July 31st is the last date for filing your Indian incometax returns for the financial year 2010-2011. If you are a Non Resident Indian (NRI) and are looking at the best way to file your tax returns, here is a quick guide on various options, including e-filing. This guide will also help you understand if you need to file a return in the first place.
Who should file returns?
If you are an NRI, you would have to file yourincome tax returns for 2010-2011 if you fulfill either of these conditions:
> Your taxable income in India during the year 2010-2011 was above the basic exemption limit of Rs 1.6 lakh OR
> You have earned short-term or long-term capital gains from sale of any investments or assets, even if the gains are less than the basic exemption limit.
Note: The enhanced exemption limit for senior citizens and women is applicable only to residents and not to non-residents.
Are there any exceptions?
Yes, there are two exceptions:
> If your taxable income consisted only of investment income (interest) and/or capital gains income and if tax has been deducted at source from such income, you do not have to file your tax returns.
> If you earned long term capital gains from the sale of equity shares or equity mutual funds, you do not have to pay any tax and therefore you do not have to include that in your tax return
Tip: You may also file a tax return if you have to claim a refund. This may happen where the tax deducted at source is more than the actual tax liability. Suppose your taxable income for the year was below Rs 1.6 lakh but the bank deducted tax at source on your interest amount, you can claim a refund by filing your tax return.
Another instance is when you have a capital loss that can be set-off against capital gains. Tax may have been deducted at source on the capital gains, but you can set-off (or carry forward) capital loss against the gain and lower your actual tax liability. In such cases, you would need to file a tax return.
By when to file returns?
The last date to file returns for the financial year 2010-2011 is July 31st 2011. However, remember the following:
> If you do not have any tax payable (that is all your tax has been deducted at source), you can still file your tax return by 31st March 2012 without any penalties
> If you do have tax payable, you can still file your returns by 31st March 2012 but you will be charged an interest of 1% per month for every month of delay starting from 31st July 2011 till the time you file your tax returns
> If you do not file your tax returns even by the 31st of March 2010, you may be charged a penalty of Rs 5,000 for every year of delay.
What's the best way to file returns?
Traditionally, you could file your return either by giving a power of attorney to someone in India or by sending your form and documents to a tax expert in India who would then file returns on your behalf.
But nowadays, the easiest option for NRIs to file their Indian tax returns is by using the online platform. There are several options to file online.
Option 1: Income tax website
The income tax website allows you to efile your return. But the process maybe a bit cumbersome. You would need to download a software, fill in your details and upload an XML file. You would then need to print and send a copy of the acknowledgement (known as ITR-V) to the tax office in Bangalore within 30 days. You can do this for free.
If you are an NRI, you would have to file yourincome tax returns for 2010-2011 if you fulfill either of these conditions:
> Your taxable income in India during the year 2010-2011 was above the basic exemption limit of Rs 1.6 lakh OR
> You have earned short-term or long-term capital gains from sale of any investments or assets, even if the gains are less than the basic exemption limit.
Note: The enhanced exemption limit for senior citizens and women is applicable only to residents and not to non-residents.
Are there any exceptions?
Yes, there are two exceptions:
> If your taxable income consisted only of investment income (interest) and/or capital gains income and if tax has been deducted at source from such income, you do not have to file your tax returns.
> If you earned long term capital gains from the sale of equity shares or equity mutual funds, you do not have to pay any tax and therefore you do not have to include that in your tax return
Tip: You may also file a tax return if you have to claim a refund. This may happen where the tax deducted at source is more than the actual tax liability. Suppose your taxable income for the year was below Rs 1.6 lakh but the bank deducted tax at source on your interest amount, you can claim a refund by filing your tax return.
Another instance is when you have a capital loss that can be set-off against capital gains. Tax may have been deducted at source on the capital gains, but you can set-off (or carry forward) capital loss against the gain and lower your actual tax liability. In such cases, you would need to file a tax return.
By when to file returns?
The last date to file returns for the financial year 2010-2011 is July 31st 2011. However, remember the following:
> If you do not have any tax payable (that is all your tax has been deducted at source), you can still file your tax return by 31st March 2012 without any penalties
> If you do have tax payable, you can still file your returns by 31st March 2012 but you will be charged an interest of 1% per month for every month of delay starting from 31st July 2011 till the time you file your tax returns
> If you do not file your tax returns even by the 31st of March 2010, you may be charged a penalty of Rs 5,000 for every year of delay.
What's the best way to file returns?
Traditionally, you could file your return either by giving a power of attorney to someone in India or by sending your form and documents to a tax expert in India who would then file returns on your behalf.
But nowadays, the easiest option for NRIs to file their Indian tax returns is by using the online platform. There are several options to file online.
Option 1: Income tax website
The income tax website allows you to efile your return. But the process maybe a bit cumbersome. You would need to download a software, fill in your details and upload an XML file. You would then need to print and send a copy of the acknowledgement (known as ITR-V) to the tax office in Bangalore within 30 days. You can do this for free.
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