I am a Non-Resident Indian (NRI) living in Australia. I had filed my income-tax return for FY 2024-25 to claim a refund of excess TDS and provided my NRE bank account details for the refund credit. However, I have not received the refund so far, and it appears that the refund has failed. Can I now change it to an NRO account and what is the procedure for refund re-request?
—Name withheld on request
In practice, credit of income-tax refunds to NRE (Non-Resident External) bank accounts often fails, as the Income-tax Department generally credits tax refunds only to an NRO (Non-Resident Ordinary) account when an Indian bank account is required. Consequently, where an NRE account is selected, the refund may be returned undelivered and the refund status on the income-tax e-filing portal may show as “failed” or “rejected”.
In your case, you should log in to the income-tax e-filing portal and validate your NRO bank account by furnishing the required bank details and completing the prescribed validation process.
Once your NRO account is successfully validated, you should submit a request for reissue of the refund on the portal and select the validated NRO account for credit of the refund amount.
Upon submission of the reissue request and subsequent verification by the Income-tax Department, your refund will be reprocessed and credited to your NRO account.
I am an NRI who has been residing in the UAE for a considerable period of time. I have been regularly investing in listed Indian equities through my PIS account in India, which is funded through remittances from my UAE bank account. Until now, I was unaware of the beneficial provisions specially available to NRIs for exemption of capital gains from the transfer of equity shares purchased from foreign exchange. Can I now avail such beneficial exemption even though I have not claimed these provisions in the past anytime?
—Name withheld on request
I presume you are referring to the provisions under Chapter XII-A of the Income Tax Act, 1961 (specifically section 115F), which provide for exemption from capital gains tax on the transfer of foreign exchange assets, such as listed shares of Indian companies acquired using convertible foreign exchange.
The exemption is available provided the net consideration from the transfer is reinvested in specified assets, such as shares of a listed Indian company, within a period of six months from the date of transfer.
As an NRI, you are eligible for these special beneficial tax provisions and they can be claimed if you opt to be governed by them.
Accordingly, even though you have not availed these benefits in the past, you may certainly claim them for capital gains earned during FY 2025-26 and for gains earned in later years, provided you reinvest the net consideration in the specified assets in accordance with the conditions under section 115F of the Income Tax Act, 1961 / section 215(1) of the Income Tax Act, 2025.
Harshal Bhuta is partner at P. R. Bhuta & Co. CAs.
