A non-resident individual is a person who, for taxation reasons, does not reside in India. Section 6 of the Income Tax Act, 1961 requires that an individual’s residence status be ascertained in order to establish whether or not the individual is a non-resident.
How can I ascertain my residency status?
If any of the following criteria are met, a person shall be considered a resident of India for any prior year:
If the individual spent a minimum of 182 days in India in the preceding year.
If the individual spent 60 days or more in India in the year prior and 365 days or more in the four years that immediately preceded the year prior.
A person shall be considered non-resident for the prior year if they do not meet both of the aforementioned requirements.
However, the 60 days specified in (2) above shall be replaced with 182 days with regard to Indian citizens and persons of Indian descent who visit India during the year. An equivalent exemption is granted to Indian nationals who have left the country in the past year either as crew members or to pursue employment abroad.
The above exception has been amended by the Finance Act, 2020, with effect from Assessment Year 2021–22. It now states that, in the event that an Indian citizen or a person of Indian origin has total income exceeding ₹ 15 lakh in the previous year, the 60-day period mentioned in (2) above will be replaced with 120 days.
New Section 6(1A) was also added by the Finance Act of 2020, and it will take effect for the Assessment Years 2021–2022. According to this provision, an Indian citizen who earns more than ₹15 lakh in total income (apart from income from overseas sources) will be considered an Indian resident if they are not required to pay taxes in any other country.
Applicable Forms and Returns for Non-Resident Individuals for Assessment Year 2023-2024
1. ITR-2 – Applicable for Non-Resident Individual
Individuals (resident or non-resident) and Hindu Undivided Families (HUF) who do not have any income under the Profits and Gains of Business or Profession heading and who are not entitled to file an ITR-1 are eligible to file this form.
2. ITR-3 – Applicable for Non-Resident Individual
Individuals (resident or non-resident) and Hindu Undivided Families (HUF) with income under the heading Profits and Gains of Business or Profession who are ineligible to file ITR-1, 2 or 4 are subject to this return.
1. Form 12BB
Details of an employee’s tax deduction claims (u/s192)
Information on HRA, LTC, interest deduction on borrowed capital, and tax-saving claims and deductions that an employee provides to his employer(s) in order to calculate tax that will be deducted at source (TDS).
2. Form 16
Information about Tax Withheld from Salary at Source (Certificate under Section 203 of the Income Tax Act, 1961) Payroll received, exemptions and deductions, and tax withheld at source to determine the amount of tax due or refundable
3. Form 16A
A quarterly Tax Deducted at Source (TDS) certificate that details the amount of TDS, the kind of payments, and the TDS deposited with the Income Tax Department is issued in accordance with Section 203 of the Income Tax Act, 1961. TDS is applied to income other than salary provided by the deductor to the deductee.
4. Form 26AS
Tax Deducted / Collected at Source (It is available on the Income Tax e-Filing Portal: Login > e-File> Income Tax return > View form 26AS)
5. AIS- Annual Information Statement
Information contained in the form (which you can get by entering into the Income Tax e-Filing portal and selecting the services menu) — Information on Tax Deducted/Collected at Source SFT Making tax payments Request / Refund Additional data (such as: ongoing or concluded legal actions, GST data, information obtained from foreign governments, etc.)
The e-filing portal can be accessed by going to Login > Services > AIS.
6. Form 10E
Form for providing information about income to the Income Tax Department to seek relief under Section 89(1) when an employee pays their wage in arrears or in advance
Information supplied on the form comprises Interest and Pre-Salary Gratuity Payment Upon Termination of Pension Commutation
7. Form 3CB-3CD
Submitted by the taxpayer, who is obligated by Section 44AB to have an accountant audit his accounts
The information included on the form
Under Section 44AB of the Income Tax Act of 1961, a Statement of Particulars and Report of Audit of Accounts must be provided.
to be provided one month in advance of the deadline specified in section 139’s sub-section (1) for providing the income return.
8. Form 3CEB
Submitted by a taxpayer who, in accordance with Section 92E of the Tax Code, must have a report from an accountant before engaging in a certain domestic or international transaction.
To be provided one month in advance of the deadline specified in section 139’s sub-section (1) for providing the income return.
The form contains information on specified domestic transactions as well as a report from an accountant regarding overseas transactions.
9. Form 3CE
Submitted by a taxpayer who, in accordance with Section 44DA, needs to have a report from an accountant regarding the receipt of certain income from specific individuals.
to be provided one month in advance of the deadline specified in section 139’s sub-section (1) for providing the income return.
The form contains information on receiving royalties or fees for technical services from the government or an Indian company, as well as a report from an accountant.
Regime Choice for AY 2023-2024
According to Section 115BAC of the Income Tax Act, non-resident individuals have the choice between the previous tax system and the new tax system, which has a reduced tax rate.
Read More:Understanding Nil Income Tax Returns
Certain exemptions and deductions (such as 80C, 80D, 80TTB, and HRA) that were available under the previous tax regime will not be available to the taxpayer choosing concessional rates under the new one.
Note: Under both tax systems, the rates for the health and education cess and surcharge are the identical.
