Kind Attention: Non-Resident Indians (NRIs) with just a few days left for the Financial Year 2022-23 to close, it is important to check on your things to be done.
Here is the checklist for things which you need to take care of before 31st March 2023:
1. Link PAN Card with Aadhar:
The Income Tax Department has made it mandatory to link the PAN with Aadhar. According to the government advisory, if the two identification cards are not linked before March 31, 2023, the PAN card will become inoperative. People will be restricted from filing the income-tax return or accessing PAN-related services. It is mandatory. Don’t delay, link it today. As per the I-T Act, it is mandatory for all PAN-holders who do not fall under the exempt category, to link their permanent account numbers (PAN) with their Aadhaar before March 31, 2023. From April 1, 2023, the unlinked PAN shall become inoperative.
Most of the NRIs have taken Aadhar declaring themselves as a resident, it is important to note its mandatory for them also to link PAN with Aadhar. Having access to a mobile number registered on Aadhar/PAN is not required, so one need not be panicked for this reason.
To check the status of PAN-Aadhar is Linked or not, Visit:
https://eportal.incometax.gov.in/iec/foservices/#/pre-login/link-aadhaar-status
And, if it is not done, you can link by paying the applicable late fees of Rs 1,000, Visit:
https://eportal.incometax.gov.in/iec/foservices/#/pre-login/bl-link-aadhaar
For a step-by-step guide on the link Aadhar user manual:
https://www.incometax.gov.in/iec/foportal/help/how-to-link-aadhaar
2. Invest to Save Tax:
Investing in various instruments that qualify for deduction under various income tax sections such as under Sec 80C with a maximum limit of Rs 1,50,000; assessee can save tax if following the old tax regime. Provided the assessee does all the investments before 31st March, then only he can claim the tax benefit. However, before you choose instruments to save taxes, make sure it fits into your portfolio or requirement. Remember, tax saving should be incidental and not the primary reason behind selecting a product to invest in.
One needs to verify the details from the bank statement and cross-check that all the eligible deductions factored into the amounts have been debited into the bank account. In case some items have not been debited, please ensure that either the payment is made for the same or investments are made in an alternate product available before the year-end.
3. Payment of Advance Tax:
All taxpayers with a tax liability of Rs 10,000 or more are liable to pay advance tax. Such advance tax liability is, however, not imposed on resident senior citizens not deriving any income from Business or Profession. Taxpayers are required to determine income from various sources and accordingly pay advance tax on the same. The taxpayers are required to pay the entire amount of advance tax up to 15th March. Failure to pay the advance tax within the due time would subject the taxpayers to interest consequences But, if the tax is not paid on or before the deadline, the taxpayer will be charged 1 percent interest per month for deferment in instalment and 1 percent interest per month if only 90 percent of the total amount is paid before the end of the Financial Year. The TDS deducted is considered a part of tax liability.
4. Log in to Income Tax Portal and Check for Pending Actions:
It is of utmost importance to login to your dashboard of the income tax portal i.e. www.incometax.gov.in and check for the followings:
a. Income tax returns filed for previous years are processed and the refund due is paid to your bank account. Demand if any is raised needs attention, either by compliance or by paying off the same. Further, if any discrepancies are found in the ITR file is complied with.
b. Pending actions tab on the dashboard shows worklists that need your attention. If any proceedings of assessment/scrutiny/enquiry are initiated against your PAN is reflected here. The help of a professional is advised here to be taken to do the necessary compliances.
c. Check for bank account validation and that EVC is enabled under the ‘my profile’ tab available on the right top of the dashboard.
d. Personal profile details have been updated with your mobile number and email ID to receive regular communication from the income tax department along with communication details of an authorized representative or any alternate individual for any important communication not to be missed to be filled in secondary details. Also, the passport number is filled in and the residential status is updated to be ‘Non-Resident’.
5. Book long-term capital gains on listed shares and equity mutual funds schemes up to Rs 1 lakh:
Section 112A provides for long-term capital gains on listed equity shares and equity-oriented schemes are fully exempt up to Rs 1 lakh and the balance is taxed at a rate of 10%. So you can book long-term capital gains up to one lakh of rupees before march 31st March, in case not yet booked. In case you have made these investments for the long term, you may decide to sell the shares the same day and buy the same next day or carry out these transactions with different brokers on the same day. The purchase and redemption of the units can be done on the same day. With this strategy, you can minimise your overall tax liability.
6. File Income Tax Return – Updated (ITR-U) for Previous Years:
Have you ever forgotten to report an income or made a mistake in your ITR?
Section 139(8A) under the Income Tax Act allows you a chance to update your ITR within two years. Two years will be calculated from the end of the year in which the original return was filed. ITR-U was introduced to optimise tax compliance by taxpayers without provoking legal action.
Any person who has made an error or omitted certain income details in any of the following returns can file an updated return: An original return of income, or belated return, or a revised return. The time limit for filing ITR-U is 24 months from the end of the relevant assessment year.
ITR-U is applicable from 1st April 2022. So during the current financial year 2022-23, you can file ITR-U for AY 2020-21 and AY 2021-22. E.g., The Return of FY19-20 can be updated till 31st March 2023. You will have to pay an additional tax of 25% or 50% on the tax amount, depending on when you file the ITR-U
The article intends to make more and more non-resident Indians compliant with the rules and regulations which are mandatory and at the same time, educate them on the benefits available.
Should you seek any professional assistance, feel free to connect CA. Ajay R. Vaswani, Author and NRI Taxation Expert on WhatsApp at +91-9975497979 or Email at: contact@cafornri.com
For Personal Appointments, will be available in Dubai, UAE from 1st to 7th March, 2023 .