Overseas income
This query is : Resolved
26 September 2025
A US CITIZEN, TAX RESIDENT OF USA (NON RESIDENT FOR INDIA). FILES HIS INDIAN TAX RETURNS FOR INCOME EARNED IN INDIA- RENTAL + INTEREST. THE PERSON RECEIVED NOTICE FROM INDIAN TAX OFFICER UNDER SECTION 142(1) ASKING FOR HIS OVERSEAS INCOME AND TAX. WHAT IS THE LEGALITY OF THIS NOTICE?
26 September 2025
The notice under Section 142(1) of the Indian Income Tax Act issued to a US citizen who is a US tax resident and a non-resident for India, seeking details of overseas income and taxes, is legally valid as a preliminary inquiry or assessment tool. Indian tax authorities are empowered to request additional information and clarification regarding both Indian and overseas income, assets, and taxes, even if only Indian-sourced income is taxable for non-residents. The goal is to verify residency status, assess potential reporting requirements, and ensure compliance with asset disclosure rules relevant for non-residents, especially in the context of FATCA, CRS, and Black Money Act enforcement.
26 September 2025
Section 142(1) empowers the Assessing Officer to request further accounts, documents, or explanations to complete income tax assessment, regardless of whether the taxpayer has already filed the return.
Non-Residents are taxable in India only on income accrued, received, or deemed to be received in India (such as rental or interest from Indian sources).
Nevertheless, authorities can lawfully request details of global income and tax filings to confirm the taxpayer's residency status and compliance with asset and income disclosure rules, especially if foreign assets or income might be connected or reported under India's disclosure framework.
Non-Residents are taxable in India only on income accrued, received, or deemed to be received in India (such as rental or interest from Indian sources).
Nevertheless, authorities can lawfully request details of global income and tax filings to confirm the taxpayer's residency status and compliance with asset and income disclosure rules, especially if foreign assets or income might be connected or reported under India's disclosure framework.
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26 September 2025
The notice does not imply that overseas income will be taxed in India, as non-residents are exempt from Indian taxation on foreign-sourced income.
Disclosure of foreign assets and taxes may be required to establish residency status and fulfill reporting requirements for Schedule FA (Foreign Assets) under the Indian tax return or related compliance under the Black Money Act.
It is important to respond to such notices with clear documentation proving non-resident status (travel records, tax residency certificate from the US) and indicate that overseas income is not taxable in India as per Section 5 and Section 6 of the Indian Income Tax Act.
Disclosure of foreign assets and taxes may be required to establish residency status and fulfill reporting requirements for Schedule FA (Foreign Assets) under the Indian tax return or related compliance under the Black Money Act.
It is important to respond to such notices with clear documentation proving non-resident status (travel records, tax residency certificate from the US) and indicate that overseas income is not taxable in India as per Section 5 and Section 6 of the Indian Income Tax Act.
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26 September 2025
Respond promptly to the notice, providing requested details and proof of non-resident status and tax residency in the US.
Submit a clear statement regarding the taxability of Indian income only and clarify that foreign income is neither accrued nor received in India.
Consult an Indian tax expert or advisor to ensure the response complies fully and prevents escalation or possible penalties.
In summary, such notices are legitimate inquiries or assessments as per the Indian Income Tax Act and compliance framework for non-residents, even when only Indian income is taxable. Proper response with supporting documents should resolve the issue without liability for overseas income tax in India.
Submit a clear statement regarding the taxability of Indian income only and clarify that foreign income is neither accrued nor received in India.
Consult an Indian tax expert or advisor to ensure the response complies fully and prevents escalation or possible penalties.
In summary, such notices are legitimate inquiries or assessments as per the Indian Income Tax Act and compliance framework for non-residents, even when only Indian income is taxable. Proper response with supporting documents should resolve the issue without liability for overseas income tax in India.
26 September 2025
Good luck...
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