02-06-2025
Does an NRI providing consultancy to Indian firms need to file income tax return?
-Name withheld on request
As a non-resident providing consultancy services related to China market entry to Indian companies, if your only source of income from India is consultancy fees and the full tax liability has been met through the appropriate TDS in India, then you are not obligated to file an income tax return in India. This applies only if Indian companies deduct TDS at the applicable domestic tax rate of 20% (plus any surcharge and cess), without considering the provisions of the DTAA.
However, if you intend to claim the benefits under the India-Hong Kong DTAA, whereunder such consultancy income may not be taxable in India due to the absence of a fixed base or physical presence in India for providing the services, then you will need to file an income tax return in India if your income exceeds the basic exemption limit.
To avail the DTAA benefits, you must obtain a Tax Residency Certificate (TRC) from the Hong Kong tax authorities and submit Form 10F along with other necessary documents.
-Name withheld on request
Under the Indian income tax provisions, self-occupied property is a concept which refers to house properties that are typically occupied by the owners for residential purpose and therefore, the annual value of such property is considered as 'nil' and not chargeable to tax. This benefit is available on two such house properties.
Prior to the Finance Act, 2025, this benefit was available only if the property was actually used by the owner as their residence or if the owner was unable to occupy it due to employment, business, or profession being carried out at another location, and the owner resided at the other location.
However, following the 2025 amendment, the requirement to justify the non-occupation due to employment, business, or profession has been removed. Now, a taxpayer, including an NRI residing abroad, can claim the annual value as 'Nil' for up to two properties, regardless of the reason for non-occupation.
Accordingly, in your case, you may treat both the houses, where your parents reside, and the second vacant property as self-occupied in your Indian income tax return. Therefore, the annual value of both properties will be considered 'Nil', resulting in no taxable income under the head 'Income from House Property'.
However, if you acquire a third property, one of the three will be deemed to be let out, and a notional rental income (based on expected rent) will become taxable in India.
Harshal Bhuta, partner, P. R. Bhuta & Co. CAs
