jewellery and other items.

- The scheme will initially be launched at a few places because the government will have to first set-up infrastructure for facilitating easy and secure handling of gold.

- Gold collected from consumers will first be cleaned and measured at test centres; it would then be melted to test for purity. After the tests, consumers can either deposit the gold for a fee or take it back after paying a nominal fee.

- The minimum quantity of gold that a customer can bring is proposed to be set at 30 grams.

- Those willing to deposit the gold will be given a certificate mentioning the amount and purity of the deposited gold. Banks will open a ‘Gold Savings Account’ on the basis of such certificates.

- Consumers will be paid interest on their gold savings account after 30/60 days of account opening. The amount of interest rate to be given is proposed to be left to the banks to decide.

- Both principal and interest will be paid to the depositors of gold, will be ‘valued’ in gold. For example if a customer deposits 100 gms of gold and gets 1 per cent interest, then, on maturity he has a credit of 101 gms.

- The customer will have the option of redemption either in cash or in gold, which will have to be exercised in the beginning itself (that is, at the time of making the deposit).

- The tenure of the deposit will be minimum 1 year and in multiples of one year. Like a fixed deposit, breaking of locking period will be allowed.

- Gold savings account will be exempt from capital gains tax, wealth tax and income tax.

- According to the government, gold deposit accounts will utilise the 20,000 tonnes available within the country and help in cutting down the 800-1,000 tonnes of gold the country ships every year.

By NRI Tax Service: June 17, 2015

CBDT has notified new Income Tax Return Forms for AY 2017-18 (i.e. FY 2016-17). Some of the salient features/changes of these forms are:

- The total number of ITR Forms has been reduced from the existing nine to seven forms.

- One page simplified ITR Form-1(Sahaj) has been provided for Individuals having income upto Rs 50 lakh (income from salary/one house property/interest income).

- ITR Forms ITR-2, ITR-2A and ITR-3 have been replaced with a single form ITR-2.

- Form ITR 4 (Sugam) for taxpayers opting for presumptive taxation scheme. A new column has been prescribed to mention digital receipts as the rate of presumptive income is 6% for such receipts.

- Cash deposits during demonetization period have to be disclosed in the new ITR forms.

- Aadhar Number is to be quoted.

New ITR Forms Notified AY 2017-18 (i.e. FY 2016-17)

Excise Duty

• The Excise Duty on all goods falling under Chapter 84 & 85 of the Schedule to the Central Excise Tariff Act is reduced from 12 percent to 10 percent for the period upto 30.06.20 14. The rates can be reviewed at the time of regular Budget.
• To give relief to the Automobile Industry, which is registering unprecended negative growth, the excise duty is reduced for the period up to30.06.2014 as follows:
• Small Cars, Motorcycle, Scooters and Commercial Vehicles - from 12 % to 8%
• SUVs - from 30% to 24%
• Large and Mid-segment Cars – from 27/24% to 24/20%
• It is also proposed to make appropriate reductions in the excise duties on chassis and trailors – The rates can be reviewed at the time of regular Budget
• To encourage domestic production of mobile handsets, the excise duties for all categories of mobile handsets is restructured. The rates will be 6% with CENVAT credit or 1 percent without CENVAT credit.

Service Tax
• The loading and un-loading, packing, storage and warehousing of rice is exempted from Service Tax.
• The services provided by cord blood banks is exempted from Service Tax.
Custom Duty
• To encourage domestic production of soaps and oleo chemicals, the custom duty structure on non-edible grade industrial oils and its fractions, fatty acids and fatty alcohols is rationalized at 7.5 percent.
• To encourage domestic production of specified road construction machinery, the exemption from CVD on similar imported machinery is withdrawn.
• A concessional custom duty 5 percent on capital goods imported by the Bank Note Paper Mill India Private Limited is provided to encourage domestic production of security paper for printing currency notes.

Income Tax
No changes in Direct tax laws in interim budget

(nritaxservice/news-articles/dated april 22, 2014) 

Most home buyers feel their investment is safe when developers tell them that all the necessary approvals from government authorities are in place, and that the project has also been approved by banks and housing finance companies. If banks have approved the project for a loan, then it would be fair to assume that the developer would have complied with all rules and regulations, for lenders carry out their share of due diligence. 

That was until April 11, when the Allahabad High Court ordered the demolition of two 40-storey towers under construction at the Emerald Court project in Noida being developed by real estate major Supertech. 

The court order has thrown up a fresh set of challenges to home buyers. What is the extent of due diligence buyers need to do on their own? This verdict has brought forth a new set of checks that a buyer should carry out, be aware of the rights provided under the law and critical questions that they need to ask developers on a continuous basis. 

The Supertech case 

The Allahabad High Court ordered demolition of Towers 16 and 17 on Plot 4 of Sector 93A in Noida “within a period of four months” for breach of the Noida Building Regulations and Directions, 2010 and the Uttar Pradesh Apartment Act, 2010. 

Under the Apartment Act, a developer had to take prior consent of buyers or residents regarding amendments or revision of the sanctioned plan. In this case, the court observed that Supertech failed to obtain this consent and slammed the Noida Authority for not ensuring compliance. 

“The maps, specifications as required under Rule 4 of the Apartment Rules, 2011 was never disclosed to the petitioner society and admittedly major alterations were made by linking petitioners’ building block with T-16 and T-17 (Apex & Ceyane), by space frame making the petitioners block unsafe. No objection/consent, as required under proviso to sub-section 4 read with Section 12 and Rule 3 and 4 of the Apartment Rules, 2011 was taken by the respondent company or Noida Authority from the petitioners,” the court order said. 

The court further ruled that the developer did not maintain the mandatory distance of 16 metres between the two buildings that is required for buildings taller than 55 meters, and said that it also failed to maintain a clear space of 7.5 meters in the parking space for the movement of fire tenders. There was also deviation on the use of the basement as the developer had carried out illegal construction in the basement. 

