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Personal Finance News

Budget 2025 for non-residents: Experts recommend when ITR filing should not be mandatory

rajeev kumar
By Rajeev Kumar

3 min read | Updated on January 21, 2025, 18:55 IST

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SUMMARY

Budget 2025 expectations: As per section 139 of the Income-tax Act, every person, other than a company or a firm, is required to file an income-tax return (ITR) if his total income during the previous financial year is above the basic exemption limit. In some cases, however, ITR filing is mandatory for individuals even when their income is below the exemption limit.

budget 2025 nri tax expectations

Expert says budget should enable non-residents to make tax payments from overseas bank accounts. Representational image

Budget 2025 expectations for non-residents: The government should exempt non-residents from mandatory ITR filing if they've spent over ₹2 lakh on foreign travel but have total income in India below the basic exemption limit, experts at Taxmann said in their pre-budget recommendations."

As per section 139 of the Income-tax Act, every person, other than a company or a firm, is required to file an income-tax return (ITR) if his total income during the previous financial year is above the basic exemption limit.

The basic exemption limit under the new tax regime is ₹3 lakh and ₹2.5 lakh under the old regime.

In the following cases, however, ITR filing is mandatory for individuals even when their income is below the exemption limit:

  • If the individual has deposited over ₹1 crore in current accounts.
  • If the individual has spent more than ₹2 lakh on foreign travel by self or for any other person
  • If the individual has spent over ₹1 lakh on electricity bill

The above conditions apply to non-residents as well as they apply to everyone, except a company or a firm.

"Consequently, where the non-residents do not have income exceeding ₹2.5 lakh but has foreign travel exceeding ₹2 lakh could be held liable to furnish the return of income even if their income during the previous year is below the maximum amount, which is not chargeable to tax," Taxmann said.
Also read | Buying property from NRIs: How can Budget 2025 end complications?
The tax experts have recommended that the upcoming budget should amend section 139 to exclude non-residents from filing ITR when their income is below the exemption limit and their expenses for travelling abroad is above ₹2 lakh during the year.

Other expectations for non-residents

Deloitte has recommended that Budget 2025 should allow the deposit of income tax refunds of non-residents, especially foreign nationals, in foreign bank accounts.

"NR (non-resident) individuals, especially foreign nationals, who leave India after closing their bank accounts in India could get a refund for various reasons. The tax refund is payable only to pre-validated Indian bank accounts. Any delay in refund processing could cause bank accounts (even if open under the NRO status) to go into dormant mode. This would prevent the refund from being credited to the account,” Divya Baweja, Partner, Deloitte India, said.

“To alleviate the difficulty, foreign bank accounts should be considered for tax refunds for PAN-holders registered as NR/foreign nationals," he added.

Baweja has also suggested that the budget should enable non-residents to make tax payments from overseas bank accounts and e-verification of income tax returns through foreign mobile numbers.

About The Author

rajeev kumar
Rajeev Kumar is a Deputy Editor at Upstox, and covers personal finance stories. In over 11 years as a journalist, he has written over 2,000 articles on topics like income tax, mutual funds, credit cards, insurance, investing, savings, and pension. He has previously worked with organisations like 1% Club, The Financial Express, Zee Business and Hindustan Times.

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