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I currently reside in the United States and I have been working here for about a year. However, my accounts in India are non NRE accounts and I have transferred about $20k to India within the last one year. Now, I am aware about the fact that India and US have a tax treaty( So I do not have to pay taxes in India, if I pay them here in the United States). My question here is, can I file a NULL return even though my accounts in India are non NRE accounts, or what steps do I need to take, in order to keep my file up to date in India?

  • Many banks send in Tax Deducted at Source (TDS) money to the Indian Income Tax Authorities. So, you may want to file a tax return to get a refund of these amounts. But, regardless of whether you choose to pursue such a refund or not, you must declare the total interest earned (money withheld as TDS plus the residue which remains in your account) as income to the IRS. Since you are likely a cash-basis taxpayer, you can choose to report TDS as tax paid to India, but if and when you get a refund of TDS, that amount must be included in US income for that year. – Dilip Sarwate Sep 22 '14 at 21:57
  • Sir, Interst in India up 2 lacs is tax free. $20k is about 12 lacs, and the interest may add up to a little more than 1 lac. I have already filled out the forms so that TDS does not get cut. Do I still need to report it? – user19894 Sep 23 '14 at 13:13
  • Tax treaties do not necessarily mean you don't have to pay tax in India. It means your tax payments to the US are taken into account when calculating your Indian taxes. However the fact that you are not resident in India probably means you won't need to pay tax there if you have no earnings from indian sources. – DJClayworth Sep 23 '14 at 14:49
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As an NRI, you are still liable to pay taxes on certain incomes earned in India, like the interest on Savings accounts / rent received from property / capital gains on shares / etc.

It is advisable to file a NIL return in India. The forms are same as one you fill for normal returns. You just have to declare the right source of income and show zero taxes[if within the exempt bracket]. There are quite a few online services including Government Website

As Dilip has mentioned in comments, US taxes on your global income, hence it would be advisable to declare the interest income in India to the IRS. The Double tax avoidance treaty would help you avoid being taxed twice, however you would still pay the max rate of tax.

  • Hello Dheer,The Double tax avoidance treaty would help you being taxed twice. What do you mean by this? – user19894 Sep 24 '14 at 1:32
  • @user19894 Missing word "avoid". Fixed the answer. – Dheer Sep 24 '14 at 16:54
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1: Log on to the Income Tax Department's portal (www.incometaxindiaefiling.gov.in) meant for filing taxes online. Register yourself using your Permanent Account Number (PAN), which will act as your user ID.

2: Under the 'Download' menu, go to e-filing AY 2012-13 < Individual/HUF and select the appropriate Income Tax Return (ITR) form. Download ITR-1's (Sahaj) return preparation software if you are a salaried individual, pensioner, own one house property and/or earn interest income.

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