The court was scathing in its indictment of the Authority. “Noida Authority has colluded with respondent company in sanctioning the plan, hence there was no occasion of the Noida Authority to respond to the specific grievance of the petitioners.” 

What can buyers do? 

There are several must do’s for home buyers and after this case, one of the most important things to do is to insist on getting the copy of the plan from the developer every 2-3 years. 

“Under law the builder is supposed to show the latest plan to the residents that has been approved by the authority and has the proposed changes to be made in the initial plan,” said Kunal Ravi Singh, the counsel for the petitioners Emerald Court Owner Residents’ Welfare Association. 

Singh added that the validity of the maps is only for 2-3 years and the builder makes new maps with changes in the plan. “Therefore buyers should regularly demand for the new maps to know the changes proposed by the builder in the original plan.” 

Another step buyers should take is to ask their bank or housing finance company to inspect these maps as the banks are also interested parties and they too should exercise a check whether the rules are being followed. 

Legal experts say that two major developments have emerged from the court order: One, the RWA has the right to represent the apartment owners in every litigation pertaining to disputes between owners and developers. Two, without taking previous consent of the owner as stipulated in the UP Apartments Act, 2010, no amendments to the sanctioned map can be made by the developer. 

When buyers are aware of these provisions, they can use it effectively to check the developer who promises say an open space or an amenity such as a club house on the map, but then goes ahead and constructs another building and markets it as a different project. While the court order says that existing buyers should be compensated for the principal investment with an interest rate of 14 per cent per annum, experts feel that, given the passage of time, that sum may not be enough to buy a property with similar specifications in that area. 

“Buyers should ask for adequate compensation and it could be a similar flat in a comparative location or a compensation that takes into account the market price in that locality,” said Sunil Agarwal, adjunct professor at the RICS School of Built Environment and MD, Black Olive Ventures. 

The key question is the compensation itself, which is hovering around current interest rates. “The existing buyers of Supertech would be compensated only for principal investment with interest at the rate of 14 per cent per annum. This compensation does not take into consideration the return on investment that would have accrued to the flat owners,” said Aditya Tiwari, managing partner, Prudentius Legal Advocates. 

Market observers say that properties in that region have risen at least four-fold over the last six years (the time buyers bought into the project) and those seeking a refund should do so being fully aware that it would take a great deal more to acquire a new property in the region or in other sectors of Noida. 

“Exit generally is not easy, as the developer has already invested significantly on the construction of the project. And refund process itself might take some months, as it involves processing through various departments and the lending banks,” said Devina Ghildial, deputy MD, RICS South Asia, a certification body for the real estate sector. 

Buyers do have the option of appeal before the Supreme Court, and this development would be keenly watched as any ruling by the apex court would be a settled question of law. 

Need for a regulator 

This episode once again brings out the dire need for a regulator for the real estate sector. The developers’ association Credai-NCR states that there is overlapping of rules that is creating confusion among developers and has called upon the government to provide clarification on the overlapping rules in the Act to avoid such incidents in future. 

“With miscommunication, lack of approvals, delayed delivery of projects becoming a constant problem in this industry, there definitely needs to be some sort of discipline that needs to be instilled,” said Manpreet Grewal, regional director, Re/Max India, a brokerage firm. 

Ghildiyal added that a regulator is necessary to remove the discrepancies prevalent in the market. “The regulator, as envisaged, will sanction the construction of a project only when the developer has fulfilled all the requirements relating to the project specifications.” 

(Source: Financial Express – April 19, 2014)

(nritaxservice/news-articles/dated may 06, 2014)

In recent time, people are investing a lot in real estate. Also for their own occupation, people are buying immovable properties. However, many of them are not aware about the newly inserted provisions of Tax Deduction at Source (TDS) (or also called Withholding Tax) on the payments being made for purchase of property. Effective June 1, 2013, under the TDS Mechanism (Sec 194IA of the Income Tax Act, 1961)(‘Act’), Govt of India has put the responsibility on the shoulders of Buyers to deduct TDS on the payments being made to Seller/Builder for purchase of property.

In this regard, Salient Features are as under:

- Threshold Limit: TDS is applicable on immovable property purchase transaction(s) of Rs 50 Lac or more.

- TDS Rate: 1%of sum being paid.

- Person Responsible: Buyer is responsible to deduct the TDS and pay the same to Govt a/c.

- TDS Deposit Time (Within 7 Days): Buyer shall deposit the TDS (to the Govt A/c), within a period seven days from deduction, online through e-Tax Payment Mechanism (available at www.tin-nsdl.com  or www.incometaxindia.gov.in) through Form 26QB.

- TDS Certificate (Form 16B): Once the TDS is paid to Govt A/c, within 15 days from the due date of deposit of TDS, the buyer need to apply (online through www.tdscpc.gov.in) for TDS Certificate (i.e Form 16B), to be provided to seller. On the basis of 16B, the seller can seek credit in his/her ITR for the deducted TDS.

- Resident Seller: The above mentioned TDS provisions are applicable if property is being purchased from a person who is a Resident’ as per the provisions of Income Tax Act. In case the Seller is a Non-resident (e.g. NRI, PIO, Foreign Citizen etc) then there are different TDS Provisions (i.e. Section 195 of the Act), which is more technical and Buyer must to consult his Tax Advisor for the compliance of same. 

- Other Important Things: TDS is applicable for flat booked with a builder, on all the payments being made to the builder. Buyer is responsible to deduct TDS even on the borrowed money (i.e. loan taken from bank, where bank pays directly in the name of seller). Further, TDS is applicable on all kind of properties (except agricultural properties). Further, buyer must have the TDS payment proof at the time of property registration otherwise the Registrar may deny the registration of property pending TDS Deposit. PAN of buyer(s) and seller(s) are compulsory for deposition of TDS Amount.

Happy news for all tax payers, specifically those who are claiming a Tax Refund in their ITR!

