Saving Mantra Blog: Step-by-Step Process for Non-Resident Indian (NRI) Tax Returns Filing in India

Many Non-Resident Indians (NRIs) earn income in India through investments, rent, capital gains, interest, or business activities. If such income is taxable, NRIs must file an Income Tax Return (ITR) in India, even though they live abroad. Filing helps avoid penalties, claim refunds, and benefit from Double Taxation Avoidance Agreements (DTAA).

Below is a detailed, structured, and beginner-friendly guide.

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🌍 1. Determine NRI Residential Status Under Income Tax Act

Tax filing depends on your residential status, not passport or visa.

Under Section 6 of Income Tax Act, NRI status applies if:

• You stayed in India less than 182 days in a financial year, or
• You stayed in India less than 60 days in a year and less than 365 days in preceding 4 years (subject to exceptions)

Important: FEMA citizenship rules are separate and not relevant for tax residential status.

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💻 2. Identify Income Taxable in India for NRIs

NRIs are taxed only on income earned or received in India, such as:

• Rental income from property
• Capital gains on sale of property/shares/mutual funds
• Interest from NRO account
• Business or professional income in India
• Dividend income from Indian companies

Not taxable for NRIs:

• Interest from NRE & FCNR(B) accounts (exempt under Section 10(4))
• Foreign income earned outside India

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🧾 3. Collect Required Documents

Before filing, gather:

✔ Personal Details

• PAN
• Passport (for days calculation)
• Address & contact details
• Bank information

✔ Income Proofs

• Rent agreements
• Capital gains statements
• Interest certificates
• Dividend statements
• Salary slips (if Indian employer)

✔ Tax Deduction Proofs

• TDS certificates (Form 16 / 16A)
• Form 26AS (tax credit view)
• AIS/TIS (Annual Information Statement)

✔ Foreign Tax Credit (FTC) (if applicable)

• Tax paid proofs abroad
• Form 67 filing details

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🧮 4. Choose Correct ITR Form for NRI

Most common forms for NRIs:

NRI Income Type	Applicable Form
Salary, One House Property, Other Income	ITR-2
Capital Gains	ITR-2
Business/Professional	ITR-3
Only passive income (interest, dividend)	ITR-2

NRIs cannot file ITR-1 (Sahaj).

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📊 5. Compute Total Taxable Income

Income heads applicable for NRIs:

1. Income from house property
2. Income from business/profession (if applicable)
3. Capital gains (property, equity, mutual funds)
4. Income from other sources (interest, dividends)

Deductions allowed under:

• Section 80C (LIC, ELSS, PF, PPF*)
• Section 80D (Health Insurance)
• Section 80G (Donations)
• Section 24(b) (Interest on home loan)

*Note: PPF contributions allowed only for resident contributors in most cases.

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📉 6. Apply DTAA Benefits (If Applicable)

To avoid double taxation, India has DTAA treaties with ~90+ countries.

DTAA benefits may allow:

• Lower TDS rates
• Tax credits
• Exemptions on specific income types

For claiming FTC (Foreign Tax Credit), file:

• Form 67 before filing ITR
• Attach tax payment proof abroad

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💸 7. Pay Additional Tax (If Required)

If TDS deducted is less than actual tax liability:
✔ Pay self-assessment tax via Challan 280 on Income Tax portal

If TDS > tax, refund will be issued to NRI’s NRO account.

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📝 8. File the ITR Online

Steps:

1. Log in to Income Tax e-filing portal
2. Select relevant ITR form
3. Pre-fill using Form 26AS, AIS, TIS
4. Declare foreign assets (Schedule FA) if resident only
5. Validate & submit

NRIs with foreign bank accounts can verify through:

• Aadhaar OTP (if linked)
• Net banking
• Digital Signature (DSC)

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🧾 9. Verification After Filing

ITR must be verified within 30 days via:
✔ Net banking
✔ Aadhaar OTP
✔ DSC

If not verified, ITR becomes invalid.

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💰 10. Track Refunds (If Any)

Refunds are processed by CPC Bengaluru and credited to NRO account.

Track status via:

• Income Tax Portal
• NSDL Refund Status portal

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📅 Key Due Dates for NRI Tax Filing

• Individual NRI without audit: 31 July
• If audit applicable: 31 October
• Revised Return: 31 December of AY

Late filing attracts:

• Late fees under Section 234F
• Loss of carry-forward benefits
• Interest penalties

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❗ Common Mistakes Made by NRIs

❌ Assuming foreign income taxable in India
❌ Filing wrong ITR form
❌ Ignoring DTAA
❌ Not reporting capital gains
❌ Not filing Form 67 for foreign tax credit
❌ Not reconciling 26AS & AIS

Fixing these early prevents notices.

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Conclusion

Filing Income Tax Returns for NRIs is a structured process involving:

• Determining residential status
• Identifying taxable India-sourced income
• Choosing correct ITR form
• Applying DTAA
• Filing and verification

Even if TDS is deducted, filing ITR helps claim refunds and ensures compliance.

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Disclaimer

This blog is for information purposes only and does not constitute tax, legal, or financial advice. Income tax laws, DTAA treaties, ITR forms, and filing due dates may change over time. Please consult qualified tax professionals and verify current regulations before making any decisions.

