Summary of Key Updates for ITR Filing
- Deadline: The last date to file ITR is July 31, 2025.
- New Tax Rates: Effective from July 23, 2024, capital gains tax rates have increased:
- Long-term capital gains: 12.5% (up from 10%)
- Short-term capital gains: 20% (up from 15%)
- Documentation Requirements: NRIs need to collate essential documents for ITR filing, including bank statements, capital gains reports, and investment proofs.
As the deadline for ITR filing for the financial year 2024-25 (assessment year 2025-26) looms, Indian expatriates in the UAE are urged to act promptly to avoid penalties and secure potential refunds. With new changes in the tax regime, being prepared for ITR filing is more crucial than ever.
Why ITR Filing is Crucial for NRIs
Many NRIs wrongly assume that Tax Deducted at Source (TDS) negates the need for ITR filing. This misconception can lead to missed refunds and penalties. The Tax Experts DMCC, filing your ITR is the only way to reclaim excess taxes and avoid potential issues with the Indian tax authorities.
Taxable Income for NRIs :
- Salary: Earned for work in India or paid by the Indian government.
- Rental Income: Taxed at slab rates.
- Interest Income: Fully taxable from NRO accounts, fixed deposits (FDs), and bonds.
- Capital Gains: From shares, mutual funds, real estate, or gold.
- Business Income: From ventures controlled or operated in India.
Note: Interest on NRE and FCNR deposits remains tax-exempt in India.
Comprehensive Guide to ITR Filing
To ensure a smooth process, follow these steps:
- Gather Essential Documents for ITR Filing
To ensure accurate ITR filing, NRIs must prepare the following:
- Bank Statements: From NRO, NRE, or resident accounts for FY 2024-25.
- Rental Documents: Agreements and receipts (if applicable).
- Interest Certificates: For FDs, bonds, and FCNR accounts.
- Property Papers: Especially for any sold during the year.
- Capital Gains Reports: Detailing gains from shares, mutual funds, or real estate.
- Investment Proofs: For deductions under Sections 80C, 80D, NPS, etc.
- Identification Proofs: Aadhaar, PAN, and passport (with UAE visa or Emirates ID).
- Residency Details: Number of days spent in India in FY 2024-25 and the preceding four years.
- Unlisted Shares Information: If applicable.
- Loan Certificates: For claiming Section 24 deduction on home loan interest.
- Understand Your Residential Status for ITR Filing Determine your residency status based on the number of days spent in India during the financial year and the previous four years. This classification significantly affects your tax liabilities and reporting requirements for ITR filing.
- Calculate Your Taxable Income for ITR Filing Include all eligible incomes as outlined above. Be sure to account for new capital gains tax rates when calculating profits from investments, crucial for accurate ITR filing.
- File Early to Maximize Benefits of ITR Filing Filing ITR well before the deadline offers multiple advantages:
- Refund Claims: Recover excess tax deducted at source.
- Loss Carryforward: Offset future gains with losses from stocks or property.
- Income Proof: Vital for loans, visas, or insurance applications.
Why Late ITR Filing Can Be Costly
Missing the July 31 deadline for ITR filing incurs a penalty of up to INR 5,000. More significantly, late filing may result in:
- Loss of refund opportunities.
- Inability to carry forward losses.
- Increased scrutiny from tax authorities.
What You Need to Know for ITR Filing
Investors should pay particular attention to the revised capital gains tax rates when preparing for ITR filing. These changes affect:
- Long-term Capital Gains: Now taxed at 12.5% (previously 10%) for assets held over 12 months.
- Short-term Capital Gains: Taxed at 20% (previously 15%) for assets held under 12 months.
To avoid misreporting, maintain detailed records of all transactions and ensure compliance with updated rates during your ITR filing.
Conclusion:
For Indian expats in the UAE, timely ITR filing is not merely a legal obligation but a financial strategy to maximize refunds and minimize liabilities. Start preparing now by gathering essential documents, calculating taxable income, and filing early. By doing so, you can avoid penalties, claim refunds, and ensure peace of mind.
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Frequently Asked Questions (FAQs)
Yes, but only if you’re officially classified as an NRI and haven’t resided in India for the required period.
Usually, ITR-2 is applicable if you don’t have income from business or profession.
Only residents and RNORs are required to report foreign assets. NRIs are exempt.
Currently, the UAE does not levy personal income tax, so individuals are not required to file income tax returns locally. However, UAE-based Indian NRIs who earn income in India—such as rent, capital gains, or interest—must complete ITR filing in India through the official Income Tax India e-filing portal. This process includes gathering relevant financial documents, determining residency status, calculating taxable income, and submitting the return online before the deadline.
Yes, ITR filing is often mandatory when applying for long-term visas to countries like Canada, the UK, the USA, and Schengen countries. Immigration authorities may require the last 2–3 years of filed ITRs as proof of consistent income, financial stability, and tax compliance. For UAE NRIs, timely ITR filing can strengthen visa applications by showcasing a clear financial track record in India.
NOTE:
The above note is subject to further study and clarification. It does not constitute a formal opinion from our end. Before making any decisions based on the above, we recommend consulting our experts on the subject.