Towards its steps to bring delight to taxpayers, the Income Tax department has put in action a new plan where it will be ensured that any tax refund (claimed in the ITR) is safely deposited in their personal bank account directly (through ECS process) as soon as it is processed and released.

Presently, as per the tax department policy, all the tax refunds for a value of more than Rs 50,000 are issued via cheques through the postal department. Now, the department is planning to fully adopt and use banking services to end this current system.

CBDT Chairperson Anita Kapur, during a recent interaction with the media, said that a plan is being worked out on priority and is aimed at bringing an end to taxpayers’ grievances regarding this particular service.

The Chairperson further said that CBDT is in touch with banks and RBI, after it found that the problem of wrong refunds or no refunds at all was continuing unabated. She said that RBI told them that in the e-environment, when a refund is sent directly to a taxpayer’s bank account, the existing protocols are such that banks do not match the name to the account number.

The Chairperson mentioned that under the present system the tax payers are facing lots of hardships. Hence, considering all the factors, their department has started working towards bringing ECS system for all refund claims.

The CBDT Chairperson also said that Prime Minister Narendra Modi had some time back held a review in this regard following which she had written to her field offices to ensure that the message of facilitating the convenience of taxpayers percolated through the ranks.



This article is useful and relevant for all ITR filers in India i.e NRIs, Expatriates and All Other ITR Filers. It also clarifies various general doubts & frequently asked questions of ITR Filers, in relation Income Tax Refund, such as:

- How shall I get my TDS, Income Tax Refund back?
- How shall I get my refund cheque if tomorrow my address gets changed? Cannot I get my refund through ECS?
- I want to have my refund through ECS to avoid the hassle of first receiving and then depositing the cheque?
- I feel very inconvenient in receiving the tax refund by cheque? I am more comfortable to receive it through ECS?
- I am an NRI. If I will receive the Tax Refund by cheque, it will be very costly and inconvenient for me to get the same credited into my account? I am more comfortable to receive it by ECS.
- Due to change in address, my refund cheque was returned back to IT Deptt as undelivered. Now, it is a big inconvenience, delay and cost for me to get the IT Refund back. If it can get directly credited to my bank account that would be very convenient to me?
- Due Date of ITR for FY 2014-15 (i.e. AY 2015-16)?
- Information Required in relation to getting income tax refund?
- Points for consideration in relation to Income Tax Refunds of NRIs/Expats ITR?


By NRI Tax Service: June 25, 2015

After sending notices to 1.21 million Permanent Account Number ( PAN) cardholders who had not filed their income tax ( I- T) returns, the I- T department has now identified another 2.17 million potential non- filers. It had already sent letters to 50,000 potential non- filers in the first batch. “The department has now conducted the second round of data- matching, which has identified an additional 2.17 million potential non- filers. Their information has been made available on the compliance module on the e- filing portal of the department,” the Central Board of Direct Taxes ( CBDT) said in a statement on Friday. CBDT had initiated a business intelligence project in February 2013 to identify PAN holders who had not filed I- T returns and about whom specific information was available in the Annual Information Return ( AIR), Central Information Branch data and TDS/ TCS returns. In the first round of data matching, 1.21 million non- filers were identified. Letters have been sent in these cases by the Compliance Management Cell and assessing officers seeking their response. In this phase, the government has received 536,220 returns, which include self- assessment tax of Rs. 1,018 crore and advance tax of Rs. 898 crore.

Source: Business Standard website

Finance Act 2017 – New Provision Section 139AA Inserted:  every person who is eligible to obtain Aadhaar number shall, on or after the 1st day of July 2017, quote Aadhaar number –

·         In the application form for allotment of permanent account number;

·         In the return of income;

Provided, where the person does not possess the Aadhaar Number the Enrolment ID of Aadhaar application form issued to him at the time of enrolment shall be quoted in the application for permanent account number or, as the case may be, in the return of income furnished by him.

 

Applicability of Section 139AA on Non-Residents (i.e. NRIs, PIOs, OCIs etc): Reference to clarification by Govt of India (Press Information Bureau: 05April2017), such mandatory quoting of Aadhaar or Enrolment ID shall apply only to a person who is eligible to obtain Aadhaar number. As per the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016, only a resident individual is entitled to obtain Aadhaar. Resident, as per the said Act, means an individual who has resided in India for a period or periods amounting in all to one hundred and eighty-two days or more in the twelve months immediately preceding the date of application for enrolment. Accordingly, the requirement to quote Aadhaar as per section 139AA of the Income-tax Act shall not apply to an individual who is not a resident as per the Aadhaar Act, 2016. Hence, provisions of section 139AA are not applicable on NRIs, PIOs, OCIs, Foreign Residents etc.

 

This Article clarifies certain FAQs of NRIs, PIOs eg:

What is the new law in relation to Aadhaar applicability in the Income Tax Act?

Whether Aadhaar number is mandatory in the Income Tax Return filing in India by NRIs?

Whether Non-residents (including NRIs, PIOs, OCIs) are required to obtain Aadhaar for filing ITR in India?

I am NRI. Do I need to obtain Aadhaar for maintaining my Income Tax Records in India?

 

NRI Tax Service: News: April 20, 2017

 

 

(nritaxservice/news-articles/dated May 10, 2015)

• The Finance Bill, 2015 as passed by the Lok Sabha has proposed mandatory filing of return by a person, being an ordinary resident in India, who at any time during the previous year:

• holds, as a beneficial owner or otherwise, any asset (including financial interest in any entity) located outside India or has signing authority in any account located outside India; or

• is a beneficiary of any asset (including any financial interest in any entity) located outside India.

• However, filing of return shall not be mandatory under this proviso for an individual, being a beneficiary of any asset (including any financial interest in any entity) located outside India, if income arising from such an asset is includible in the income of the person who is beneficial owner of such an asset.