Introduction to 80G Renewal

Registration under Section 80G of the Income Tax Act, 1961 allows donors to claim tax deductions on donations made to eligible NGOs. To continue offering this benefit, organizations must renew their 80G registration within the prescribed timeline.

This Saving Mantra guide explains the step-by-step process for 80G renewal in India, ensuring uninterrupted donor benefits and full compliance.

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What Is 80G Renewal?

80G renewal refers to:

• Renewal of regular 80G approval
• Conversion of provisional 80G to regular approval

Upon renewal:

• A new 80G certificate is issued
• Validity is generally 5 years
• Donors remain eligible for tax deductions

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Who Must Apply for 80G Renewal?

80G renewal is mandatory for:

• Charitable Trusts
• Registered Societies
• Section 8 Companies
• NGOs holding provisional or expiring 80G approval

Non-renewal may result in loss of donor tax benefits.

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Benefits of Timely 80G Renewal

• Continued donor tax deduction eligibility
• Increased donor trust and funding
• Compliance with Income Tax regulations
• Eligibility for CSR and institutional grants

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Eligibility Criteria for 80G Renewal

To qualify for renewal, the NGO must:

• Hold valid 12AB registration
• Carry out genuine charitable activities
• Maintain proper books of accounts
• File income tax returns regularly
• Comply with donation reporting requirements

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Step-by-Step Process for 80G Renewal in India

Step 1: Check Existing 80G Validity

Review:

• Expiry date of 80G certificate
• Type (provisional or regular)
• Compliance history

This helps determine renewal timelines.

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Step 2: Prepare Required Documents

Documents commonly required:

• Existing 80G certificate
• 12AB registration certificate
• NGO registration certificate
• Trust deed / MOA / Bye-laws
• PAN of NGO
• Activity report
• Audited financial statements
• Donor and donation details

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Step 3: File Online Application (Form 10AB)

• Login to Income Tax e-filing portal
• Select Form 10AB for 80G renewal
• Enter organizational and activity details
• Upload supporting documents
• Submit using DSC or EVC

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Step 4: Verification & Clarifications

The Income Tax Department may:

• Request clarifications
• Ask for additional documents
• Examine donation utilization

Timely response is critical.

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Step 5: Grant of Renewed 80G Approval

Once satisfied:

• Renewed 80G certificate is issued
• Validity: 5 years
• Approval number updated

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Time Limit for 80G Renewal

• Application must be filed at least 6 months before expiry
• Processing time: 1 to 3 months

Late filing can cause temporary lapse of donor benefits.

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Post-Renewal Compliance Obligations

After renewal, NGOs must:

• Issue donation receipts with approval details
• File Form 10BD annually
• Issue Form 10BE to donors
• Maintain proper accounts and records

Non-compliance may lead to cancellation of 80G approval.

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Common Reasons for 80G Renewal Rejection

• Non-genuine charitable activities
• Incomplete or inaccurate documents
• Non-compliance with reporting requirements
• Misuse of donation funds
• Irregular income tax filings

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How Saving Mantra Helps NGOs

Saving Mantra offers complete 80G renewal services, including:

• Eligibility and compliance review
• Documentation and application support
• Form 10AB filing
• Handling income tax notices
• Ongoing NGO compliance advisory

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Disclaimer

This article is for informational purposes only and does not constitute legal or tax advice. Income tax laws and procedures are subject to change. Readers are advised to consult qualified professionals before filing 80G renewal applications. Saving Mantra shall not be responsible for decisions taken based on this content.

🧭 1. Understand Eligibility & Investment Routes

NRIs/OCIs can invest or set up business in India through:

✔ Automatic Route

No prior approval from RBI required for most sectors including:

• IT & Tech
• Manufacturing
• E-commerce marketplace
• Trading
• Services

✔ Approval Route

Government approval needed for sectors like:

• Defense
• Media
• Satellite
• Telecom (partial)

Check sector-specific FDI limits before planning.

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🏢 2. Choose the Suitable Business Entity

Common structures for NRI entrepreneurs:

✔ Private Limited Company

• Most preferred
• Limited liability
• Easy fundraising
• 1 Resident Director mandatory

✔ LLP (Limited Liability Partnership)

• Flexible structure
• Limited compliance
• Allowed for service sectors

✔ Subsidiary of Foreign Company

• Ideal for expansions
• 100% FDI in many sectors
• Treated as Indian company for taxation

✔ Branch Office / Liaison Office

• Requires RBI approval
• Limited activities permitted

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📜 3. Obtain Digital Signature (DSC) & DIN

For company/LLP incorporation:

• Directors require DSC for digital filings
• Directors require DIN (Director Identification Number)

Documents needed:

• Passport
• Overseas address proof
• Photo
• Email & phone

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🧾 4. Register Entity with MCA (Ministry of Corporate Affairs)

Steps:

1. Reserve company name (SPICe+ Part A)
2. Draft MOA & AOA
3. Submit incorporation forms (SPICe+ Part B)
4. Apply for PAN & TAN
5. Obtain Certificate of Incorporation

Processing time: 7–15 working days

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💰 5. Plan Capital Investment & FDI Compliance

Under FEMA, foreign funds coming from NRI/OCI qualify as FDI.

