July 2025

Filing season brings out the same handful of errors year after year among NRIs, and most of them are avoidable with a bit of forethought rather than last-minute scrambling.

Getting residential status right comes first. It’s determined by days spent in India during the financial year and the preceding years, not by visa type or self-perception of being “settled abroad.” Someone who spent extra months in India for family reasons can unknowingly slip into resident status, which changes what income is taxable in India altogether.

Choosing the correct ITR form matters more than it seems. NRIs with capital gains, foreign assets, or income from more than one house property usually need ITR-2 or ITR-3, not the simpler ITR-1, which isn’t even available to non-residents. Filing the wrong form can lead to a defective return notice, which just adds delay.

Claiming DTAA benefits requires more than mentioning the treaty exists. It needs Form 10F, a Tax Residency Certificate from the country of residence, and matching documentation of tax already paid abroad. Advisors at Ashutosh Financial Services routinely see the claim made without the paperwork to support it, which usually results in the credit being denied or queried.

TDS on property sales trips up a lot of NRIs specifically. Buyers are required to deduct tax at a rate meant for non-residents, which is often higher than the seller’s actual liability, so the difference is only recoverable by filing a return and claiming a refund. Skipping the filing means leaving that money with the tax department indefinitely.

Reporting foreign bank accounts and assets, where the taxpayer qualifies as a resident, is a disclosure obligation separate from tax liability. Ashutosh Financial Services has flagged this as one of the most misunderstood requirements, since people often assume small balances don’t need mentioning at all.

None of these five points are obscure technicalities. They’re the same issues that surface every filing season because the underlying rules rarely get explained clearly before the deadline creates pressure to just get something filed. Ashutosh Financial Services continues to hold pre-season sessions for NRI taxpayers specifically to work through this list before it becomes a scramble.

What “Attractive Returns” on Debentures Actually Depends On

Debentures and bonds get marketed on yield, and yield is the easiest number to make look good on a page. What rarely gets equal billing is the thing that determines whether that yield is worth taking: the creditworthiness of whoever is borrowing the money.

A debenture is simply a company’s IOU, a promise to pay a fixed rate of interest over a set period and return the principal at maturity. Bonds work on the same basic structure, though the term is more often used for instruments issued by governments, PSUs, or larger corporates with public credit ratings. The distinction matters less than most marketing suggests. What matters is whether the debenture is secured against specific assets of the company or unsecured, since that decides where an investor stands if the issuer runs into trouble.

Credit rating is the number worth reading before the coupon rate. A AAA-rated instrument yielding a modest premium over a bank fixed deposit is a genuinely different proposition from a lower-rated one offering a much higher coupon, because that extra yield exists precisely to compensate for higher default risk. Chasing the higher number without checking why it’s higher is how conservative-sounding portfolios end up with an unpleasant surprise.

Liquidity is the other underappreciated factor. Listed non-convertible debentures trade on exchanges, but volumes for many issues are thin, which means exiting before maturity can mean accepting a price worse than fair value. Anyone building a debenture allocation with a specific time horizon in mind should check listing status and trading history, not just assume an exit is always available at a reasonable price.

Tax treatment on debenture interest and any capital gains depends on the holding period and the specific instrument, and this has seen changes in recent years that affect the post-tax comparison with other fixed-income options. Advisors at Ashutosh Financial Services generally recommend running that comparison before assuming a higher headline rate translates into a higher take-home return.

None of this makes debentures a bad idea. It just means the coupon rate is the last number to look at, not the first. Ashutosh Financial Services continues to walk investors through exactly this kind of fixed-income due diligence as part of its ongoing investor education efforts.

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