March 31, 2014 is approaching. With this FY 2013-14 will end. Certain things require an action before the Financial Year (FY) ends. Below is some compliance as well planning areas, where needful may be required from taxpayer:

 - Deduction U/s 80C (Rs 1 Lac): Can be availed if investments in specified schemes have been made in the relevant FY.    For the same, payment must be made before this FY ending.

 - Deduction U/s 80D, 80E, 80G: Under Income Tax Act, variousdeductions are available on the payment basis. E.g. Medical Insurance Premium (Sec 80D), Education Loan Interest (Sec 80E), Donations (Sec 80G) etc.

 - Property Municipal Taxes: Deduction for Municipal Taxes can be claimed against Income From House Property only to the extent of the payment made in the related FY.

 - Filing of Pending ITR:If Income Tax Return (ITR) is not filed for previous FY(s). The same can be filed belatedly. However, the same must be filed before March 31, 2014. An ITR for FY 2011-12 can be filed belatedly upto March 31, 2014. And an ITR for FY 2012-13 can be filed by March 31, 2014 without the attraction of any penal provision.

 - Wealth Tax Planning: Wealth Tax is payable on the basis of value of assets as on March 31 of a FY. Hence, care is needed to apply proper tax planning to keep the Wealth Tax Liability to minimum e.g. keep cash balance below Rs 50,000 etc.

 - Payment of Taxes (Advance Tax): As per Tax provisions, advance tax liability must be paid in the year of income earned by the assesse. Hence, wrt FY 2013-14, advance tax liability must be paid before March 31, 2014. If the same is not paid so, an interest @1% shall be applicable wef April 1, 2014 till the date of liability so paid.

 - ITR V Submission with CPC:An ITR filed online needs a further action i.e. posting of ITR V (ie. Acknowledgement) with the IT Deptt. For the same, time period is 120 days from the date of online filing of ITR. However, recently, CBDT has given a waiver wrt earlier years related ITR V, where they have allowed to submit the pending ITR V to be filed by March 31, 2014.

 - Other Tax Plannings: Similarly, there can be various other kind of tax planning where doing or not doing the needful by March 31 would be of importance. E.g. payment of expenses,receipt of income etc.

 

- Short Term Gains arising on Mutual Funds/Shares attract Income Tax @ 15%.

- In case, in earlier years, one has suffered some losses from Mutual Funds/Equity Shares Sale, and has accrued some gains       on present holding of share/mutual funds, the earlier year loss can be set off by booking profit (i.e. by selling the investment)   before the year end.

- Example: One has sold his investments (shares/mutual funds) in FY 2012-13 (or earlier year) and suffered a loss of Rs 2 Lac.   And there are profits arising on current year investments. Let’s say these profits are for Rs 2 Lac. A tax saving of Rs 30,000  (plus surcharge & education cess) can be planned by booking profit on this investment (i.e. by selling the current year        investments) before March 31 of 2014.

- Once profit is booked, thereafter (may be same day), similar investment can be again made in the similar stocks through    fresh investment.

- Similarly, a tax planning can be done in reverse way as well. E.g. there have been some profits booked during the year. And  there is some loss arising on some present investments. The loss can be booked before the Financial Year end, and this loss  can be used to set off against the earlier gain. And thereafter (may be same day) fresh investment can be done in similar  stock. 


After getting severe criticism for seeking numerous additional details, the Income Tax department has now finally notified the new set of ITR forms.

The new form does not require details of foreign travels and about dormant bank accounts, however, requisite details of all active accounts need to be submitted. The taxpayers and other non-audit entities can now file their returns till August 31.

The most simplified form, ITR-2A, to be filled by those individuals and HUFs who do not have income from either business, profession or by way of capital gains and do not hold foreign assets, only asks for the passport number of the tax-filer, with the words “if available”.

The taxpayers now will have to only declare the total number of active bank accounts held by them, both current and savings, excluding dormant accounts. The form also has space to fill up the IFSC code of the bank and in an additional feature, tax filers have been given an option to indicate their bank accounts in which they would want their refund credited.

The I-T department, in the new ITRs, has also sought the Aadhaar number of filers and has also given options for providing two e-mail ids to it.

This article is useful and relevant for all ITR filers in India i.e NRIs, Expatriates and All Other ITR Filers. It also clarifies various general doubts & frequently asked questions of ITR Filers, such as:

-What are the new ITR Forms requiring for information submission in relation to ITR for FY 2014-15 (i.e. AY 2015-16)?

-Information Required in ITR Form?

-What kind of ITR forms are there for FY 2014-15 (i.e. AY 2015-16)?

-Need to know about ITR Forms for filing of an ITR in India by NRI/Expats/Others?

-Income Tax Return, Due Date, ITR Contents, Information Required in ITR Forms, Complication of ITR, Why ITR etc?


By NRI Tax Service: June 25, 2015

Presently, in the e-filing of ITR process, post submission of ITR on Income Tax Website, there is a need of sending ITR V (duly signed by the assesse) to the Central Processing Centre Bangaluru (CPC) within 120 days of online submission of ITR. However, now the IT Department has provided a new mechanism i.e. ‘Electronic Verification Code’ (‘EVC’), where there will be no need to send ITR V to CPC. Hereunder is, the process, how the same can be done.

A. Verification of person via EVC
EVC means a code will be generated for the purpose of electronic verification of the person furnishing the return of income. EVC will be a unique number linked to assessee’s PAN. It cannot be used for filing return of income of any other PAN. One EVC can be used to validate one return, irrespective, of assessment year or type of return. EVC generated via Adhaar Card will be valid only for 10 minutes and in any other case, it will be valid for 72 hours.

B. Who cannot file return via EVC?

•    Persons, whose accounts are required to be audited under Section 44AB;
•    Political parties filing their return of income in ITR-7; and
•    Companies.