Requirements:

• Funds must come from NRE/FCNR(B) or foreign bank account
• Valuation certificate (if required)
• Filing of FC-GPR form after share allotment
• Reporting to AD Bank + RBI

Investment instruments include:

• Equity shares
• Compulsorily Convertible Debentures (CCDs)
• Compulsorily Convertible Preference Shares (CCPS)

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🏦 6. Open Bank Accounts

After incorporation, the company must open:

• Current Account for operations

For capital infusion:

• FDI remittance must come through NRE/FCNR(B)/Foreign bank account
• Bank issues FIRC & KYC report (mandatory for FC-GPR filing)

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📑 7. Apply for Mandatory Registrations

Depending on business nature:

✔ GST Registration (if turnover > threshold or inter-state)
✔ Professional Tax (in applicable states)
✔ EPF/ESIC (when employees exceed limits)
✔ Import Export Code (IEC) for export/import
✔ Startup India Recognition (optional)

These enable legal operations and tax compliance.

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💼 8. Setup Accounting, Tax & Audit Structure

NRIs must plan:

• TDS compliance
• GST filings
• Transfer pricing (if foreign group involved)
• Statutory audit
• ROC filings

Corporate taxes apply as per Indian rules:

• Domestic company tax rate: 22%–25% approx.
• MAT may apply for certain entities

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🚀 9. Operational Setup & Team Hiring

NRIs must consider:

• HR compliance
• Payroll setup
• Vendor contracts
• Tech infrastructure
• Data compliance (especially IT startups)

Certain roles like director/employee may require appropriate visas for foreign nationals.

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🌍 10. Repatriation & Exit Planning

NRIs may repatriate profits subject to:

• Taxes paid in India
• Board declaration
• Compliance reporting

For repatriation:

• File Form 15CA/15CB
• FEMA reporting
• Bank documentation

Shares can also be transferred through:

• FEMA-compliant valuation
• Form FC-TRS reporting

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Common Challenges Faced by NRIs

❌ Lack of resident director
❌ Misunderstanding FDI rules
❌ FEMA reporting delays (FC-GPR)
❌ Bank KYC issues
❌ Repatriation misunderstandings
❌ Tax treaty interpretation errors

Professional assistance helps avoid compliance penalties.

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Conclusion

Setting up a venture in India as an NRI is a structured process involving:

• Entity selection
• FEMA & FDI compliance
• MCA incorporation
• Banking & capital infusion
• Tax & regulatory filings

With proper planning, India offers vast growth opportunities and ease of doing business for global entrepreneurs.

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Disclaimer

This blog is for informational purposes only and does not constitute legal, tax, or investment advice. Regulatory rules, FEMA provisions, FDI caps, tax laws, and incorporation policies may change over time. Always consult qualified professionals and verify latest rules before executing any business setup in India.

1. Understand TDS Rules for NRI Property Sale

✔ Applicable Section

Section 195 – TDS on payments to Non-Residents.

✔ TDS Rates

• Long-Term Capital Asset (held > 24 months):
  TDS = 20% + surcharge + cess (effective ~23% to 25%)
• Short-Term Capital Asset (< 24 months):
  TDS = slab rate of NRI (30% + surcharge + cess)

✔ Important

TDS is deducted on the sale value, not on capital gains, unless the NRI obtains a Lower Tax Deduction Certificate (LDC) under Section 197.

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📉 2. Option for Lower TDS Certificate (Recommended)

NRIs can apply for a Lower TDS Certificate to reduce TDS to:

• Actual LTCG amount, or
• Nil if no capital gain

Benefits

✔ Avoid heavy upfront tax
✔ Faster repatriation
✔ No refund dependency

This certificate is issued by the Assessing Officer based on estimated capital gains.

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🪪 3. Buyer Must Obtain TAN (Tax Deduction Account Number)

The buyer, not the seller, is responsible for deducting TDS.

Steps

1. Apply online at TIN-NSDL → Form 49B
2. Receive TAN within 7–10 days
3. TAN must be quoted while paying TDS (Challan 281) and filing returns

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📑 4. Collect Required Documents

📌 From NRI Seller

• PAN
• Passport
• Overseas address proof
• OCI/Visa (if applicable)
• Tax residency certificate (if DTAA is used)
• Purchase deed of property
• Bank details for payment
• Lower Deduction Certificate (if available)

📌 From Buyer

• PAN
• TAN
• Aadhaar
• Sale agreement
• Payment schedule

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💸 5. Calculate the TDS Amount

If Lower TDS Certificate Available

Apply rate mentioned in the certificate.

If No Certificate

Use standard TDS rates on full sale value.

Example:
Property sale value ₹1 crore → TDS approx. ₹23–25 lakh (LTCG case).

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🧾 6. Deduct & Deposit TDS Using Challan 281

Steps

1. Visit TIN-NSDL → e-Payment → Challan 281
2. Select:
   • 0020 (if company buyer)
   • 0021 (if individual buyer)
3. Choose Section 195 – TDS on Non-Residents
4. Enter TAN, seller PAN, and TDS amount
5. Make payment via net banking/RTGS/NEFT
6. Download Challan Receipt (CIN)

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📤 7. File TDS Return in Form 27Q

• Filed quarterly by the buyer
• Must include seller’s PAN, transaction details, and challan
• File on TRACES Portal

After filing, the buyer must generate Form 16A TDS Certificate and give it to the NRI seller.

