Top Mistakes to Avoid as a Non-Resident Indian (NRI) During Tax Return Filing

As a Non-Resident Indian (NRI), filing income tax returns in India can be a complex and daunting task. It is important to avoid common mistakes that can lead to unnecessary penalties and legal issues. Here are some of the top mistakes that Non-Resident Indian (NRI) should avoid while filing their income tax returns.

  1. Not determining residential status correctly: One of the most common mistakes Non-Resident Indian (NRI) make while filing their income tax returns is not determining their residential status correctly. Your residential status determines your tax liability in India. NRIs who have stayed in India for less than 182 days in a financial year are considered as non-residents for tax purposes. On the other hand, NRIs who have stayed in India for more than 182 days in a financial year are considered as residents for tax purposes. Non-Resident Indian (NRI) need to determine their residential status correctly to avoid paying unnecessary taxes or underpaying taxes, which can lead to legal issues.
  2. Not filing tax returns on time: NRIs are required to file their tax returns on time to avoid penalties and legal issues. The due date for filing tax returns for NRIs is July 31st of the assessment year. Failing to file tax returns on time can lead to a penalty of Rs. 1,000, which can increase to Rs. 5,000 if the total income is above INR 5 Lakhs.
  3. Not availing tax benefits: NRIs are eligible for certain tax benefits, such as exemptions under Section 80C, 80D, and 80G of the Income Tax Act. Not availing these tax benefits can lead to higher tax liability, which can be avoided by proper tax planning.
  4. Not considering Double Taxation Avoidance Agreements (DTAA): NRIs who earn income in India and their home country are subject to double taxation. To avoid double taxation, India has signed DTAA with several countries. NRIs need to consider the DTAA provisions while filing their tax returns to avoid double taxation and claim tax credit for taxes paid in their home country.
  5. Not maintaining proper documentation: NRIs need to maintain proper documentation, such as bank statements, investment documents, and Form 16A, to support their tax returns. Failure to maintain proper documentation can lead to legal issues and penalties.
  6. Not filing revised tax returns: NRIs who have made errors or omissions in their tax returns are required to file revised tax returns to correct them. Failure to file revised tax returns can lead to the addition of income, penalties and legal issues.
  7. Not declaring income from all sources: NRIs are required to declare income from all sources in India, such as rental income, capital gains, and income from investments, in their tax returns. Failure to declare income from all sources can lead to penalties and legal issues.
  8. Not seeking professional help: Filing a tax return as an NRI can be a complicated process, and it’s important to seek professional such as a CA firm in gurgaon and faridabad help if you’re not sure how to proceed. A tax professional can help you navigate the various rules and regulations, avoid common mistakes, and ensure that your tax return is accurate and complete.

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