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 Frequently Asked Question |
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8. Is it necessary for NRIs to file Return of income in India?
Ans. For any individual, Resident or an NRI, there is no legal obligation to file the income-tax returns in India unless the taxable income exceeds the minimum tax threshold of Rs.50, 000. The only exception is 1-by-6 schemes, which requires an individual to file returns if he fulfills any 1 of the 6 specified conditions. This 1-by-6 scheme is not applicable to NRIs. Therefore, most of the NRIs are not required to file the returns.
Though it is not necessary to file the returns of income in India, if your taxable income, after claiming the exemptions u/s 10 and deductions u/s 80L, 80G, 80D, etc., is less than the threshold of Rs.50,000/-, It is necessary to file the returns even if your tax liability becomes NIL after taking advantage of the tax rebates.
The Union Budget 2004-2005 has inserted a new section 88D, which provides for exemption of income upto Rs 1,00,000 after claiming the exemptions u/s 10 and deductions under chapter VIA. However the benefit of this section is not available to NRI.
9. What is due date of filing return in India for NRI ?
Ans. NRI is required to file the return of income in India by 31st July.
Return for the Financial Year ended on 31st March 2004 has to be filed by 31st July, 2004.
(For the financial year ended 31st March, 2004, the due date of filing the return of income has been extended upto 31st October, 2004).
10. What is Double Taxation Avoidance Agreement?
Ans. A person earning any income has to pay tax in the country in which the income is earned (as Source Country) as well as in the country in which the person is resident. As such, the said income is liable to tax in both the countries. To avoid this hardship of double taxation, Government of India has entered into Double Taxation Avoidance Agreements (DTAA's) with various countries
DTAA's provide for the following reduced rates of tax on dividend, interest, royalties, technical service fees, etc., received by residents of one country from those in the other.
Where total exemption is not granted in the DTAA's and the income is taxed in both countries, the country in which the person is resident and is paying taxed, the credit for the tax paid by that person in the other country is allowed.
Where tax relief has been given by one country, the country of residence generally allows credit for the tax so 'spared', to avoid nullifying the relief.
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