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🌍 8. Repatriation of Sale Proceeds (For NRI Seller)

For sending funds abroad, NRI must submit:

• Form 15CA
• Form 15CB (CA certificate)
• Sale deed
• TDS challan
• Capital gain computation
• Bank KYC & FEMA declarations

Bank remits the funds from NRO account to overseas account.

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🧮 9. Claim Refund (If Excess TDS Deducted)

NRIs can claim refund while filing ITR 2 or ITR 3 if:

• Lower TDS certificate was not taken, and
• Actual capital gain was lower than TDS paid

Refunds are directly credited to the NRO bank account.

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📌 10. Common Mistakes to Avoid

❌ Buyer deducts TDS without TAN
❌ TDS deducted only on capital gains without LDC
❌ Wrong TDS section selected in challan
❌ Not filing Form 27Q on time
❌ Not issuing Form 16A
❌ Bank rejects repatriation due to missing 15CA/CB

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Conclusion

TDS on sale of property by an NRI is a multi-step compliance process involving TAN, tax deduction, TDS payment, Form 27Q filing, capital gains calculation, and repatriation rules under FEMA. Proper documentation and an early application for a Lower TDS Certificate can significantly simplify the transaction and reduce tax burden.

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Disclaimer

This blog is for educational purposes only and does not constitute financial, legal, or tax advice. TDS rates, FEMA rules, and tax laws may change. Readers should verify current regulations and consult qualified professionals before taking any action.

Introduction to 12AA Renewal

Registration under Section 12AA (now transitioned to 12AB) of the Income Tax Act, 1961 is mandatory for NGOs, trusts, and societies to claim income tax exemption on their surplus income.

As per amended provisions, all existing 12AA registrations must be renewed within prescribed timelines to continue availing tax exemption benefits.

This Saving Mantra guide explains the step-by-step process for 12AA (12AB) renewal in India, ensuring full compliance and uninterrupted tax benefits.

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What Is 12AA / 12AB Renewal?

12AA renewal refers to the revalidation of:

• Existing 12AA registration
• Provisional 12AB registration

Upon renewal:

• A new 12AB certificate is issued
• Validity is generally 5 years
• Tax exemption under Sections 11 & 12 continues

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Who Needs to Apply for 12AA Renewal?

12AA / 12AB renewal is required for:

• Charitable Trusts
• Registered Societies
• Section 8 Companies
• NGOs already holding 12AA or provisional 12AB registration

Failure to renew may lead to loss of income tax exemption.

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Benefits of 12AA Renewal

• Continuation of income tax exemption
• Eligibility for 80G approval
• Increased donor and CSR credibility
• Legal compliance with Income Tax Department

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Eligibility Criteria for 12AA Renewal

To be eligible, the NGO must:

• Be legally registered as Trust / Society / Section 8 Company
• Carry out genuine charitable activities
• Maintain proper books of accounts
• File income tax returns regularly
• Use income strictly for charitable purposes

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Step-by-Step Process for 12AA Renewal in India

Step 1: Review Existing 12AA / 12AB Status

Check:

• Current registration type (12AA or provisional 12AB)
• Validity period
• Compliance history

This determines the applicable renewal timeline.

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Step 2: Prepare Required Documents

Commonly required documents include:

• Existing 12AA / 12AB certificate
• Registration certificate of NGO
• Trust deed / MOA / Bye-laws
• PAN of NGO
• Activity report
• Audited financial statements
• List of trustees / directors
• Bank account details

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Step 3: File Online Application (Form 10AB)

• Login to Income Tax e-filing portal
• Select Form 10AB for renewal
• Fill organizational and activity details
• Upload supporting documents
• Submit using DSC or EVC

Form 10AB is mandatory for all 12AA renewals.

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Step 4: Verification & Scrutiny

The Income Tax Department may:

• Seek clarifications
• Ask for additional documents
• Conduct inquiries to verify genuineness of activities

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Step 5: Grant of 12AB Registration

Upon satisfaction:

• New 12AB registration order is issued
• Validity: 5 years
• NGO continues to enjoy tax exemption benefits

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Time Limit for 12AA Renewal

• Renewal application must be filed at least 6 months before expiry
• Processing time: 1 to 3 months, depending on scrutiny

Timely filing avoids lapse of exemption.

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Post-Renewal Compliance Requirements

After renewal, NGOs must:

• File income tax returns on time
• Maintain proper books and audit reports
• File Form 10BD & issue Form 10BE (if 80G approved)
• Intimate changes in objects or management

Non-compliance can lead to cancellation of 12AB registration.

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Common Reasons for 12AA Renewal Rejection

• Non-genuine or inactive charitable activities
• Incomplete or incorrect documents
• Diversion of funds for non-charitable purposes
• Irregular tax filings
• Mismatch between objectives and activities

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How Saving Mantra Helps

Saving Mantra provides end-to-end 12AA / 12AB renewal services, including:

• Eligibility and compliance review
• Document preparation & verification
• Form 10AB filing
• Handling income tax queries
• Ongoing NGO compliance support

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Disclaimer

This article is for informational purposes only and does not constitute legal, tax, or professional advice. Tax laws and procedures are subject to change. Readers are advised to consult qualified professionals before filing 12AA/12AB renewal applications. Saving Mantra shall not be responsible for decisions taken based on this information.

