NRI FROM FILING
Income Tax Act provides for filing of returns by assessees if the gross income is in excess of exemption limit and for company and firm it is mandatory to file return even if no income is there .However , tax laws in India also allows exemption from filing of tax returns to non-residents and foreign company and also Non Resident Indians.
The relief from filing of tax returns are allowed on earning specific types of income and under specific circumstances. So , here are the list of such income and conditions under which a non-resident or NRI or a Foreign company need not file income tax return at all.
Section 115A of Income Tax Act is a specific section in this regard it relates to income of non-residents & foreign company in form of dividend, royalties, technical fees etc. Sub-section 5 of section 115A provides that a non-resident ( including NRI) or a foreign company ,
if receives following income , and tax deductible on such income is deducted , in such case they would be exempt from filing of tax return as provided u/s 139(1) .
- Dividends other than dividends on which distribution tax is leviable under section 115-O; or
- Interest received from Government or an Indian concern on monies borrowed or debt incurred by Government or the Indian concern in foreign currency not being interest of the nature referred to in sub-clause (iia) or sub-clause (iiaa)
- Interest received from an infrastructure debt fund referred to in clause (47) of section 10; or
- Interest from Indian company of the nature and extent referred to in section 194LC; or
- Interest to Foreign Institutional Investor or a Qualified Foreign Investor of the nature and extent referred to in section 194LD; or
- Distributed income being interest referred to in sub-section (2) of section 194LBA;
- Income received in respect of units, purchased in foreign currency, of a Mutual Fund specified under clause (23D) of section 10 or of the Unit Trust of India
(5) It Shall Not Be Necessary For An Assessee Referred To In Sub-Section (1) To Furnish Under Sub-Section (1) Of Section 139 A Return Of His Or Its Income If—(A) His Or Its Total Income In Respect Of Which He Or It Is Assessable Under This Act During The Previous Year Consisted Only Of Income Referred To In Clause (A) Of Sub-Section(1);
And(B) The Tax Deductible At Source Under The Provisions Of Chapter XVII-B Has Been Deduct From Such Income.
Exemption from Filing of Returns to Non Resident Indians
Chapter XII-A is specific to assessment of income of Non resident Indians or Person of Indian Origins (PIO) . If an NRI or PIO claims that he /she be assess under this chapter , not only computation of income shall be as per section 115D , but also the NRI or PIO gets relief in form of exemption from filing of tax returns as per section 115G of the Income Tax Act.
Return Of Income Not To Be File In Certain Cases.
115G. It Shall Not Be Necessary For A Non-Resident Indian To Furnish Under Sub-Section
(1) Of Section 139 A Return Of His Income If—
(A) His Total Income In Respect Of Which He Is Assessable Under This Act During The Previous Year Consisted Only Of Investment Income Or Income By Way Of Long-Term Capital Gains Or Both; And
(B) The Tax Deductible At Source Under The Provisions Of Chapter XVII-B Has Been Deduct From Such Income.
It must be note that exemption from filing of tax return to a Non Resident Indian or PIO is applicable only when he /she has no income taxable under Income Tax Act other than
• Investment Income or /and
• Long term capital gains
Meaning Investment Income or LTCG ?
Section 115C of the Income Tax Act defines the meaning of various terms like. Investment income, foreign exchange asset or long term capital gains. As per the definition , following things should be note.
1. Investment income means any kinds income from a foreign exchange asset. Other than dividend on which a company is liable to pay dividend distribution tax .
2. Foreign exchanges asset means following assets when bought by using foreign exchange
• (i) shares in an Indian company.
• (ii) debentures issued by an Indian company which is not a private company as defined in the Companies Act, 1956 (1 of 1956).
• (iii) deposits with an Indian company which is not a private com-pany as defined in the Companies Act, 1956 (1 of 1956).
• (iv) any security of the Central Government as defined in clause (2) of section 2 of the Public Debt Act, 1944 (18 of 1944).
• (v) such other assets as the Central Government may specify in this behalf by notification in the Official Gazette.
3. Long term capital gains means gains on sale of aforesaid foreign exchange assets listed above after 12 months or 36 months as the case maybe.