A recent survey has depicted the complexities of tax compliance for NRIs and OCIs. India has the world’s largest overseas diaspora, with nearly 32 million NRIs and OCIs. India’s NRI network witnesses an effective presence in Gulf countries, alongside Singapore, the US, Canada, the UK, and more.
SBNRI surveyed a comprehensive investment platform for NRIs and OCIs and remarked that 14.11% of NRIs from Australia, followed by 13.10% and 8.06% from the UK and the US, respectively, feel that double taxation is the biggest challenge when it comes to filing tax returns as an NRI and OCI.
While, 12.10%, 9.05%, and 6.02% of NRIs from the US, the UK, and Australia discovered accessing taxation documents from abroad to be the most difficult concern for filing taxes as NRIs.
As per the survey 10% of US-based NRIs, followed by 7% from Australia, Canada, and Singapore, respectively, report just the income made in India to the Indian Tax authorities. On the opposite, 6% from Canada, 4% from the US and Singapore, respectively, and 3% from Australia revealed that they reported both income earned in India and abroad to the Indian Tax authorities.
The motive of the Indian government is to ease the NRI’s taxation yet challenges continue in the tax framework even though their devoted efforts. NRIs need to file the ITR in India, given that they have made the earnings within the Indian territory at the time of the pertinent fiscal year.
The NRIs income tax determination in India is a chance on their residential status for that specific year this is important under the provisions of the Indian Income Tax Act 1961. Should your residential status be categorized as ‘resident’, it is to learn that your worldwide earnings will warrant taxation under Indian jurisdiction.
Income obtained in the Indian territory or compensation generated for the services in India comprises earnings via property located in India, capital gains that come from the transfer of assets situated herein, income made via fixed deposit schemes or interest accrued on savings bank accounts – function as major illustrations of income earned or accrued in the nation. It is important to learn that these revenue streams bear tax importance for NRIs.
In income tax, the Double Taxation Avoidance Agreement (DTAA) prevents double taxation by permitting the assessees to file their tax in only one country, promoting income savings and drawing businesses. It assists in curbing tax evasion by providing relief from double taxation, making the country more attractive for investments.
Filing taxes can be difficult for NRIs and OCIs, but analyzing tax-saving chances is beneficial. Approximately 7% of NRIs in the UK and Australia, and 5% in Canada and Singapore, utilize available tax-saving options. Conversely, 2% in Australia, 4% in Canada and Singapore, and 6% in the UK are unaware of such options, as per the survey.
Directing beyond the fragmented tax world for NRIs, the survey uncovered that 5% of NRIs from Singapore, 4% from the UK, and 2% from the US do not file tax returns in India.
Among the ones that file tax returns in India, only a fraction of them decide to do it themselves by filling out forms. The majority, namely 12% from the UK, along with 10%, and 7% from the US and Singapore respectively employ a tax professional or advisor to do that on their behalf.
