NRIs can avail the same tax deductions under section 80C that are available to resident Indians
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For non-resident Indians (NRIs), what is the last date for filing income-tax return (ITR)? Also, can NRIs avail the benefits of tax deduction that resident Indians get under section 80C of the Income-tax Act, 1961?
The due date of filing income-tax returns is determined on the basis of sources of income of an individual in India. The due date, however, remains the same irrespective of your residential status.
You need to file your personal tax return for financial year (FY) 2016-17 on or before 30 September 2017, if you have the following sources of income:
(a) business or profession, where accounts of such business or profession is required to be audited in India; or
(b)if you are a working partner of a partnership firm whose accounts are required to be audited in India.
For other individual taxpayers, the due date is 31 July of the subsequent year. Therefore, if you have any income such as salary, interest from, say, a bank fixed deposit, dividend, rent, capital gains from, say, sale of property or units of equity mutual funds, and so on, you will have to file your income tax return for FY17 on or before 31 July 2017.
If the income-tax return could not be filed on or before the due date, then an option to file a belated return for that particular FY is also available.
Until FY16, a belated tax return could be filed within 2 years from the end of the relevant FY with no chance of revision. But from FY17, a belated tax return can be filed within a year from the end of the relevant FY. But such belated returns from FY17 can now be revised.
A point of caution, though, is that any loss reported in such a return cannot be carried forward to subsequent years for adjustments with income (this provision can be used if income tax return is filed on time).
And, yes, NRIs can avail the same tax deductions under section 80C that are available to resident Indians. For instance, you can claim deductions on premiums paid for life insurance, on term deposits, pension schemes, and so on.
I live and work in Lisbon, Portugal, but have an apartment in Hyderabad, which I have let out. Will the rent be taxed?
Rental income from property in India is considered as income accrued in India and taxable in India irrespective of residential status. You need to pay tax on this rental income. However, if your total taxable income in India (including rental income or any other source of income) does not exceed the maximum amount not chargeable to tax (Rs2.5 lakh), you are not liable to pay tax on it. The gross rent received by you is not fully taxable. While calculating the taxable value of rental income, various deductions are available.
(a) standard deduction at 30% of the taxable value;
(b) municipal taxes paid to the local authority;
(c) interest payable on a loan taken for construction, repairs, acquisition, or renewal of the property;
(d) pre-construction period interest deduction (available as deduction in five instalments from year subsequent to construction completion year).
Interest payable on a loan taken outside India is also eligible for deduction.
Additionally, any repayment of principal amount against housing loan taken for such property is also eligible for deduction under section 80C (maximum deduction under this section is Rs1.5 lakh).
Sonu Iyer is tax partner & people advisory services leader, EY India.
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