Income Tax News: With over 32 million NRIs and OCIs, India has risen to the position of having the largest abroad diaspora in the world in recent years. The Gulf nations, along with other nations like Singapore, the US, Canada, the UK, etc., continue to garner the greatest concentration of NRIs inside the vast network of India.
Taxation of NRIs in India
NRIs are subject to taxation in India on income earned within the nation, which is significant given the large number of NRIs who relocate outside in quest of better employment and educational prospects.
The subtleties of managing taxes for NRIs and OCIs in 2024 were revealed by a recent poll conducted by SBNRI, a one-stop investing platform for NRIs and OCIs, in response to the steady inflow of NRIs. The Indian government is working in tandem to streamline the taxes process for non-resident individuals (NRIs). However, in spite of their best efforts, there are still a number of obstacles in the way of NRI taxation.
A Major Hurdle for NRIs and OCIs
Regarding the tax environment, the most barrier to filing taxes as an OCI and NRI is double taxation, according to 14.11% of NRIs from Australia, followed by 13.10% and 8.06% from the UK and the US, respectively. Meanwhile, the biggest obstacle to NRI tax filing was identified by 12.10%, 9.05%, and 6.02% of NRIs from the US, UK, and Australia as being the inability to obtain tax documentation from outside.
The survey also revealed that, in light of the difficult tax environment, 10% of NRIs based in the US and 7% of those in Australia, Canada, and Singapore, respectively, solely disclose income generated in India to the Indian Tax Authorities. In contrast, it was found that 6% of respondents from Canada, 4% from the US and Singapore, and 3% from Australia declared to the Indian Tax authorities both income received overseas and in India.
Challenges in Tax Filing Persist for NRIs and OCIs
While the rising popularity of tax-saving options presents a lucrative potential for all NRIs, filing taxes remains a problem for both OCIs and NRIs. Roughly 7% of NRIs based in the UK and Australia, and 5% of those based in Canada and Singapore, respectively, take use of the tax-savings options that are accessible to them. On the other hand, just 2% of respondents from Australia, 4% from Canada and Singapore, and 6% from the UK do not know about the available tax savings possibilities.
A Fraction of NRIs Fail to File Tax Returns in India
Beyond the disjointed tax environment for non-resident aliens (NRIs), the poll also found that 2% of NRIs from the US, 4% of NRIs from the UK, and 5% of NRIs from Singapore do not file tax returns in India. Only a small percentage of Indian taxpayers chose to file their returns on their own by filling out forms. However, the majority—12% from the UK, 10% from the US, and 7% from Singapore—hire a tax counsellor or professional to handle the same tasks on their behalf.
Reasons Behind Indians Residing Overseas
With the number of NRIs rising, SBNRI’s survey also looked at the main reasons Indians are residing overseas: 11% are from the UK and 9% are from Canada, while others do so primarily in order to take advantage of improved job prospects. Higher education also seems to be the main factor, as evidenced by the 9%, 6%, and 5% of respondents from Singapore, Canada, and the UK, respectively, who selected the latter.
