Why NRIs shall consider filing Belated Returns?
The due date for filing the Income Tax Return for Assessment Year 2018-19 was 31st August 2018 for person other than Company, person other than those liable to gets the books of accounts audited and working partners of partnership firm liable for audit. Refer: https://thetaxtalk.com/2018/08/28/due-dates-for-filling-income-tax-returns/. If the returns are not filed in time it can still be filed till 31st March 2019 for Assessment year 2018-19. The only point is the person filing belated return needs to pay the fees of Section 234F of the Income Tax Act, 1961.
The above due dates are also applicable for Non-Resident Indians (NRIs). The question that would be answered here is whether NRIs who have not filed their returns yet shall consider filing it as belated returns.
For NRIs filing tax returns comes with a number of advantages.
The first reason is the high TDS rates for NRIs. For example u/s 194IA if property is purchased from NRI TDS is to be deducted at 20% + surcharge + cess while for resident Indians the TDS is 1% of the sale value of the property. Accordingly a high amount of refund gets accumulated that can be claimed only by way of filing the Income Tax Return. Refer: https://thetaxtalk.com/2018/09/10/property-purchased-from-nri-tax-implication-on-buyer/.
TDS of NRI is deducted for most of the cases at the flat rates. Accordingly, TDS is also deducted of NRIs who have income less than the maximum amount chargeable to tax. Therefore, in many cases NRI has to claim the refund of the TDS. The refund can only be claimed by Filing the income Tax Return. Refer: https://thetaxtalk.com/2018/09/08/tds-rate-chart-for-non-resident-indians/
NRIs are also eligible for claiming the benefits of Double Taxation Avoidance Agreements (DTAA). Even they can avail the tax benefit in their country of residence for the tax already paid in India. Therefore, to avail the additional benefits given to them they need to file Income tax Return.
As per the principals of Indian Income Tax law if a person owns more than one house property he needs to offer deemed rental income of one of the property. This also applies to NRIs, if NRIs own more than one property in India he needs to offer rental income on the second property. NRIs are taking it all leniently and not filing the returns in time. Accordingly, a large number of electronic notices are given to NRIs for assessment.
Another advantage of filing IT returns is that NRIs like Resident Indians can carry forward any loss on their investments in India. They can claim benefit under Section 54, 54 EC, 54 F for capital gains.
For repatriation of funds in an NRO account, NRIs will need to obtain a form 15CA/15CB. To get this form NRI needs to pay the taxes at the applicable rate. Refer: https://thetaxtalk.com/2018/09/11/non-resident-ordinary-rupee-account-nro-or-non-resident-external-rupee-account-nre/.
So, keeping in mind all the advantages it seems that belated filing of Income Tax Return at the cost of Fees u/s 234F would be justified.
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