Saving Mantra Blog: Step-by-Step Process for Repatriation of Funds under FEMA/LRS in India

Repatriation of funds from India refers to transferring money outside India by residents or non-residents under regulated frameworks such as FEMA (Foreign Exchange Management Act, 1999) and LRS (Liberalised Remittance Scheme). Whether it is income earned in India, sale proceeds of investments, or remittance for education or family maintenance, the Reserve Bank of India (RBI) and banks ensure proper documentation, tax compliance, and traceability.

This guide breaks down the complete step-by-step process covering RBI rules, bank procedure, documentation, and tax compliance.

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🏛 1. Understanding FEMA & LRS Framework

Before initiating repatriation, it is crucial to know which rules apply:

✔ FEMA (Foreign Exchange Management Act, 1999)

Controls foreign exchange transactions in India and governs:

• Inward remittances
• Outward remittances
• Repatriation of sale proceeds
• Repatriation by NRI/OCI investors
• Limits, documentation, and approvals

✔ LRS (Liberalised Remittance Scheme)

Allows resident individuals to remit up to USD 250,000 per financial year for:

• Education expenses
• Travel
• Family maintenance
• Gifts & donations
• Medical treatment
• Investment abroad

✔ Repatriation by NRIs/OCIs

NRIs/OCIs can repatriate from:

• NRE Accounts – Fully repatriable (principal + interest)
• FCNR(B) Accounts – Fully repatriable (principal + interest)
• NRO Accounts – Up to USD 1 million per FY post-tax

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📑 2. Documentation Required for Repatriation

Banks require compliance and proof of source of funds. Below are typical documents:

🗂 Commonly Required Documents

• PAN card
• Passport (for NRIs/OCIs)
• Visa/OCI card copy
• Bank account statements
• FEMA declaration
• Remitter’s self-declaration
• Purpose code selection

🗂 Specific Cases

(a) NRO to NRE / Overseas Transfer

• Form 15CA (online submission via Income Tax portal)
• Form 15CB (issued by Chartered Accountant)
• Proof of tax paid/TDS certificates
• Source of funds (e.g., rental income, sale proceeds, dividend)

(b) LRS Remittances

• LRS declaration form (A2 form)
• KYC documents
• Tax Collected at Source (TCS) confirmation (if applicable)

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🏦 3. Bank Procedure for Repatriation

Below is the standard step-by-step process followed by banks in India:

Step 1 — Contact Bank Branch or Authorized Dealer (AD Bank)

Repatriation can only occur through banks authorized by RBI to deal in forex.

Step 2 — Submission of Documents

Submit:

• Application form
• FEMA/LRS declaration
• 15CA/15CB (if required)
• Source of funds proof
• KYC documents

Step 3 — Verification by Bank

Bank verifies:

• Purpose code
• FEMA compliance
• Tax clearance
• Foreign exchange usage limit
• Beneficiary details abroad

Step 4 — Forex Conversion & Transfer

Bank converts INR to foreign currency (USD/EUR/GBP etc.) and sends funds via SWIFT to the beneficiary account.

Step 5 — Confirmation & Reporting

Bank issues confirmation reports for compliance and future reference, such as:

• SWIFT copy
• Remittance advice
• FIRC (Foreign Inward Remittance Certificate) or debit advice

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💼 4. Tax Compliance Before Repatriation

Most repatriations require income tax compliance to avoid misuse.

🔶 Form 15CA

An online declaration filed to the Income Tax Department for foreign remittances.

🔷 Form 15CB

A certificate issued by a Chartered Accountant confirming:

• Nature of remittance
• Applicable tax rate
• Taxability under DTAA (if applicable)
• TDS paid (if applicable)

⭐ When 15CA & 15CB Are Mandatory

Required when:
✔ Taxable nature of funds
✔ NRO repatriation beyond ₹5 lakh
✔ Specific foreign remittances under rule 37BB

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🌍 5. RBI Compliance & FEMA Reporting

Depending on purpose, banks apply correct Purpose Codes, such as:

• S1101 – Maintenance of close relatives
• S0301 – Education abroad
• S0501 – Gifts
• S1301 – Remittance by NRI from NRO

This ensures alignment with RBI’s foreign exchange monitoring system.

