In recent few years we are seeing increase in number of investors investing in India and amount that is being invested in India.
The investment could be in real estate or even shares and mutual funds of India.
Thus, we shall discuss in this article as to whether such non-residents are required to file Income tax return in India even if they have incurred loss in such capital transactions.
As discussed above there could be majorly 2 type of investment in India where a non-resident generally parks it’s money:
1. Immovable property.
2. Shares and mutual fund.
Let’s discuss what could be the scenario where a non-resident is making loss and he is still required to file Income tax return.
As we all know, now everything get’s reported in AIS (Annual information statement) which is a tool from Income tax department where majorly all financial transaction get’s reported.
However, in many cases it is seen that it either shows only sale value of the transaction (like in property transaction) or even if they show cost it could be incorrect (like in share or mutual fund transaction). Further, the income tax department while conducting scrutiny or assessment for cases only considers sale consideration as income of the assessee and accordingly issues notice to the assessee.
Let’s take an example:
A person owns a land and he sell’s it for Rs.30 lakh, however after indexation the cost of land comes to Rs.32 lakh and accordingly assessee is incurring a loss of Rs.2 lakh but the income tax department would be only aware about the sale consideration and accordingly it might issue notice to the assessee that he has earned Rs.30 lakh in income but has not filed his return of income.
Thus, it is important to file the return of income to avoid such unnecessary notices from income tax department. Further, it is important to note that assessee can claim benefit of such loss in future if they file their income tax return within the due date. Hence, for this reason also it is advisable to file income tax return within due date and avoid getting notice from income tax department and also claim benefit of loss.
Many a times assessee finds it as a hassle to file income tax return even when they have earned losses however it is important to note that Income tax department is not aware of what expenses the assessee has incurred against the sale consideration. Thus, filing of return of income is important.
Guidance on above article on Income Tax by:
Naman Maloo (C.A., B.Com)
He is currently working as Partner – Direct Tax with a renowned firm in Jaipur having experience in dealing Assessments before Income Tax authority, Tax Audit, International Taxation, Tax planning for NRI, Business planning and consultation.
E-mail: naman.maloo@jainshrimal.in | LinkedIn: Naman Maloo
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