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NRI/PIO/OCI Definition & General Guidelines
Income Tax

Who should file tax returns?

If you are an NRI/OCI/PIO, you would have to file your income tax returns if you fulfill either of these conditions:

  • Your taxable income in India during the year was above the basic exemption limit of ` 1.6 lakh OR
  • You have earned short-term or long-term capital gains from sale of any investments or assets, even if the gains are less than the basic exemption limit

Note: The enhanced exemption limit for senior citizens and women is applicable only to residents and not to non-residents.

Are there any exceptions?

Yes, there are two exceptions:

  • If your taxable income consisted only of investment income (interest) and/or capital gains income and if tax has been deducted at source from such income, you do not have to file your tax returns.
  • If you earned long term capital gains from the sale of equity shares or equity mutual funds, you do not have to pay any tax and therefore you do not have to include that in your tax return.

Tip: You may also file a tax return if you have to claim a refund. This may happen where the tax deducted at source is more than the actual tax liability. Suppose your taxable income for the year was below ` 1.6 lakh but the bank deducted tax at source on your interest amount, you can claim a refund by filing your tax return.

Another instance is when you have a capital loss that can be set-off against capital gains. Tax may have been deducted at source on the capital gains, but you can set-off (or carry forward) capital loss against the gain and lower your actual tax liability. In such cases, you would need to file a tax return.

What’s the best way to file tax returns?

Traditionally, you could file your return either by giving a power of attorney to someone in India or by sending your form and documents to a tax expert in India who would then file returns on your behalf. But nowadays, the easiest option for NRIs to file their Indian tax returns is by using the online platform. There are several options to file online.