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📦 6. Types of Funds Allowed for Repatriation

Below funds can be repatriated depending on status:

✔ Resident Individuals (Under LRS)

• Maintenance for family abroad
• Education & travel expenses
• Investments in securities abroad
• Purchase of property abroad

✔ NRIs/OCIs

• Rent income
• Dividend
• Pension
• Sale of immovable property (post compliance)
• Sale of investments
• Current income (interest etc.)
• Inheritance receipts

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🚫 7. Repatriation Restrictions to Note

• TCS applicable under Section 206C(1G) for LRS if limits exceeded
• Restrictions on remitting lottery/illegal income
• Sale proceeds of agricultural property not repatriable in many cases
• FEMA approval required in specific real estate scenarios

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📌 8. Practical Tips for Smooth Processing

✔ Keep all tax proofs and TDS certificates
✔ Maintain trail of credit entry in NRO accounts
✔ Take CA assistance for 15CA/15CB
✔ Check double taxation relief under DTAA
✔ Apply before financial year end for LRS limit optimization
✔ Choose correct purpose code for compliance

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Conclusion

Repatriation of funds from India is a structured process involving RBI rules, FEMA compliance, tax clearance, and bank procedures. With proper documentation and professional support, the process is smooth, compliant, and efficient.

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Disclaimer

This article is for educational and informational purposes only and does not constitute legal, tax, or financial advice. FEMA rules, RBI regulations, limits, and tax laws may change over time. Always consult a qualified professional and verify latest rules before initiating any repatriation transaction.

📌 What Is a Lower Tax Deduction Certificate?

A Lower Tax Deduction Certificate (sometimes called a lower TDS certificate) is issued by the Income Tax Department when the estimated tax liability justifies a reduced rate of TDS or no TDS at source. It ensures the payer deducts tax at a lower rate than the default specified for non-residents.

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📋 Eligibility Criteria

Your company can apply if:
✅ It does not have a PE in India and the income in India is taxable.
✅ Estimated tax liability on Indian income is lower than the default TDS rate.
✅ PAN (Permanent Account Number) is available.
✅ You have supporting documents like past tax returns, income computations, and contractual details.

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📝 Documents You’ll Need

Prepare these before applying:

• Copy of PAN of the foreign entity
• Contract or agreement showing income from India
• Details of Tax Deductor’s TAN (Tax Deduction Account Number)
• Estimated income and tax liability computation
• Previous years’ income & tax returns (if available)

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💻 Step-by-Step Application Process

1. Login to TRACES Portal

Go to the Income Tax Department’s TRACES portal and log in using your PAN and credentials (register if new).

2. Find Form 13

Navigate to “e-File → Form 13 – Application for Lower/Nil Deduction Certificate.”

3. Input Company & Income Details

Complete Form 13:
✔ Foreign entity details (PAN, address)
✔ Deductor’s details (TAN, name)
✔ Estimated income from India
✔ Tax liability calculation
✔ TDS section under which tax would ordinarily be deducted

4. Upload Supporting Documents

Attach income proofs, contracts, computations, tax returns, and other evidence to justify a lower rate.

5. Verify & Submit

Verify with a Digital Signature Certificate (DSC) or Electronic Verification Code (EVC) and submit.

6. Tracking & Assessment

You’ll get an acknowledgment. The jurisdictional Assessing Officer (AO) reviews the application and may ask for clarifications.

7. Issue of Certificate

If approved, the AO issues the certificate with the approved lower rate or nil rate and validity period, usually up to the end of the financial year.

8. Give Certificate to Deductor

Share the issued certificate with the payer in India so they can deduct TDS at the approved rate.

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⏱ Typical Timelines & Validity

• Processing usually takes 4–6 weeks but can vary.
• The certificate is generally valid until the end of the financial year or as mentioned on it.

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✅ Final Tips for Success

✔ Apply before the first payment in the year to avoid excess TDS.
✔ Submit complete and accurate documentation to minimize queries from the AO.
✔ Renew annually if you want continued benefit in subsequent years.

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⚠️ Disclaimer

This blog is for informational purposes only and doesn’t constitute legal or tax advice. Tax laws and procedures can change; always verify with the Income Tax Department and consult a qualified tax professional before applying.

Introduction to Objection Memo & Reply Filing

NGOs, Trusts, and Societies in India often receive notices, objections, or clarification letters from various authorities during registrations, renewals, audits, or assessments. Filing a timely and accurate Objection Memo or Reply is crucial to protect legal status and ensure smooth compliance.

Replies may be required before authorities such as the Income Tax Department, Charity Commissioner, Registrar of Societies, CSR authorities, or FCRA division.

This Saving Mantra guide explains the step-by-step process for filing objection memos and other replies for NGO/Trust/Society in India.

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What Is an Objection Memo or Reply?

An Objection Memo / Reply is a formal written response submitted against:

• Income Tax notices (12AB, 80G, scrutiny, audit)
• Change report objections
• Registration or renewal queries
• Compliance defects or document shortfalls
• FCRA or CSR clarifications

It justifies the NGO’s position with facts, documents, and legal references.

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When Is Filing an Objection or Reply Required?

Replies are required when:

• A notice or defect memo is issued
• Clarification or additional documents are sought
• Application is kept pending due to discrepancies
• Provisional approval is objected or questioned
• Assessment or inquiry proceedings are initiated

Missing deadlines may result in rejection, cancellation, or penalties.

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Step-by-Step Process for Filing Objection Memo & Replies

Step 1: Carefully Review the Notice

• Identify issuing authority
• Note reference number and date
• Understand objections, defects, or queries
• Check deadline for submission

Never respond without understanding the exact concern.

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Step 2: Identify Applicable Law & Authority

Determine whether the reply is under:

• Income Tax Act, 1961
• State Trust / Society laws
• FCRA regulations
• CSR guidelines

Each authority has a specific format and tone.

