How NRIs can file their India tax returns - NRI Tax Returns Filing

In this article, we review the procedure for income tax return filing for NRIs. NRI’s should file income tax return in India if they have taxable income in India. For example, an NRI having a house property in India earning rental income would be required to file income tax return, if the rental income exceeds the exemption amount.

In an earlier article, we saw the important things that Non Resident Indians (NRIs) must keep in mind while filing their India tax returns. This time, we take a look at the tax filing process.

The process

Step 1: Select your method (discussed in detail below)
You can choose the method of filing returns; either do-it-yourself online or through assisted services or through the traditional route of a chartered accountant.

Step 2: File returns

You would then need to complete the process to file your returns. If you are doing it online, you would need to fill up the details on the website. If you are opting for assisted services, you would need to send your documents to the service provider who will complete the process for you.

Step 3: Sign your return

There are two options here. The first is to purchase a digital signature. However, this is not a very popular option. Ankur Sharma, CEO of Taxspanner.com explains, "Digital signature is not very popular and in fact in the next few months the Government is likely to do away with this process. The issuance of digital signature was cumbersome, both for the individual as well as the Government."

The other more popular option is to print out the acknowledgement, called ITR-V, sign it and send it by regular or speed post to the income tax office in Bangalore within 120 days. It is important to remember that the ITR-V must be sent only by regular or speed post. So if you are sending it from overseas, you should either use the regular postal service or courier it to someone in India who can forward it to the tax office by post.

The methods

There are 3 ways in which you can file your tax returns.

Option 1: Do-it-yourself online

This is perhaps the easiest option for NRIs today. The Indian Income Tax office is gradually moving toward the e-filing process so you can file your returns from anywhere in the world. In fact, from this year onward, those earning a gross total income of over Rs 10 lakh must mandatorily file their returns online.

There are a number of options for efiling. The first is to log on to the income tax website and file your returns. This is a free option but the process maybe a bit cumbersome and you may need to have some technical know-how. You would need to download a software for the appropriate form, fill in your details and upload an XML file. If you have a digital signature, you can attach it and your return will be filed. If you do not have a digital signature, you would then need to send a signed copy of the ITR-V.

The other option is to log on to websites that offer tax filing service. There are several websites, the popular ones being taxspanner.com, taxsmile.com and elagaan.com. These online service providers offer a more user friendly experience, for a fee of course. Some of them have support offices in some countries.

You can file your tax returns through taxspanner.com by choosing from among their various packages, depending on the complexity of your tax return. "An NRI user can register on our website and follow the process to file tax returns like any resident individual. We allow overseas users to pay using their international credit card," explains Sharma.

Sharma adds a few interesting points in the process, "The income tax forms have clear instructions about entering your foreign address and we recommend that NRIs do that. You can then either send the signed ITR-V or you can also authorize someone in India to sign on your behalf as your representative assessee."

Taxspanner does not have overseas offices but has advanced assisted packages where they provide complete support through skype, chat or phone calls. The regular packages come at a cost of anywhere between Rs 250 and Rs 750. Details of the assisted package are discussed in the next option below.

Taxsmile.com has preferred partners in various countries including US, UK and Australia. Explains Bala Balaguru, President of Athreya Inc, taxsmile.com's preferred partner for North America, "For a fee of USD 69, an individual tax payer will be able to file his tax return completely online. This fee includes a digital signature of 1 year validity. You would need to send a notarized copy of your address proof and photo ID to Athreya's office and we will create your account within 3 days. " These copies are basically needed in order to obtain the digital signature.

In addition to Income tax return preparation, the package also allows you to resolve up to 10 tax related queries as well as get the prepared return reviewed by taxsmile's tax professionals.

Athreya also offers a package without the digital signature in which case you would need to sign the ITR-V and send it to the income tax office in Bangalore. This package however does not come with any support from tax professionals.

Another website elagaan.com also offers a similar service for NRIs. Says Navin Kumar, Co-founder of elagaan.com, "Elagaan.com offers an end to end solution with digital signature being optional. If you choose not to take the digital signature, you would need to send a signed copy of the ITR-V to our office and elagaan would send it to the income tax office in Bangalore. Here we suggest our users to send 3-4 copies of their signed ITR-V, so that if a copy gets missed/ lost in the process, elagaan sends another copy without any additional charges."

Elagaan.com offers services across 38 countries but has physical offices in the US and India only. It charges Rs 749 for filing your returns without a digital signature. If you want to opt for the digital signature, it comes with a price tag of Rs 899 for a year's validity.

The pros: You can complete the entire process online at the click of a button. The cons: This may not be the best option for those who have complicated returns and require professional advice.

Option 2: Assisted return preparation

Several websites offer a mix of online and offline service and each works differently.

Global tax preparing company H&R Block for instance has recently opened its offices in India. "We do not offer a do-it-yourself package as of now. But NRIs can call our offices and the entire tax filing process can be done through email. NRIs would need to send us scanned copies of their documents and we will file the returns for them. They will receive a copy of the ITR-V, which they would need to sign and send to our office. We will forward the same to the income tax office in Bangalore," explains Vaibhav Sankla, Director, H&R Block India. Currently, the company is offering an introductory price of Rs 300 for a basic return (ITR1) and Rs 500 for the ITR2. Rates would further vary depending on complexity of the return.

Taxspanner.com also offers a 'Foreign Income solution' package. Priced at Rs 1999, the return is prepared on the basis of information and documents provided by the user. This package includes consultation to a limited extent. The website also has a Tax Optimiser package worth Rs 2499 for the entire year. In this package, the user can get 12 month access to a chartered accountant along with tax filing services.

There are several other websites like taxmunshi.com, taxyogi.com etc that have various offerings. Do check the process and support service before you pick the provider.

The pros: You can get professional advice The cons: All service providers may not offer complete online assistance so you would need to choose the provider carefully, depending on your needs.

Option 3: Consult a chartered accountant or tax advisor in India

This is the traditional route where your regular chartered accountant with whom you have a long term relationship with files you tax return.

The pros: You already have a long term relationship with the chartered accountant. He has your tax information and will be able to guide you. The cons: Identifying a specialist who can handle NRI matters can be challenging. You would also need someone who is tech savvy and accessible to you at your time zone.

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