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Is income below Rs. 12 Lacs tax-free for NRIs from April 1, 2025?

 



Q: NRI Tax Filing Guide 2025-26 Q. Is income below Rs. 12 Lacs tax-free for NRIs from April 1, 2025?


 A. No, this is a misconception. The provision for "Zero Income Tax for Income upto Rs. 12 Lacs" with a tax rebate under section 87A is applicable only to Resident Individuals in India who opt for the New Tax Regime, not for NRIs. 

 Q. What is the threshold for NRIs to file their Income Tax Return in India for FY 2025-26? 


 A. From April 1, 2025, NRIs are required to file their Tax Return in India if their Total Income in India exceeds Rs. 4 Lacs during the financial year. 

 Q. What is the threshold for NRIs to file their Income Tax Return in India for FY 2024-25? 


 A. For the financial year 2024-25, NRIs are currently required to file their Income Tax Return in India if their Total Income in India under the New Regime exceeds Rs. 3 Lacs. 

 Q. Why do NRIs often hesitate to file tax returns in India? 


 A. NRIs often shy away from filing tax returns due to various reasons including lack of proper advice, unfamiliarity with Indian legal requirements, busy schedules, difficulty in compiling data, insignificant income in India, and low TDS amounts. 

 Q. What types of income earned by NRIs in India are typically subject to TDS?


 A. Most of the income earned by NRIs in India is subject to TDS. This includes interest income on NRO Bank Accounts, dividends from companies or mutual funds, capital gains, and rental income. 

 Q. What are the potential consequences for NRIs who fail to file their tax returns in India? 


 A. Failing to file tax returns can lead to tax enquiries such as scrutiny assessments and reopening of assessments. If an NRI invests a substantial amount in property without filing returns, it can trigger a notice from the tax department questioning the source of funds. Page 1 NRI Tax Filing Guide 2025-26

 Q. What are the benefits of an NRI filing their Income Tax Return in India? 


 A. Filing a tax return in India offers several benefits to NRIs: it allows claiming refunds for excess TDS deducted, significantly minimizes the possibility of receiving future tax notices, helps in filing tax returns in their country of residence, and helps regularize their tax affairs in India. 

 Q. Is it advisable for NRIs to file tax returns in India even if their income is below the filing threshold?


 A. Yes, it is always advisable for NRIs to file tax returns in India, irrespective of the amount of income, to avoid potential untoward consequences and gain the advantages listed above. 

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