Introduction: In this blog post, I aim to highlight key tasks and changes that Non-Resident Indians (NRIs) should promptly address to maintain a clean record with the Indian Income Tax Department. Despite not being liable for tax returns in India, many NRIs have received Income Tax notices due to outdated contact information and incomplete financial transaction details, potentially leading to substantial outstanding demands.
Important Tasks/Steps:
1) Update Online Income Tax Profile: Begin by updating your online income tax profile on the Indian income tax department website, accessible at: https://eportal.incometax.gov.in/iec/foservices/#/login
If you haven’t created your online income tax account, register using the “Register” option. Upon account creation, log in using your PAN-based user ID. Locate your name at the top right corner, click on it, and access the “My Profile” tab to review and update your current address, email ID, phone number, and residential status. Ensure non-resident status is selected, and provide your passport number and citizenship status.
Designate your updated email as primary, even if a Chartered Accountant (CA) manages your tax-related work.
NRIs now receive OTPs and EVCs on foreign contact numbers, so include your foreign account number in the contact section to avoid missing crucial notifications.
In case of login issues, explore the password reset option, including options like Aadhar OTP, OTPs on previously provided contact details, or digital signatures. If all else fails, consider the net banking option through any Indian bank to access your income tax account and change your login password.
2) Check for Pending Compliance or Outstanding Demands: The second crucial task involves checking for unnoticed pending compliance or outstanding demands issued by the income tax department. Ignorance is not an excuse, and prompt responses to communications or notices are essential.
Many NRIs mistakenly believe they are exempt from filing tax returns, especially if TDS has been deducted. Please note, TDS deduction and filing of tax returns are different processes.
You shall Log in to your online income tax account and navigate to Pending Actions, checking tabs like Worklist, Response to Outstanding Demand, e-Proceedings, and Compliance Portal for any pending compliance matters. Seek professional assistance for filing responses online, ensuring proper documentation to substantiate claims.
3) Verify Aadhar Linkage with PAN: The third crucial step involves verifying if your Aadhar is linked with your PAN by accessing the “My Profile” section. While obtaining a PAN is not mandatory for NRIs, linking Aadhar is essential. If you have Aadhar and it is not yet linked, do so immediately.
If you don’t have Aadhar, check your PAN status using your 26AS. Some NRIs may find their PAN inoperative due to the income tax department’s database still classifying them as residents. To rectify this, write an application to your jurisdictional officer, attaching relevant documents that substantiate your NRI status, especially if you maintain bank accounts, invest, or conduct financial transactions in India.
4) File Tax Returns for Financial Transactions: The final step emphasizes filing tax returns in India, even if you have no income but engage in financial transactions such as property transactions, gifting, credit card transactions, or inward/outward remittances. File before the due date to avoid penalties and enjoy benefits like the carry-forward of business and capital losses. This proactive approach ensures compliance and reduces the risk of facing high outstanding demands in the future.
Conclusion: Understanding that the Indian Income Tax Department has implemented numerous changes, it is crucial to strictly comply with all rules and regulations to safeguard against potential difficulties. I hope this blog proves beneficial to at least some of you.
Disclaimer: This article is solely based on my views, experience and interaction I had with Indian Income Tax Department. People may have different views on above.
Please do let me know if you still have any questions related to above. You can write to me at ushma@nricaservices.com or call/Whatsapp me at +91 9910075924.