Income tax and tax matters for NRIs

Income tax matters for NRIs

Complete spectrum of services for private individuals or organisations related to Income tax matters in India (for any Income accrued from a real estate asset, Income from business or profession, Income from salaries, Income in the form of capital gains or any Income from other sources) including but not limited to, assessment of tax liability, payments of taxes based on applicable rules and statutes, handling of any income tax notices, arguing cases or appeals as the situation warrants in appropriate courts or tribunals and negotiating settlements on behalf of our clients

The key law which governs rules and statutes with regards to Income Tax in India is the Income Tax-Act, 1961. The Income Tax Act 1961 determines tax applicability and liability on the income of an individual person or a body corporate. It provides for levy, administration, collection and recovery of Income Tax. Taxes in India are levied by the Central Government and the state governments. However, some minor taxes are also levied by the local authorities such as the Municipalities. The Central Board of Revenue or Department of Revenue is the apex body charged with the administration of taxes in India. It is a part of Ministry of Finance which came into existence as a result of the Central Board of Revenue Act, 1924. The Income Tax-Act, 1961 imposes a tax on income under the following five heads:

  • Income from Immovable assets (Real Estate holdings)
  • Income from business for an individual or Income of Corporate Company
  • Income from Wages
  • Income accrued through capital gains
  • Income from any other source

With the globalisation and liberalisation of the Indian economy. Tax laws in India are rapidly evolving and becoming completely digitised as well. Our services ensure that we can deliver top class and upto date tax advisories regarding Income tax matters, that are responsive to the ever-evolving changes in tax laws. Our team of lawyers are full upto speed and completely abreast with the current developments in the latest changes and we are always on our toes with regards to latest circulars, exemption notifications etc. issued by the relevant government authorities with regards to changes or interpretation of the applicable tax laws governing the country.

 

FAQs

Taxes are collected by the Government by way of three means:

  1. Voluntary payments made by the taxpayers into various designated Banks, which includes Advance Tax and Self-Assessment Tax,
  2. Tax deducted at source, i.e., TDS, which is deducted from the income of the receiver, and
  3. Tax collected at source, i.e., TCS

The excess Tax paid can be claimed as a refund by filling the Income-tax return. It is refunded to the person by crediting the same in their bank account through ECS transfer. 

No, the Agricultural income is not taxable.

PAN stands for Permanent Account Number. It is a ten-digit unique alphanumeric number which is issued by the Income Tax Department.

A permanent Account Number is issued in the form of a laminated plastic card, commonly known as a PAN card.

A PAN Card enables the department to link all the transactions of the assessee with the department. These transactions include TDS/TCS credits, tax payments, returns of income, specified transactions, correspondence, etc. It also facilitates the easy retrieval of information of an assessee and comparing of various investments, borrowings and also other business activities of the assessee.​

ITR stands for the Income Tax Return. It is filed in a prescribed form. The particulars of the incomes earned by any person in a financial year and the taxes paid on such income are communicated to an Income-tax Department by filing an IT return.

ITR allows carrying forward the loss and further claim refunds from the income tax department.​ The Different forms of income returns are prescribed for filing the returns for different Status and Nature of income.

The Income-tax is levied on a person’s annual income, and the year under the Income-tax Law is the period initiating from 1st April and ending on 31st March of the subsequent calendar year.
The Income-tax Law classifies the year as the following: –

  • Previous year: – It is the year in which the income is earned.
  • Assessment year: – It is the year in which the income is charged to tax.

An exempted income is the income which is not charged to tax, and under Income-tax Law, there is a specific exemption from tax to such incomes. The Taxable incomes are those incomes which are chargeable to tax.

The Income-tax Law has incorporated a system of deduction of tax at the point of generation of income for the quick and efficient collection of the taxes. This system is known as the “Tax Deducted at Source”, commonly known as the TDS. Under this system of TDS, the tax is deducted at the origin of the income.

The tax is deducted by the payer, and the same is remitted to the Government by the payer on behalf of the payee.

The provisions related to the deduction of tax at source are applicable to the following payments: –

  1. Salary
  2. Interest,
  3. Commission,
  4. Brokerage,
  5. Professional fees,
  6. Royalty,
  7. Contract payments, etc.

In respect of the payments to which the TDS provisions apply, the payer has to deduct the tax at source on the payments made by him, and he/she has to deposit the tax deducted by him to the credit of the Government.

FEMA ensures that there is orderly development and maintenance of the foreign exchange market in India, and external trade and payments are in order as well. FEMA deals with all the provisions relating to the procedures, formalities, dealings, etc., with respect to the foreign exchange transactions in India.

The transactions relating to the foreign exchange have been classified under FEMA in two main categories,

  1. Current Account Transaction,
  2. Capital Account Transaction.

​Under the head “Capital Gains”, any gain or profit arising from the transfer of a capital asset during the year is charged to the Tax.

Before the Commissioner within 30 days from the date of order under Form 35.

Before the Income Tax Appellate Tribunal (ITAT) within 60 days from the date of order under Form 36.

Income tax is to be paid by every person. The term ‘person’ as defined under the section2 (3) of the Income-tax Act and covers the natural as well as the artificial persons under its ambit.

For the purposes of charging the Income-tax, the term ‘person’ includes the following: –

  1. Individual
  2. Hindu Undivided Families [HUFs]
  3. Association of Persons [AOPs]
  4. Body of individuals [BOIs]
  5. Firms
  6. LLPs, Companies
  7. Local authority and
  8. Any artificial juridical persons are not covered under any of the above.

Therefore, by the definition of the term ‘person’, it can be observed that apart from a natural person, i.e., an individual, any type of artificial entity will also be liable to pay the Income-tax.

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