Dubai: The Government of India has clarified that Indian expatriates have to provide their foreign bank account details only if they do not have a bank account in India when they apply for income tax refunds.
The government’s official statement issued on Monday has put to rest the confusion regarding media reports related to the new requirement for Non-Resident Indians (NRIs) to furnish details for their overseas bank accounts in the income tax return forms.
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In a report published last week, Gulf News had highlighted that the NRIs in the UAE had sought clarification on the new clause added to the income tax return forms.
Tax experts who spoke to this paper that day had also urged the government to issue an official notification to clear the air in this regard.
In its first official statement on the matter, the Indian government said the change was about “optional reporting of details of one foreign bank account by the non-residents in refund cases”.
The government has also clarified that NRIs, who are not claiming refund, and NRIs who are claiming refund but having a bank account in India are not required to furnish details of their foreign bank accounts when filing their income tax returns.
Currently, the refund generated on processing of return of income is credited directly to the bank accounts of the taxpayers. Availability of the details of bank accounts in which the refund is to be credited is a precondition for the direct credit of refunds in the bank accounts.
The Income-tax Return Forms for the Assessment Year 2017-18 were notified on March 30, 2017, the statement from the Ministry of Finance said.
After that, the government said it received a number of representations from NRIs that they were facing difficulties in getting refunds as they do not have bank accounts in India. Also, there was no column in the notified form of return of income for reporting details of foreign bank accounts by the NRIs for this purpose.
“In view of this, a facility has been provided in return utility for reporting of details of bank accounts by non-residents, who do not have bank accounts in India and who are claiming income-tax refund,” the ministry said.
“However, the non-residents, who are claiming income-tax refund and not having bank accounts in India may, at their option, furnish the details of one foreign bank account in the return of income for issuance of refund,” it added.
Welcome move
The Consul-General of India in Dubai, Vipul, told Gulf News he was happy that the Government of India has clarified this issue which had been raised by several NRIs with the Indian mission as well.
Anish Mehta, secretary, Institute of Chartered Accountants of India, Dubai, also welcomed the government’s statement that would clarify the doubts among NRIs.
“It is beneficial as people can now file tax returns without any doubts or ambiguity and without fear that they are not doing it as per the regulations. This will also offer relief to NRIs who do not wish to disclose their foreign account details without the actual need for it. I suppose there will be provision to convert the currency also before the refund amount is directly sent to the overseas bank accounts.”
He said the move will encourage more people to file their returns and get refunds on time. “It can also encourage NRIs to open bank accounts in India. That may be beneficial to Indian banking industry,” Mehta said.
Dr Khalid Maniar, managing partner of Crowe Horwath UAE, said the government’s statement also clarified that it has no other hidden agenda behind the move at present. He was referring to widespread speculation that the move was aimed at levying taxes from NRIs or for monitoring their foreign accounts to prevent money laundering.
“The subject of disclosure is the choice of NRIs and the only requirement is for one bank account where they wish the refund to be credited,” he added.