C. Modes of generating EVC

There are four modes, which the tax payer can choose to generate an EVC, as specified hereunder:

1) Using Aadhaar Number : Taxpayers can link their Aadhaar Number with their PAN on e-filing website to generate the EVC. Aadhaar Number can only be linked if the PAN database (i.e., name, DOB and gender) are similar to data available with UIDAI for his Aadhaar number.
Once the Aadhaar Number is linked to PAN, ‘one time password’ (‘OTP’) will be generated by UIDAI and sent to the taxpayer’s mobile number registered with UIDAI. This Aadhaar based OTP will be the EVC and can be used to verify the income-tax return.

2) Using Net-Banking:
Banks, which are registered with Income-tax Dept., are providing direct access to the e-filing website to their account holders. By clicking on e-filing option account holder will be redirected to the e-filing website where he/she can generate an EVC using the “e-File” menu. EVC generated will be sent to the registered e-mail id and mobile number of taxpayer, which can be used to verify income-tax return.

3) Using ATM: All taxpayers can generate EVC through ATM only if ATM card of taxpayer is linked to PAN validated bank account and bank is also registered with the Income-tax department. Taxpayer can access ATM of registered bank using his Debit/Creditcard andthereafter he/she needs to selectoption of “Generate EVC for Income Tax Return Filing” on ATM screen. The bank will communicate this request to e-filing website which will generate EVC and send the EVC to assessee on his registered mobile number.

4) Using E-filing Website of Income-tax Dept.:
Assessee can also generate EVC by using e-filing website of Income-tax Dept.www.incometaxindiaefiling.gov.in. However, this facility is available only to those assesses, whose total income is Rs. 5 Lakhs or below and who are not claiming Income-tax refund. To use this facility, assessee can visit the e-filing website and select the option ‘Generate EVC’ from e-File menu. EVC generated will be sent to the registered email ID and mobile number.
 
This article is useful and relevant for all ITR filers in India i.e NRIs, Expatriates and All Other ITR Filers. It also clarifies various general doubts & frequently asked questions of ITR Filers, such as:

 - How can I complete my e-filing of ITR without a hassle of sending ITR V to CPC?
 - What are the new useful needful to know in relation to ITR Filing of FY 2014-15 (i.e. AY 15-16)?
 - If am residing abroad, how can I save my cost of sending ITR V to CPC wrr my Indian ITR?
 - So, finally an ITR can be filed without a need of sending ITR V to Income Tax Department?
 - So, now the ITR processing shall be faster if an Income Tax Return is filed using EVC.


By NRI Tax Service: July 18, 2015


- Shri Narendra Damodardas Modi led BJP Party has thundered to victory on May 16, 2014 in India Loksabha Election, trouncing the ruling Nehru-Gandhi dynasty in a seismic political shift that gives him and his party a mandate for sweeping economic reform.

- After 30 years, first time any single party has attained clear majority in LS Election i.e. 283 seats by BJP (out of 543 seats).

- Results show that country voted against the sitting govt (i.e. UPA). Congress party has done its worst performance ever, and could not score even to get the status of Leader of Opposite Party (i.e. 10% seats). Out of 48 Ministers, only 3 could save their seats.

- Born in a family of grocers, 63 year old, Shri Modi is all set to be 14th Prime Minister of India (after being 14th Chief Minister of Gujarat).

- A very hard-working man, Shri Modi is amongst the best leaders to take care of his health. Despite sleeping late in nights, he always gets up well before 5 am in the morning and does one hour yoga. He is a vegetarian, and have very simple food habits (Gujarati Khichdi, Poha, Dosa, Idli. He does fast all nine days during Navratras eating only one fruit every day.

- On a fantastic win in the LS Election, Shri Modi has got congratulations from all the big economies of the world. He has got invitation by US President Barrack Obama to visit White House. He got invitation by Pakistan PM.

- Certain challenges for Shri Modi led Govt would be (a) To kick start growth rate cycle (presently crippling below 5%) (b) To push industrial growth rate (c) To control inflation (d) Poverty eradication, employment generation, social security (e) Tackling weak monsoon (f) Containing Current Account Deficit (CAD) and Fiscal Account Deficit (g) Approach towards subsidies – mainly fuel and food (h) Handling sick PSUs (i) Opening FDI Policy and attracting foreign investor (j) Tax Reforms e.g. GST. 

NRI Tax Service hereby conveys its heartiest congratulations to Shri Modi and BJP Party for this marvelous win, and is quite confident that Shri Modi led Govt will take India to its ever best position and make every Indian happiest and proud of its country. 

Source: Various News Websites 

Every year the Ministry of Finance body CBDT announces the ITR forms for the relevant Assessment Year (presently AY 2015-16). For the same, on April 15, 2015, the CBDT has announced some lengthy & complicated ITR Forms (requiring lots of information including foreign travel details, all bank account details etc). Facing immediate criticism & condemnation from all the corners, the honorable finance minister (who was attending some meetings abroad) has spoken to take these Forms back and to come back with new simplified Forms.

Now, Vide Press Release Dated May 31, 2015, Ministry of Finance has announced that as the new ITR Forms are still under preparation, hence, Due Date of ITR Filing is proposed to be extended upto August 31, 2015. Further, for the simplification of ITR Forms, the MoF has also given certain clarifications about the new ITR Forms, which are as under:


ITR 1 and ITR 4S
For Individuals Individuals having exempt income without any ceiling (other than agricultural income exceeding Rs. 5,000) can now file Form ITR 1 (Sahaj). Similar simplification is also proposed for individuals/HUF in respect of Form ITR 4S (Sugam).

New ITR 2A Form Proposed
At present individuals/HUFs having income from more than one house property and capital gains are required to file Form ITR-2. It is, however, noticed that majority of individuals/HUFs who file Form ITR-2 do not have capital gains. With a view to provide for a simplified form for these individuals/HUFs, a new Form ITR 2A is proposed which can be filed by an individual or HUF who does not have capital gains, income from business/profession or foreign asset/foreign income.

