Income Tax alerts NRIs on non-filing; urges confirmation of high-value transactions in 2022-23

IT department is likely to issue notices for reassessments of the tax returns filed by the NRI account holders and order detailed scrutiny if the taxpayer does not respond by filing revised returns.

The Income Tax (IT) department has issued advisories to Non-Resident Indians (NRIs) for non-filing of Income Tax Returns (ITR) and asking them to confirm their high-value transactions in 2022­-23 including foreign currency non-resident account (FCNR) and non-resident external account (NRE) or non-resident ordinary account (NRO) deposits.

IT department is likely to issue notices for reassessments of the tax returns filed by the NRI account holders and order detailed scrutiny if the taxpayer does not respond by filing revised returns. “The advisories are an intimation for non-resident Indians to file revised returns and declared high-value transactions,” confirmed a senior IT official.

According to Foreign Exchange Management Act (FEMA) guidelines, a non-resident is prohibited from having a local savings account in India and must convert all savings (money earned abroad) to an NRE or NRO account.

Advisories prompted by duplicate entries

The NRI tax advisories were triggered by duplicate entries in Form 26 AS and investments done under a joint account collected from data analysis by the tax authorities.

“In several instances, the NRI had not converted their bank accounts into non-resident accounts, received taxable income in the form of dividends, address mismatch, multiple FCNR accounts with high-value transactions while maintaining NRE/NRO accounts are some of the instances data analysis has revealed,” added the tax official.

Also read: The NRI retirement guide for investing in India in 2022

FCNR deposits are held in foreign currency with Indian banks but reported to the Central Board of Direct Taxes (CBDT) in Indian currency applying a notional rupee rate.

According to Foreign Exchange Management Act (FEMA) guidelines, a non-resident is prohibited from having a local savings account in India and must convert all savings (money earned abroad) to an NRE or NRO account.

(This article is published under a mutual content partnership arrangement between The Brew News and The Free Press Journal)