NRIs and OCIs highlight double taxation as top tax filing concern: Survey

NRI tax dilemma: Double taxation poses a major challenge for Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs), according to recent survey findings. Amongst respondents, 14.11 per cent from Australia, 13.10 per cent from the UK, and 8.06 per cent from the US identified double taxation as their primary concern when filing tax returns.

Accessing taxation documents from abroad emerged as another notable hurdle, particularly for NRIs in the US, the UK, and Australia, with 12.10 per cent, 9.05 per cent and 6.02 per cent respectively, finding it to be the most challenging aspect of tax filing.

Income reporting variability

Moreover, the survey reveals varied approaches amongst NRIs regarding reporting income to Indian tax authorities. While 10 per cent of US-based NRIs report only income earned in India, 7 per cent from Australia, Canada, and Singapore respectively follow suit. Conversely, some NRIs disclose both domestic and international earnings to Indian tax authorities, with figures varying across countries.

Despite the government's focus on streamlining taxation for NRIs, challenges persist. NRIs must file tax returns in India if they have earned income within the country during the relevant financial year, based on their residential status as per the Indian Income Tax Act, 1961.

DTAA benefits

The presence of Double Taxation Avoidance Agreements (DTAA) aims to alleviate double taxation concerns, allowing taxpayers to pay tax in only one country, thereby promoting income savings and boosting investment attractiveness. Additionally, leveraging tax-saving opportunities is encouraged, with a notable percentage of NRIs in the UK, Australia, Canada, and Singapore taking advantage of available options.

However, the survey highlights gaps in awareness and compliance, with a portion of NRIs opting not to file tax returns in India. Amongst those who do, preferences vary between self-filing and seeking professional assistance, with the majority opting for the latter.