No Foreign Travel & Expense Detail Required
In lieu of foreign travel details, it is now proposed that only Passport Number, if available, would be required to be given in Forms ITR-2 and ITR-2A. Details of foreign trips or expenditure thereon are not required to be furnished.

All Bank Accounts Details – Information Requirement Limited
As regards bank account details in all these forms, only the IFS code, account number of all the current/savings account which are held at any time during the previous year will be required to be filled-up. The balance in accounts will not be required to be furnished. Details of dormant accounts which are not operational during the last three years are not required to be furnished.

Migrated NRIs, Expatriates - Foreign Assets Details Not Required
An individual who is not an Indian citizen and is in India on a business, employment or student visa (expatriate), would not mandatorily be required to report the foreign assets acquired by him during the previous years in which he was non-resident if no income is derived from such assets during the relevant previous year.


ITR Form Information & Size Shortened
As a measure of simplification, it has been endeavoured to ensure that in Form ITR 2 and the new Form ITR 2A, the main form will not contain more than 3 pages, and other information will be captured in the Schedules which will be required to be filled only if applicable.

Due Date Extended – From July 31 to August 31 of 2015
As the software for these forms is under preparation, they are likely to be available for e-filing by 3rd week of June 2015. Accordingly, the time limit for filing these returns is also proposed to be extended up to 31st August, 2015. A separate notification will be issued in this regard.


This article is useful and relevant for all ITR filers in India i.e NRIs, Expatriates and All Other ITR Filers. It also clarifies various general doubts & frequently asked questions of ITR Filers, such as:

 - Due Date of ITR for FY 2014-15 (i.e. AY 2015-16)?
 - Information Required in ITR Form?
 - What kind of ITR forms shall be there for FY 2014-15 (i.e. AY 2015-16)?
 - Need to know about ITR Forms for filing of an ITR in India by NRI/Expats/Others?
 - Income Tax Return, Due Date, ITR Contents, Information Required in ITR Forms, Complication of ITR, Why ITR etc?
 - Which ITR Form is applicable to my case?
 - Points for consideration in relation to NRIs/Expats ITR?
 - Filing of ITR in India - things/tips/points, which NRI/Expat should keep in mind?
 - Which ITR Form is applicable to my case??
 - I am an NRI/Expatriate. Should I file an ITR in India? Should I file the ITR before Due Date?


By NRI Tax Service: June 3, 2015

(nritaxservice/news-articles/dated April 12, 2017)

In India, Income Tax Return (ITR) filing for FY 2016-17 (i.e. Assessment Year 2017-18) is due (by July 31, 2017 for non-audit assessees). Hence, there are various aspects, which NRIs, Expats should be aware of. Here are certain points, which NRIs/PIOs (including Returned NRIs as well Migrated Abroad NRIs) and Expats must consider at the time preparation of their Income Tax Return:

Residential Status

Residential Status is key factor in determination of taxability of income in India. A person, who is an Ordinary Resident (OR), has to offer global income in the Indian ITR. However, in case of Not Ordinary Resident (NOR) and Non-Resident (NR), foreign income is not taxable in India and only Indian Income shall be offered for tax in India ITR. Also, NR and NOR need not to show their foreign Income in India ITR.

Receipt of Foreign Income in India

If NR or NOR receive their foreign source income directly in Indian Bank Account; the same shall be liable to tax in India.

Double Taxation of Income – Income arising in one country and person is resident of other country

This is a general situation, which arises for Foreign Residing NRIs and Expatriates Residing in India. E.g. if an NRI is residing abroad since long, and have some income in India (interest income, capital gain on mutual funds/shares sale, rental income etc). Similarly, an Expat residing in India since long and earning certain income (interest, dividend, rental etc) abroad. In these situations, NRI/Expat can seek the benefit of Double Tax Avoidance Agreement (DTAA) between respective two countries. As per DTAA, there can be special lesser rate of taxability in one country (i.e. Source Country) or taxes paid in one country (Source Country) can be claimed as Foreign Tax Credit in the other country (Resident Country). Here, utmost care need to be taken while making the calculations as well submitting the information in the ITR Form. In this case, information and document wrt foreign tax credit should be arranged as the ITR form specifically require various details wrt foreign tax payment (i.e. Tax Id No, Tax Payment Details, Country Code, Income On which Tax Paidetc).

Double Taxation of Income – A Person Being the Resident of Two Countries

In certain cases, a person may be resident in two countries e.g. if in the relevant fiscal year - An Indian citizen has migrated abroad for employment/business purposes (becoming NRI), An NRI has returned back to India (Returning NRI), A foreign citizen has come to India for business or employment (Expatriate). In this kind of situation, again, if there is a DTAA between two countries then as per Tie Breaker clause of the DTAA (generally article 4 of DTAA e.g. in Indo-US DTAA), it can be determined that in which country the person will be considered as Resident. And thereafter, accordingly tax treatment shall be given as mentioned in earlier para.

Permanent Account Number (PAN)

Though PAN is mandatory for various other purposes also, however, PAN is pre-requisite for the purposes of filing of ITR. Without PAN an ITR cannot be filed.

Foreign Assets and Bank Accounts

Ordinary Residents need to provide information about foreign bank accounts and assets in their ITR. Even if the OR is just signatory in the bank account outside India, the information needs to be submitted in ITR Form. In ITR Form, the information has been sought in detail. Hence, full information and document wrt foreign asset should be timely arranged by OR. This may be applicable to all NRIs who have returned back to India in recent years as well Expatriates working in India since last 2-3 years.

Details of Exempted Income and Reporting of Same in ITR Form

In the general kind of incomes, which NRIs earn in India, lots of incomes are exempt under the Income Tax Act Provisions e.g. Interest Income From NRE A/c, Interest Income From FCNR (B) A/c, Dividend Income From Mutual Funds/Shares, Long Term Capital Gain Income From Shares/Mutual Funds etc. Though these incomes are not subject matter of taxation, however, their reporting in the ITR Form is mandatory and important. Non-reporting of same may lead to some notice from IT Deptt later on.

