January 20, 2024

Interim Budget 2024 Expectations - Simplifying ITR Filing for NRIs

The Indian government has made commendable strides in simplifying the income tax return (ITR) filing processes in recent years. However, as the landscape evolves, there remains a distinct need for further simplification, especially for Non-Resident Indians (NRIs) navigating the intricate Indian tax system. In this blog post, we explore the current challenges faced by NRIs in the ITR filing process and propose suggestions for improvement in the upcoming Interim Budget of 2024.

The Current Situation for NRIs

Living abroad doesn't exempt NRIs from filing ITR in India, and the process involves multiple steps, from paying taxes on foreign income to claiming refunds. Tax consultants can provide assistance, but NRIs encounter challenges throughout the end-to-end filing process, hindering the timely receipt of claimed income tax refunds.

Key Processes and Challenges Faced by NRIs

Complexity of ITR Forms:

Challenge: NRIs, not engaged in business or profession, must file using the exhaustive ITR-2 Form, making the process intricate and time-consuming.
Suggestion: Introduce a simplified ITR form tailored for NRIs with specific income sources, similar to the resident-friendly ITR-1 Form, expediting the preparation of tax returns.

Overseas Tax Payments:

Challenge: Tax payments are limited to authorized banks in India, creating difficulties for NRIs with unlisted Indian bank accounts.
Suggestion: Allow tax payments for NRIs to be made through their overseas bank accounts, ensuring timely and hassle-free transactions.

Refunds to Overseas Bank Accounts:

Challenge: Despite a provision for furnishing overseas bank details, refunds are credited only to validated Indian bank accounts.
Suggestion: Initiate tax refunds directly to foreign bank accounts mentioned in ITR-2 and ITR-3 Forms, avoiding practical difficulties faced by NRIs.

Verification Process Simplification:

Challenge: Online verification requires an active Indian mobile number for OTP, posing challenges for NRIs settled abroad.
Suggestion: Allow OTPs to be sent to overseas mobile numbers or email addresses linked to the NRI's account for seamless e-verification. Additionally, accept scanned copies of ITR acknowledgments through emails for offline verification, reducing logistical hurdles.

Anticipating Positive Changes in the Interim Budget 2024

With the upcoming Interim Budget in 2024, there is optimistic anticipation for further measures to simplify the ITR filing process for NRIs. Addressing these challenges will not only enhance the efficiency of the system but also encourage NRIs to fulfill their tax obligations without unnecessary complications.

Stay tuned for potential updates in the upcoming Interim Budget that could reshape the landscape of ITR filing for NRIs.