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Step 3: Collect Supporting Documents

Common documents include:

• Registration certificates
• Trust deed / MOA / Bye-laws
• Board resolutions
• Financial statements & audit reports
• Activity and project reports
• Bank statements
• Clarification affidavits

Documents must directly address the objection raised.

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Step 4: Draft the Objection Memo / Reply

A proper reply should include:

• Reference to notice number & date
• Point-wise response to each objection
• Legal explanation and factual clarity
• Supporting document index
• Declaration and authorized signature

Clarity and accuracy are critical.

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Step 5: Approval by Governing Body (If Required)

For major matters:

• Obtain trustee / board approval
• Pass a resolution authorizing submission
• Attach authorization letter

This strengthens the reply’s legal standing.

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Step 6: File Reply Through Prescribed Mode

Replies may be filed:

• Online via Income Tax or MCA portal
• Through email (as instructed)
• Physical submission to authority office

Always follow the mode specified in the notice.

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Step 7: Acknowledge & Track Status

• Save acknowledgement or submission proof
• Track response status online or offline
• Be prepared for hearings or further queries

Maintain records for future reference.

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Time Limit for Filing Objection Memo

• Usually 7 to 30 days from notice date
• Timelines vary by authority and nature of notice

Late submissions may lead to adverse orders.

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Common Reasons Objections Are Raised

• Incomplete documentation
• Mismatch in financial data
• Unclear charitable objectives
• Non-compliance with registration conditions
• Delayed filings or updates

Proactive compliance reduces objections.

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Best Practices for Effective Replies

• Respond point-wise, not generically
• Attach only relevant documents
• Avoid emotional or argumentative language
• Quote applicable legal provisions where needed
• Maintain professional formatting

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How Saving Mantra Helps NGOs

Saving Mantra provides expert objection and reply handling services, including:

• Notice analysis & compliance mapping
• Drafting professional objection memos
• Document collation & validation
• Online and offline submission
• Representation & follow-ups

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Disclaimer

This article is for informational purposes only and does not constitute legal, tax, or professional advice. Procedures and timelines vary based on authority and applicable laws. Readers are advised to consult qualified professionals before filing replies or objections. Saving Mantra shall not be liable for actions taken based on this content.

Introduction to Change Report Filing

A Change Report is a mandatory compliance requirement for NGOs, charitable trusts, and societies whenever there is any change in management, structure, address, objects, or governing body. Filing a timely change report ensures transparency and legal continuity of the organization.

Change reports are typically filed with the Charity Commissioner, Registrar of Societies, or other applicable authorities depending on the type of entity and state laws.

This Saving Mantra guide explains the step-by-step process for filing a Change Report for NGO/Trust/Society in India, covering applicability, documents, timelines, and best practices.

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What Is a Change Report?

A Change Report is a formal intimation submitted to the concerned authority to record any modification in:

• Trustees or managing committee members
• Office bearers (President, Secretary, Treasurer, etc.)
• Registered office address
• Objectives or activities
• Name of the NGO
• Bank signatories or internal governance structure

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Who Is Required to File a Change Report?

Change Report filing is mandatory for:

• Charitable Trusts
• Registered Societies
• Section 8 Companies (as applicable under MCA filings)
• NGOs registered under state charity laws

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When Is Change Report Filing Required?

A change report must be filed when there is:

• Appointment, resignation, or death of trustee/member
• Change in governing body composition
• Amendment in trust deed, MOA, or bye-laws
• Change in registered office address
• Merger or restructuring of NGO

Delay or non-filing may attract penalties or legal complications.

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Step-by-Step Process for Filing Change Report in India

Step 1: Identify the Nature of Change

Determine whether the change relates to:

• Management / trustees
• Address
• Objectives
• Structural amendments

Each type of change may require different documentation.

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Step 2: Conduct Governing Body Meeting

• Convene a Board of Trustees / Managing Committee meeting
• Pass a resolution approving the change
• Record minutes of the meeting

This resolution forms the legal basis for filing the change report.

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Step 3: Prepare Supporting Documents

Documents typically required include:

• Resolution and minutes of meeting
• Updated list of trustees/members
• Identity & address proof of new members
• Amended trust deed / MOA / bye-laws (if applicable)
• Affidavit or declaration
• Previous registration certificates

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Step 4: Draft and File the Change Report

• Prepare the change report in prescribed format
• File it with the Charity Commissioner / Registrar of Societies
• Attach all supporting documents
• Pay applicable government fees

Some states allow online filing, while others require physical submission.

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Step 5: Scrutiny by Authorities

• Authority reviews documents and resolutions
• May issue notice for clarification or objections
• Hearing may be conducted if required

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Step 6: Approval & Record Update

Once approved:

• Changes are recorded in official NGO records
• Updated entry is reflected in public register
• NGO can legally operate with updated details

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Time Limit for Filing Change Report

• Generally required within 30 to 90 days from the date of change
• Timelines may vary based on state-specific laws

Early filing helps avoid disputes and penalties.

