NRIs can remit up to $1 million from their NRO accounts in a financial year2 min read . Updated: 15 Jun 2020, 10:12 PM IST
- An NRI is required to file ITR if the gross taxable income exceeds the maximum amount not chargeable to tax
- The taxable value of a residential house situated in India may be considered as ‘nil’ in case of a self-occupied property
I am a Canadian citizen and hold an overseas citizenship of India (OCI) card. I own one house in India that is vacant and locked and fixed deposits of above ₹1 crore in non-resident ordinary (NRO) accounts with an interest income of over ₹2.50 lakh. Do I need to file income tax returns (ITR)? Is the FD amount and its interest repatriable?
A non-resident Indian (NRI) is required to file ITR if the gross taxable income exceeds the maximum amount not chargeable to tax. For FY21, the maximum amount not chargeable to tax is ₹2.5 lakh. However, for determining the limit of ₹2.5 lakh, the gross taxable income should be computed before giving effect to the deductions under Chapter VI-A (such as under Section 80C) or capital gains rollover exemptions (like under Section 54).
Even if the gross taxable income is below ₹2.5 lakh, the income tax law was recently amended for mandatory furnishing of ITR, in case an individual (among others) deposits over ₹1 crore in one or more current accounts in the financial year (FY); incurs expenditure over ₹2 lakh for himself or any other person for travel to a foreign country in the FY; and incurs expenditure over ₹1 lakh towards the consumption of electricity. In your case, as the interest income is more than ₹2.5 lakh, there is a requirement to file ITR.
The taxable value of a residential house situated in India may be considered as “nil" in case of a self-occupied property. An individual may consider up to two properties as self-occupied. A property is considered as self-occupied if it is: occupied by the owner for his own residence; or cannot be occupied by the owner due to his employment, business or profession carried on at any other place, where he has to reside in a building not belonging to him.
In any other case, the individual is liable to pay tax on notional rent in respect of the vacant property, subject to deductions. In that case, such income will also need to be included in the total income to evaluate if it exceeds the limit of ₹2.5 lakh, triggering the obligation to file ITR.
Under the exchange control law, as an NRI, you are allowed to remit up to $1 million from your NRO account on production of necessary documentary evidence. Remittance exceeding $1 million requires special permission from the Reserve Bank of India.
Sonu Iyer is tax partner and people advisory services leader, EY India