In this blog, I want to mention few important tasks or changes NRIs should do immediately to maintain clean records with Indian Income Tax Department.
I have seen many NRIs who have received notices from Indian Income Tax Department in spite of the fact they were not liable to file tax returns in India. It is due to fact department doesn’t know the source behind the financial transactions they have done in India
Also, these notices were going to their old email ids as they have not updated their current status and contact details with Indian Income Tax Department.
Because of all these ignorance they may end up paying huge amount as an outstanding demand to Indian Income tax department.
In this blog, I am trying to highlight few tasks which NRIs should do to maintain better compliance in India. It may safeguard them from potential difficulties.
Important Tasks/Steps:
- Let’s Begin with most important step which is updating your online income tax profile on Indian income tax department website. Website’s URL is https://eportal.incometax.gov.in/iec/foservices/#/login
If you haven’t created your online income tax account yet, then create it by using “Register” option available on income tax website.
Once you created your online income tax account, you can login using your user id which is your pan.
Now once you login to your income tax account locate your name at the top right corner of the page, and click on it.
Access the “My Profile” tab to review and update your current address, email ID, phone number, and residential status.
If you are a non-resident then your residentials status should be selected as non-resident.
You have to provide your passport number and citizenship status also.
Given that most communications are now conducted online, providing an updated email will ensure you receive future notifications from the Income Tax Department. Even if your CA manages your whole tax related work, then also designate your email id as primary email and give the CA’s email as secondary.
There is good news that now NRIs have started receiving OTPs and EVCs on their foreign contact numbers, so better you mention your foreign account number in contact section.
This will save you from missing any important intimation from Indian Income Tax Department.
In case you are facing a problem in login to income tax website then you can explore password reset option. They will give you few options to reset the password like Aadar OTP, OTPs on contact details given earlier or by using digital signature.
If still no option is working for you then you can try net banking option.
You just have login to your net-banking of any Indian bank and search for efiling/e-verify related tab which will take you directly to your income tax account.
Once login you can change your income tax login password for future logins.
- Second important task is to check if there is any unnoticed pending compliance or outstanding demand issued by income tax department for you.
As you know: Ignorance of the law is not an excuse” you cannot deny these notices just saying that you haven’t received them.
Please note It is very important to reply promptly to any communications or notices received from the income tax department.
Some individuals mistakenly believe that being an NRI they are exempt from filing tax returns in India, especially if TDS has been deducted by banks or third parties.
But please be aware of this fact that TDS deduction and actual filing are different processes. Even if TDS is deducted, filing a tax return remains mandatory.
To avoid potential issues, log in to your online income tax account and navigate to Pending Actions. Check tabs like Worklist, Response to Outstanding Demand, e-Proceedings, and Compliance Portal for any pending compliance matters. If there is any pending compliance or outstanding demand, address it promptly. Now, most of the responses can be filed online. Better you take professional help to draft a proper response in proper manner with uploading all the relevant documents to justify your claims.
- Third crucial step is to check if your Aadhar is linked with your PAN which can be check by again going to my profile section.
For NRIs obtaining pan is not mandatory. But in case you have Aadhar then linking it with pan is must. If you have aadhar and it is still not linked with Pan then link it immediately.
Also, If you don’t have aadhar then it is important to check the pan status. For few NRIs, their Pan has been made in-operative by income tax department. This is due to the fact in income tax department’s database they are still showing as resident. To check your pan status, download your 26AS from income tax account and check pan current status. If your pan status is coming out to be active and inoperative
If you pan is inoperative then you have to make it operative by writing an application to your jurisdictional officer. Along with your application you have to attaching all relevant documents which can substantiate you an NRI.
This is important especially when you are maintaining bank accounts in India or if you are doing any investment in India or doing any kind of financial transaction in India.
- Now Last but not the least even if you don’t have any income in India but doing any kind of financial transaction like buying a property, gifting a property or money, credit card transactions, outward or inward remittance then make sure to file your tax return in India.
Better you file your tax return before due date of filing to avoid any penalties and enjoy few benefits like carry forward of business and capital losses. This proactive approach ensures compliance and reduces the risk of facing high outstanding demands in the future.
I hope you understand that Indian Income Tax Department has made many changes in their system and It is imperative that we strictly comply with all the rules and regulations to safeguard ourselves from potential difficulties.
I sincerely hope it proves beneficial to atleast 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.
