NRIs need not file return on income

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Section 139 of the Income Tax Act 1961 provides that every person if his total income or the total income of any other person in respect of which he is assessable under the Act during the previous year exceeded the maximum amount which is not chargeable to Income tax, shall, before the due date furnish, a Return of Income in the prescribed form and verified in the prescribed manner.

Section 115G of the Income Tax Act 1961, provides that on certain circumstances non-resident Indian are exempted in filing the Return of Income. This in other words, on certain conditions, the non-resident Indian need not file the Return of Income.

The conditions to be satisfied for non-filing the return of Income are mentioned below:

• Where the total income of the non resident Indian consists only of investment income and income by way of long term capital gain, and
• The tax deductible at source has been deducted from such income.

When it refers to long-term capital gain, question arises whether the long-term capital arising other than from the investment income could also be exempted from filing the Return of Income? The Central Board of Direct Taxes, Ministry of Finance in Circular No.372, dated 8.12.1983 has clarified; the relevant Para's of the Circular are reproduced for ready reference:

"Non Resident Indians having only investment income or/and long term capital gain - Not required to file return of income provided tax has been deducted at source there from"

The Investment Income means any income derived... (other than dividends referred to in section 115 O)from a foreign exchange asset. Foreign Exchange Asset means" any specified asset which the assessee has acquired or purchased with, or subscribed in convertible foreign exchange. Similarly, section 115C(e), defines, Long-term Capital gains, which means income chargeable under the head capital gains relating to capital asset, being a foreign exchange asset which is not a short term capital asset.

herefore, Income derived from a foreign exchange asset either Investment income or long-term capital gain, as long as tax has been deducted at source, then, there is no need to file the return of Income.  Read more 

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