Details of Deduction and Reporting of same in ITR Form

There are various deductions, which can be claimed from the Gross Total Income. Some of these deductions are, deduction u/s 80C (Insurance policy, ELSS, NSC etc), deduction u/s 80CCD (Pension Scheme), deduction u/s 80D (health insurance related), Donation u/s 80G, Saving Bank Interest Income u/s 80TTA etc. NRI, Expats should cautiously keep a documentation ready in relation to these deduction to make a correct claim in the ITR.

Payment of Taxes

Taxes due on the taxable income submitted in the ITR Form can be paid by means of TDS (i.e. Tax Deducted at Source by the Payer of income e.g. Banks in case of Interest Income etc), Advance Tax (i.e. Taxes paid by the person on various advance tax due dates). In addition to these, if there is any further balance tax payable, the same can be paid as Self-Assessment Tax before submitting the ITR, and the details of same shall be duly filled in the ITR Form.

Why To File ITR If Income is Less Than Taxable Limit

Filing of ITR is mandatory if total taxable income exceed the basic exemption slab (i.e. Rs 2.50 Lacs in case of individuals). However, if the total taxable income is within the exemption slab then ITR filing is not mandatory (section 139 of the Income Tax Act). Here is the need of understanding the importance of ITR Filing. Some of the important point for filing of ITR are: (a) Claiming refund of TDS (b) Keep a track record of ITR (c) To use it as a legal authentic govt document for the purposes of usage at various places e.g. VISA purposes (d) To report financial transactions undertaken during relevant FY (e) To report exempt income (f) To carry forward the losses (g) To avoid income tax notice for non-filing of ITR (h) To keep a transparency with the Income Tax Department about assets/residential status/income. 

Correct Bank Account Details (Should Be NRO Bank A/c for NRIs)

In general,most of the incomes of NRIs are either exempt from tax or attract highest rate of TDS. Hence, most of NRIs ITR reflects a tax refund claim. Here, the important point is that to claim that refund back, there is a requirement of filling of Bank Account details in the ITR Form. Caution need to be taken care that Bank details are correctly filled up, and it should never be NRE A/c but should be NRO A/c in case of NRIs.

Income Tax Return Form

ITR forms have been specified according to the scope of income. Hence, scope of income as well ITR form need to be chosen correctly.

Compulsory E-filing of ITR

ITR can be filed electronically (online) only. In this case, ITR shall be prepared in the ITR Preparing Software and then .xml file (generated from software) shall be uploaded in the Income Tax Website (www.incometaxindiaefiling.gov.in).

Submission of ITR Filing Acknowledgement (ITR V) with Income Tax Deptt

On filing of online ITR, the acknowledgement (ITR V) is generated online. This acknowledgement (ITR V) needs to be submitted to Central Processing Center (CPC) Bangalore. Very important thing to be noted in this regard is that time period for submission of this ITR V is 120 days from the date of online filing of ITR, else the ITR submitted shall be considered null and void. Alternatively, e-verification can also be done.

Record of All Documents Wrt Income and Deduction shown in ITR

Once the ITR is submitted, it is very important to keep a record of all the documents, as the same would be of crucial importance in any future income tax proceedings as well for other purposes.

 

Above article will clarify various doubts of NRIs, Expatriates and Other ITR Filers in relation to Income Tax Return Filing In India such as:

 - What are the steps that NRIs/Expatriates/Others should know/take in relation to filing of ITR in India?

 - What are the important points and tips for NRIs/Expats ITR in India?

 - Important Things to be considered in relation to filing of ITR in India by NRI/Expats?

 - Steps for preparation of NRI/Expats ITR in India?

 - Points for consideration in relation to NRIs/Expats ITR?

 - Filing of ITR in India - What are the things/tips/points, which NRI/Expat should keep in mind?

 - Whether to File an Income Tax Return in India or not?

 - Whehter filinig of ITR in India is beneficial/compulsory?

 - I am an NRI/Expatriate. What all I need to Know about an ITR Filing in India? 

 

 

 

In India, for FY 2014-15 (i.e. Assessment Year 2015-16), filing of Income Tax Return (ITR) is due. In general, the Due Date of filing is July 31, 2015 for non-audit-business assesses, and Sept 30, 2015 for audited-business-assessees. Therefore, in most of the cases, generally, July 31 (i.e. presently July 31, 2015) is relevant due date (generally for mostly Individuals). Hence, it is high time and important for all individuals to get ready with all information & documents for the preparation of an Income Tax Return. Some people (for various reasons) donot pay much attention for filing of ITR before the due date. Here, it is important to understand that why the ITR must be filed before the due date.

Here are certain useful & relevant points, which show the importance of filing of ITR by the due date and must be considered for the purposes of filing of ITR before the Due Date:

  • Levy of Interest Penalty: The very first impact of not filing of ITR by due date is that a Penal Interest @ 1% gets attracted (u/s 234A of the Income Tax Act, 1961 "Act")). This penal interest is charged on Tax Liability Payable, and is charged in addition to normal interest of section 234B of the Act. Hence, non-filing of an ITR, by Due Date, will lead to double interest i.e. one, a normal interest u/s 234B and two, a penalty interest for non-filing of ITR by Due Date. Any person, once misses the due date, awakes very late (i.e. after receiving an IT Deptt Letter or Arising of a need for Loan/Visa/Otherwise) and till that date a big amount of interest gets accrued, which become a burden for assessee at that stage.


  • Levy of Penalty for Rs 5,000: U/s 271F of the Act, if ITR is not filed till the end of relevant assessment year then a penalty of Rs 5,000 may be levied by the concerned assessing officer on the assessee.


