NRIs in UAE: How to file tax returns for capital gains
Question: I have not been filing my tax return in India after I came to the Gulf. However, during the financial year 2024-25 I made capital gains on sale of investments and therefore I will be filing my tax return. Can you please guide me and let me know the last date for filing the same?
ANSWER: Generally the last date for filing the tax return is July 31 for persons who are not liable to file a tax audit report. However, this date has been extended to September 15 for the current assessment year 2025-26. The reason for this extension is that certain amendments have been made to the law which has necessitated revision of the format of income-tax returns requiring the tax department to streamline the technology platform as all returns have to be filed online. Given the increased reporting requirements, the extension of time till September 15, 2025 will give you the opportunity to ensure that proper disclosures are made in respect of the capital gains made by you during the financial year ended March 31, 2025.
If any tax has been deducted at source from the interest or dividend earned, you will be able to collect the relevant details from Form 26 AS which is on the website of the tax department. You must ensure that the correct figures are reflected in your tax return so that the assessment is made seamlessly without any further inquiry from the tax authorities and any amount due to you is refunded immediately upon such summary assessment being completed.
Question: Can you throw some light on the external commercial borrowing regime for Indian corporates. What are the guidelines?
ANSWER: External commercial borrowings are allowed to Indian companies either under the automatic route or under the approval route where specific permission of the Reserve Bank of India/Finance Ministry needs to be taken. Indian companies raise loans in foreign currency primarily to access a substantial capital at interest rates which are lower than those prevailing in India. Thus, large scale projects can be financed at international interest rates. Loans can be obtained in foreign currency for import of capital goods as well as for overseas acquisition of foreign companies.
Financial services companies are also eligible to resort to external commercial borrowings. In fact, during the financial year ended March 31, 2025, Indian companies were granted permission to borrow an amount of $61.8 billion which is a significant increase from $49 billion raised in the earlier financial year ended on March 31, 2024. The surge in external commercial borrowings highlights the growing confidence of foreign institutions in India's economic growth. Several Indian companies have been able to attract foreign funds to meet their working capital needs as well as to refinance existing loans. Investment in infrastructure projects attracted the major amount of loans from overseas agencies. The semiconductor industry, being the sunrise industry in India, was able to raise substantial funds in the last financial year.
Question: Are professional services firms allowed to raise capital from foreign sources? Certain private equity firms are keen to invest in well-established firms in India.
ANSWER: Professional services firms are permitted to raise funds from overseas markets within the regulatory framework. Globally, over the last two years, professional services firms have received private equity or sold holdings in their regional arms to fuel global expansion and invest in technology. This worldwide trend of private equity investing in professional services is gaining traction in India as well. While the Big Four are well capitalised, other accounting firms in India are using the merger and acquisition route to grow at a rapid pace. Some of these firms are looking to invest in small CPA firms in the United States for which they seek private equity funding. The India-US corridor offers great potential with Indian back-end capabilities supporting the American operations.
In short, access to private capital provides a key competitive advantage which helps medium sized firms in India to invest in technology and acquire smaller professional outfits. Corporatisation and capitalisation are the two engines on which Indian professional services firms are planning to go international. Firms which originally provided audit and tax related services are now moving into technology-based services covering a diverse range of activities which require employment of highly paid technical personnel from different disciplines.
The writer is a practising lawyer, specialising in corporate and fiscal laws of India.
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