EPFO hikes withdrawal limit from Rs 50,000 to Rs 1,00,000 for medical treatment

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The taxation rules for resident Indians and non-resident Indians differ drastically. This becomes challenging for those whose residential status changes frequently. People who travel often need to take good care of their residential status. During Covid-19, a lot of people got stuck and were not able to move back to their respective destinations. This has affected their residential status. We received the following query on Money9 Helpline:

My father was a non-resident India (NRI) who returned to India in September 2020. The same year there was an insurance policy payment that we received with 30% tax deduction due to NRI status. We are trying to file ITR this year for the tax refund. However, for this year, he doesn’t qualify to be an NRI. In this scenario, should we use ITR form-1 or ITR form-2? Please advise.

– Namit Korgaonkar

Expert view

We approached Sujit Bangar, founder, Taxbuddy.com, to get a response to this:

If your stay in India is more than 182 days, your status for taxation purpose is Resident. Your father returned to India in September 2020, and it seems that he stayed here till the end of financial year. If your father was in India from September 27, 2020 onwards, he would have completed a stay of 182 days in India.

Therefore, your father’s residential status would no more be NR for FY 2010-21.

It seems he only has an income earned in India such as LIC maturity / interest. Therefore, he can file ITR-1 and while filing this return, he can claim refund.

In normal times, due date for filing Income Tax Returns, for those who are eligible for ITR-1 is July 31.

This year with prevalent disruptions due to pandemic, the due date for filing Income Tax Returns for these taxpayers has been extended to September 30, 2021. Please check your 26 AS statement and ascertain whether credit is there for this TDS done. If credit for TDS done is not yet appearing, it would be due to delay in submission of TDS statement by the deductor due to extended deadline for TDS filing.  In such circumstances, you should wait till TDS credit appears in your 26 AS statement.

Once it is reflected in 26AS, please proceed with filing of income tax return. You anyway have to complete filing of ITR before September 30, 2021.