  • ITR Cannot Be Revised: Post-filing of ITR, if one realizes some mistake in the filed ITR then there is an option to correct the mistake by filing a Revised Return. However, if someone does not file the ITR by due date and files the ITR late (i.e. after due date of ITR) then he/she loses the option to revise the ITR. Hence, in nutshell, if someone finds occur a mistake in ITR and file the ITR late then that mistake cannot be corrected, and the same may lead to lots of inconvenience & hassles to the assessee. Here it is very important to understand that this Revision of ITR window is very crucial & important. There are numerous reasons (and some are beyond control of assesse) when Revision of ITR is very much needed. However, due to non-filing of ITR by Due Date, the option is not available. Hence, all assesses (NRIs, Expatriates, Indian Citizens, Indian Residents, Business Assessee, Non-Business Assessee, Taxable ITR, Non-Taxable ITR) need to keep this importance in their mind and file the ITR by the Due Date.


  • Late ITR Late Refund: If ITR is filed with delay then the ITR will get processed also with delay and the same will lead to late processing of ITR in Refund cases. Hence, assesse will face delay in getting the refund back from the IT Deptt. Here, it is important to understand that most of the assesses (who file their ITR by due date) are used to file their ITR in last 10 days before Due Date. However, if the ITR is filed much before the due date (i.e. 1-2 months before) then the processing of those ITRs will be done first and refund processing shall also happen accordingly on FIFO basis. Hence, in addition to filing ITR by Due Date, filing well before Due Date is important for hereby mentioned reason.


  • Chances of Income Tax Notice as well Scrutiny Notice: In today scenario, through various sources IT Deptt is aware of assessees major financial transactions, property transactions, bank deposits, credit card transactions etc. Also, if any income is earned by assessee, the IT deptt is aware of those transactions through TDS records (i.e 26AS). In these kind of situations, if assesse does not file the ITR by due date and thereafter, the same may lead to some Income Tax Notice from the IT Department (through IT Deptt Compliance Cell or otherwise) and in some cases to Income Tax Scrutiny Notice as well.


  • Reminders From Income Tax Department: Now, the IT Deptt have full records of assesses. If an ITR is not filed by due date, IT Deptt starts sending communications via emails, sms etc. These communications trouble the assesse. Also, in IT Deptt records, assesse information gets place in defaulter/non-compliant assesse. Hence, for these reasons also, it is very important to comply the Tax Rules (specifically for filing ITR before Due Date).


  • Carry Forward of Losses Not Allowed: If assesse has incurred some losses during the year (business loss, loss on sale of shares/mutual funds etc) then as per the provisions of the Act same can be carried forward to next years to set off against future year profits. However, if the assesse files the ITR late (ie after due date) then assesse loses the right of carry forward of losses. Hence, in nutshell, for losses ITR, one should be very cautious to file ITR wrt filing of same by due date. Here, it is important to understand that in loss cases, assesse thinks that there is no tax payable, hence, ITR lapses for filing by Due Date, which become a bottleneck in carry forward of losses and the losses lapses.


  • Importance of Tax Return: ITR is a very important legal document and is very helpful before various authorities and at various places e.g. for VISA purposes, Loan purposes etc. Even in various proceedings in the Income Tax Department, filing of ITR (by Due Date) provides lots of strengths to assesses representations.


  • Prosecution: As per the new provisions of Income Tax Law, intentionally non-filing of ITR (by due date) can lead to initiating of prosecution provisions by the the Tax Authorities.


  • Foreign Assets: As per the latest Budget (passed by Loksabha & RajyaSabha) i.e. Finance Act 2015, it is proposed that all Resident Assessees, who have foreign assets or financial interest, are compulsorily required to file their ITR whether they have taxable income or not. Here, even in honest assesse cases, through filing of ITR the due needful can be taken care by them, which will avoid unnecessary hassles to them by the Investigation Deptt of Income Tax Office.


  • Black Money Act: Now, with the passage of Black Money Bill (in relation to foreign undisclosed assets and income) it is very pertinent for Resident Assessees, who have foreign sources of assets and/or income, to file an ITR and take needful timely decisions in relation to disclosure so that harshest penal provisions of this new Act can be minimized or avoided or taken care of.


Here, it is important to understand that though as per the provisions of the Act, one has time of two years to file belated returns. For instance, for FY 2014-15, belated returns can be filed till March 31, 2017. However, this should not be considered a tool to sit back and relax as the same may lead to various penal provisions & inconveniences. In the current era, where various new information technologies have been launched by the Tax Department, delay in ITR filing will automatically lead to triggering of various trouble-raising mechanism by the Department. Also, in the light of insertion of new laws (e.g. Black Money Act), ITR filing (By Due Date) is very very important.

Also, it is found that once the ITR is not filed by Due Date, assesse even lapses the maximum time available for filing an ITR, and in that case non-filing of ITR leads to non-repairable losses to assesses.

It is also very important to understand that ITR should not only be filed by Due Date but should be filed well before Due Date so that last hours inconveniences can be avoided and benefits of early filing are gained.


This article is useful and relevant for all ITR filers in India i.e NRIs, Expatriates and Other ITR Filers. It also clarifies various general doubts & frequently asked questions of ITR Filers, such as:

 - Why an ITR should be filed in India by NRIs/Expatriates/Others?
 - Why an ITR must be filed before Due date?
 - Relevance, importance of filing of ITR in India by NRIs/Expats?
 - Important reasons for filing of an ITR in India by Due Date by NRI/Expats/Others?
 - What if the ITR in India is not filed by Due Date?
 - Points for consideration in relation to NRIs/Expats ITR?
 - Filing of ITR in India - What are the things/tips/points, which NRI/Expat should keep in mind?
 - What are the consequences for not filing of an ITR in India by Due Date?
 - Whehter filinig of ITR in India is beneficial/compulsory?
 - I am an NRI/Expatriate. Should I file an ITR in India? Should I file the ITR before Due Date?


By NRI Tax Service: May 29, 2015