Why an NRI should file the ROI?
- The actual tax liability for the year as against the TDS deducted from income credited to NRI could be lower for different reasons, to name a few:
- Income up to the basic exemption limit, currently Rs. 2,50,000 (for FY 2018-19) (other than capital gains) earned by NRI is not liable to taxation.
- The income earned may not be liable to tax but the Payer in following cases deducts the tax.
- Capital losses can be set off against Capital Gains, but tax is deducted at source from capital gains without setting off the losses.
- Tax chargeable on income as per Double Taxation Avoidance Agreements (DTAA) with the country where NRI resides, may be lower.
- In view of above, NRI should file Return of Income to claim refund of excess tax deducted.
- Sometimes, NRI may incur short-term or long-term capital loss on sale of investments. He can set off such loss against long term capital gain from sale of investments in subsequent year(s) provided he has filed Return of Income within the prescribed time for the year in which he has incurred loss.
Hence the NRI should file the return of Income declaring loss in such situation.