The Income-tax department CBDT has exempted certain non-residents and foreign investors from filing Income Tax Return (ITR) from 2020-21 onwards, a move aimed at easing the compliance burden.
Through a notification, the Central Board of Direct Taxes (CBDT) said non-residents who do not earn any income other than income from the investment in ‘specified fund’, being Alternative Investment Fund category located in International Financial Services Centres (IFSC) or GIFT city shall not be required to file Income Tax Return.
Further, eligible foreign investors (non-residents who operate in accordance with SEBI instructions), who during the financial year, have only transacted in capital assets like Global Depository Receipts, Rupee Denominated Bonds, derivatives, or other notified securities, listed on a recognised stock exchange in IFSC, have also been exempted from ITR filing.
This is subject to the condition that the consideration for transfer of such asset is discharged in foreign currency and no other income is earned by such class of persons in India. However, in both cases above, these classes of non-residents shall have to ensure that they are exempted from the requirement of obtaining a PAN.
As per I-T rules, PAN is not required if tax has been duly deducted on the income of non-residents and remitted to the government by the ‘specified fund’.
Additionally, requisite details and documents like contact information, TIN and residential status declaration, are submitted by the non-resident to the ‘specified fund’.
“Exempting such non-residents from the obligation of filing the return of income, simply eases their compliance burden. Reducing the compliance burden on taxpayers reflects on the country’s efficient tax administration, which will further improve investor confidence,” Malhotra said.