Foreign Residents in UAE: 8 Common Indian Income Tax Return Errors that Could Delay Your Tax Refund This Year
Filing Your Income Tax Return (ITR) from the UAE: A Guide for NRIs
To ensure a smooth and timely tax refund process when filing your Income Tax Return (ITR) from the UAE, it's essential for Non-Resident Indians (NRIs) to be aware of common pitfalls and take necessary precautions.
- Choosing the Correct ITR Form
NRIs should select the appropriate ITR form based on their income sources. Typically, ITR-2 is used, but those with different income types must verify the correct form to prevent delays or rejection.
- Verifying Income Details
Cross-check Form 26AS and the Annual Information Statement (AIS) to ensure that declared tax deducted at source (TDS) and income figures match. Discrepancies, such as undisclosed income from interest, rental, or freelance earnings, can trigger a review.
- Selecting the Correct Assessment Year
An error in the Assessment Year selection can lead to notices or penalties. Be sure to choose the correct year during filing.
- E-Verification Process
Complete the e-verification process after filing using options like Aadhaar OTP, net banking, or sending a signed physical copy. Without verification, the return may be considered invalid, potentially delaying refunds.
- Correct Bank Details
Ensure that bank details, including account number and IFSC code, are correctly filled to prevent refund transfer issues.
- Filing Early
Filing early can help avoid backlog and facilitate smooth refund processing.
- Form 10F for DTAA Benefits
For NRIs claiming benefits under the Double Tax Avoidance Agreement (DTAA), file Form 10F to reduce TDS and claim treaty benefits. Form 10F is valid for one year and can be filed retrospectively within the financial year.
- Excel-based ITR Utilities
When using Excel-based ITR utilities, carefully fill all required sections, especially capital gains schedules, and resolve validation errors before submitting to avoid tax miscalculations or return rejections.
By avoiding these common mistakes, NRIs can help ensure a smooth processing of their ITR and timely receipt of tax refunds from India when filing from the UAE. Ignoring notices from the Tax Department, filing with an incorrect ITR form, claiming deductions without proper proof, or failing to double check bank details can lead to delayed refunds, penalties, or other complications. Proper documentation is necessary to support claimed deductions.
- For better personal-finance management and potential tax savings, NRIs may consider taking advantage of Double Tax Avoidance Agreement (DTAA) benefits by filing Form 10F.
- Awareness of various financial news related to personal-finance and health in the UAE can be crucial for NRIs to make informed decisions about their financial future and investment choices.
- After submitting your ITR, be mindful of financial news regarding the UAE's business sector and economy as these developments may impact your personal-finance and investment decisions, such as tax policies, exchange rates, and inflation rate.
