In order to avail tax relief under the double taxation avoidance agreement, expats or non-resident Indians (NRI) have to reveal more than before. The latest income return (ITR) forms require extensive disclosures like tax identification number at their country of residence, assets held outside India and overseas tax residency certificate.
Last week, the Central Board of Direct Taxes (CBDT) had notified the release of ITR forms for the assessment year 2019-20 (financial year 2018-19) for individuals as well as companies. Note that the last day to file ITR for the FY 2018-19 is 31 July 2019 (without penalty) for those who do not require their account to be audited.
Overseas residents will now be required to provide the tax identification number and residential status in India along with their residential status details in the country they presently live.
Those claiming OCI (Overseas Citizens of India) and POI (Persons of Indian Origin) status will be required to report the number of days stayed in the country in the relevant tax year and also in the previous four tax years. This is required to calculate if they meet the criteria of residency under the Income Tax Act.
Further, a person who is a director or shareholder in an unlisted company in India will need to disclose this along with details and permanent account number of the company.
Experts suggest that the additional information is being sought by the Income Tax Department in order to be able to adopt automation in the system and reduce the need of further inquiry by the Income Tax authorities to seek clarity.
Indian residents also need to provide a detailed breakup of their salary as well information on directorship, unlisted securities, agricultural land income (if exceeds the limit) or mode of payments for donations made.
While the ITR-1 form remains unchanged from that in the AY 2018-19, forms 2, 2, 3, 5, 6 and 7 have been slightly amended.
ITR-1 is to be filed by individuals with total income from salary/pension, one house property, agricultural income (less than Rs 5,000) and other sources for the financial year not exceeding Rs 50 lakh. If the individual is a company director or has investments in unlisted equity shares or has an income on which tax has been deducted in the hands of another person, they cannot file this form.
The ITR-2 form will be applicable in this case. It is to be filed by individuals who exceed the income limit imposed on form 1. For ITR-1 as well as 2, the income cannot be made from a business or profession.
If you are a company director or own unlisted shares, ITR-2 will now seek information of the company name, PAN, number of shares held or acquired or sold by you.
All the ITR forms are to be filed online. Only those who are over 80 years old and are filing ITR-1 or ITR-4 can file their returns in paper form.
Ideally, if you are in a job that keeps you globally mobile, you will be required to file one of these two. NRIs only have to file returns on income earned in India. It helps them avoid double taxation, that is avoid being taxed for their income earned in India in two countries.