Do you reside in the UAE as an Indian ex-pat? If so, you could have questioned if you ought to file a “zero tax return” or not.
If their earnings are greater than the necessary threshold, non-resident Indians (NRIs) must file taxes on such earnings. However, filing zero tax returns is not a bad idea even if you do not have any profits that necessitate filing taxes. This is due to the fact that foreigners looking to reside in India may find it useful to maintain an active file with the Indian Income Tax (IT) department.
The IT department will have information about your earnings and will be aware that you were an NRI during those years, therefore your records with the tax department will be updated if you return to India permanently. Housing loans are also simpler to obtain because banks ask for your tax information. Even if you had investing losses in a certain year, I would strongly advise everyone to file tax returns. If you have losses from one year on your record, you can carry them over to the following year to use as a credit against any future profits that may be subject to taxation.
Who needs to pay taxes in India?
Even though the majority of Indians residing in the UAE may have investments in India, whether, through mutual fund returns or rental income from real estate, it is crucial to determine whether the income is “taxable”.
The income must fulfill a number of requirements in order to be taxable. For instance, an interest that has accrued from a Non-Resident External (NRE) account is not subject to taxes. The interest earned on a Non-Resident Ordinary (NRO) account, however, is included in your taxable income.
Similar to this, there are other sources of income that might be tax-free or taxable.
The 1961 Income Tax Act in India establishes a “basic exemption limit” for tax, which is fixed at Rs. 250,000 and defines taxable income in very detailed terms (Dh 11,506).
This implies that any NRI with a taxable income of more than Rs250,000 in India must file income tax reports.
Additionally, it is crucial to remember that some revenues, including the most typical one—profit from share trading—will be taxed even if it is less than Rs250,000.