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Compliance Linkages with Change Report

Change report filing supports:

• Validity of NGO governance
• Smooth income tax compliance under the Income Tax Act, 1961
• FCRA compliance (if applicable)
• Bank, donor, and CSR reporting

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Common Mistakes to Avoid

• Delayed filing of change report
• Missing board resolutions
• Incorrect or incomplete documentation
• Not updating related authorities (Income Tax, FCRA, banks)
• Ignoring state-specific rules

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How Saving Mantra Helps NGOs

Saving Mantra provides complete Change Report filing services, including:

• Identification of applicable changes
• Drafting resolutions and documents
• Filing with Charity Commissioner / Registrar
• Follow-ups and approvals
• Post-change compliance alignment

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Disclaimer

This article is for informational purposes only and does not constitute legal or professional advice. Change report procedures and timelines may vary by state and governing law. Readers are advised to consult qualified professionals before filing. Saving Mantra shall not be liable for actions taken based on this information.

Introduction to Annual Budget Filing for NGOs

Preparing and filing an Annual Budget is a critical compliance and governance requirement for every NGO, Trust, and Society in India. The annual budget acts as a financial roadmap, outlining expected income, planned expenses, and project-wise fund allocation for the upcoming financial year.

Proper budgeting ensures transparency, donor confidence, and smooth compliance under the Income Tax Act, 1961, CSR norms, FCRA (if applicable), and internal governance rules.

This Saving Mantra guide explains the step-by-step process for filing the annual budget for NGOs in India, suitable for charitable trusts, societies, and Section 8 companies.

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What Is an Annual Budget for NGO/Trust/Society?

An annual budget is a financial statement that estimates:

• Expected income (donations, grants, CSR, subscriptions)
• Program and project expenses
• Administrative and compliance costs
• Capital expenditure (assets, infrastructure)
• Reserve or surplus planning

It is usually approved by the Governing Body / Board of Trustees before the start of the financial year.

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Why Annual Budget Filing Is Important

• Ensures financial discipline and control
• Mandatory under trust deed, MOA, or bye-laws
• Required for donor funding and CSR grants
• Essential for FCRA and statutory compliance
• Helps in audit, reporting, and future planning

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Who Is Required to Prepare an Annual Budget?

Annual budget preparation is required for:

• Charitable Trusts
• Registered Societies
• Section 8 Companies
• NGOs receiving grants, CSR funds, or foreign contributions

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Step-by-Step Process for Filing Annual Budget in India

Step 1: Review Previous Year Financials

Analyze:

• Last year’s income and expenditure
• Budget vs actual variance
• Pending liabilities or commitments
• Project-wise fund utilization

This helps in realistic budget planning.

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Step 2: Estimate Expected Income

Prepare income projections from:

• Voluntary donations
• CSR contributions
• Government or private grants
• Foreign contributions (FCRA registered NGOs)
• Membership fees or subscriptions
• Interest or other income

Income estimation should be conservative and well-supported.

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Step 3: Plan Program & Project Expenses

Allocate funds for:

• Ongoing projects
• New proposed programs
• Beneficiary-related costs
• Monitoring and evaluation expenses

Each project should have a clear budget head.

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Step 4: Estimate Administrative Expenses

Include:

• Salaries and professional fees
• Office rent and utilities
• Compliance costs (audit, filing, consultancy)
• Technology, software, and communication costs

Administrative expenses should remain reasonable and justifiable.

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Step 5: Capital Expenditure Planning

Budget for:

• Purchase of equipment
• Office infrastructure
• Vehicles or fixed assets
• Long-term capacity building

Capital expenses should align with NGO objectives.

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Step 6: Prepare Budget Statement

Create a structured budget document showing:

• Income heads
• Expenditure heads
• Surplus or deficit projection
• Project-wise allocation

The budget should be prepared in standard accounting format.

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Step 7: Governing Body / Board Approval

• Present the budget to Trustees / Managing Committee
• Pass a formal Board Resolution
• Record approval in meeting minutes

Board approval is mandatory for legal validity.

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Step 8: Filing & Record Maintenance

Depending on structure and funding:

• Maintain budget in statutory records
• Submit to donors or CSR partners if required
• Upload or submit to government authorities (if applicable)
• Keep ready for audit and assessments

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Documents Required for Annual Budget Filing

• Previous year financial statements
• Activity and project reports
• Estimated income details
• Expense breakup and projections
• Governing body resolution
• Trust deed / MOA / Bye-laws

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Compliance Linkages with Annual Budget

Annual budget supports compliance with:

• Income Tax filings and audit
• CSR funding utilization
• FCRA reporting (where applicable)
• Internal control and governance norms

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Common Mistakes to Avoid

• Unrealistic income projections
• Mixing capital and revenue expenses
• No board approval
• Ignoring compliance-related costs
• Poor documentation and records

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How Saving Mantra Helps NGOs

Saving Mantra offers end-to-end NGO financial compliance support, including:

• Annual budget preparation
• Project-wise financial planning
• Board resolutions & documentation
• Alignment with tax, CSR & FCRA norms
• Audit and compliance advisory

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Disclaimer

This article is for informational purposes only and does not constitute legal, financial, or professional advice. Budgeting requirements may vary based on the NGO’s structure, funding, and applicable laws. Readers are advised to consult qualified professionals before implementation. Saving Mantra is not responsible for actions taken based on this information.