India Tax Filing

UsTaxFiler®, with a processing center established in India, also files Indian Tax Returns for its US tax clients who are required to file tax returns in India. An individual taxpayer who is either a full year non-resident/ part year resident of India during the tax year may still need to file the tax returns in India.

Below are some of the potential situations which would need you to file tax returns in India.

• The taxpayer may receive Wages/Salaries in India for the period while he was residing in USA during Tax Year (This may be applicable for the taxpayers who are Indian Citizens and deputed to the US employer location/client locations).
• The taxpayer who earns Interest or Dividend from any source in India.
• The taxpayer may have a property (residential or any other propery) in India which was let out during the tax year and receives rental income.
• The taxpayer may have a property which was sold in the tax year at a profit/loss.
• The taxpayer made stock transactions during the tax year.
• The taxpayer, being a partner in any partnership in India, also need to file the tax returns in India if they receive any income from it.

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Getting PAN in India

Every Indian citizen entering a financial transaction in India is mandatorily required to have a Permanent Account Number (PAN). It is the sole identification number for the purpose of tax payments and investments.

• To file tax returns in India.
• To open a bank account or D-mat account in India.
• Purchase and/or sale of property in India.
• Purchase and payments of vehicles.
• Making time deposits in a bank worth over Rs.50,000.
• Investing in securities per the Securities and Exchange Board of India (SEBI).
• Investing in Mutual Fund schemes for all existing and prospective investors.

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Opening an NRE account in India

There are two options an NRI interested in opening a bank account in India can choose from – an NRE or an NRO account.

What’s an NRE account?

A Non-Resident External (NRE) account is a bank account that’s opened by depositing foreign currency at the time of opening a bank account. This currency can be tendered in the form of traveler’s checks or notes.

What’s an NRO account?

A Non-Resident Ordinary (NRO) account is the normal bank account opened by an Indian going abroad with the intention of becoming an NRI. An NRI can also open this account by sending remittances from his home country or by transferring funds from his other NRO account. It offers the same facilities as an NRE account, except that any repatriation done through this account should be reported to RBI by filling up prescribed forms.

How do NRE and NRO accounts differ?

Funds remitted from overseas sources or local funds that would otherwise have been sent to the accountholder abroad can instead be transferred to NRE Accounts. On the other hand, local funds that aren’t eligible to be remitted abroad must be credited to an NRO account.

Can you transfer funds from an NRE to an NRO account and vice versa?

It's easy to transfer funds from an NRE to an NRO account. But it's not possible to transfer funds from an NRO account to an NRE account. Once you transfer funds from an NRE to an NRO account, the amount is non-repatriable. Consequently, you cannot transfer it back.

What’s the difference in the tax treatment for interest earned on an NRE and an NRO account?

The interest earned on any type of NRO bank as well as the credit balances in this kind of account are taxed under the account holder’s tax bracket. On the other hand, interest earned on the NRE account is totally exempted from income tax, and the credit balances in the account don’t attract any wealth tax. Any gift given to a close relative doesn’t attract gift tax.

NRE and NRO accounts are two different types of rupee accounts permitted by the Government of India for NRIs.