Income Tax department’s advisories put NRIs on notice on high value deals: Report

The Income Tax (I-T) Department has sent out advisories to non-resident Indians (NRIs), telling them to confirm their high value transactions in 2022­23, and for non­-filing of their income tax returns (ITRs), reported Business Line.

The NRIs who received such communication in the past few days also include those who have opened FCNR (foreign currency non resident account) and/or NRE/ NRO deposits.

These advisories are an intimation of the data in the possession of the Tax Department, said market watchers. 

This may be followed up with an issue of notices for assessments (or re­assessments) and even a detailed scrutiny if the taxpayer does not respond by filing revised returns (to address the mismatch) or by replying on the income tax portal.

Duplicate entries

The communication from the tax department could also be the result of duplicate entries in Form 26 AS or investments done under a joint account. 

There could be instances of NRIs not converting their bank accounts into non-resident accounts. Or, they may have received income in the form of dividends, which are taxable. 

For NRIs having no source of income in India, the remedy is to file an online response on the IT portal. The portal, however, only offers drop down options affirming select information and does not provide any space to write explanations. NRIs required to confirm the deposits placed with different banks are in a bind, said Pankaj Bhuta, Founder of PR Bhuta & Co. 

For example, FCNR deposits are held in foreign currency with Indian banks, whereas banks report them in rupees to the CBDT by applying a notional rupee rate.

Also, multiple FCNR deposits running into crores of rupees may be made during a particular year alongside other NRE/ NRO deposits, making it difficult to segregate between them and match precise amounts reported to the CBDT by banks. 

“Changes in the reporting mechanism should be made in order to avoid last minute inconvenience to the non­resident assessees,” said Bhuta.

 

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Published: 02 Jan 2024, 03:15 PM IST

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