In recent years, there has been a noticeable surge in NRI tax filings in India, highlighting the increasing financial participation of the Indian diaspora. Here’s a breakdown of the key trends from the past 3-4 years:
- Steady Growth in NRI Tax Returns:
The number of NRI tax filers has steadily risen, with over 7.2 lakh NRIs filing income tax returns in FY 2023-24, up from 6.8 lakh in FY 2022-23, and 4.9 lakh in FY 2019-20—reflecting a growth of nearly 47% over the last four years.
- Higher Income Brackets:
A significant portion of NRIs are in higher income brackets, contributing substantially to tax revenues. This is largely driven by investments in Indian real estate, capital markets, and startups, necessitating tax compliance.
- Impact of 2020 Budget Amendments:
The changes introduced in the 2020 Union Budget, particularly around residential status criteria, have led to increased tax filings by NRIs. Clearer guidelines on income earned in India have encouraged more NRIs to comply with Indian tax laws.
- Rising Capital Gains Declarations:
NRIs are reporting more capital gains, especially from property sales, due to India’s real estate boom. Capital gains tax filings have risen by 25% in the last few years, with more NRIs monetizing their Indian assets.
- Foreign Asset Reporting:
With the increasing focus on global tax transparency, NRIs are also declaring their foreign assets more frequently under the Income Tax Act. This trend is driven by greater scrutiny and compliance under Double Taxation Avoidance Agreements (DTAA) and international tax-sharing mechanisms.
As the Indian tax system continues to evolve, NRIs are playing a more integral role in tax compliance and contributing to India’s fiscal growth. With streamlined regulations and enhanced global reporting standards, this upward trend in NRI tax filings is expected to continue in the coming years.
