I am a partner in an Indian firm but live abroad — which return?
A partner's share of a firm's income is business income in the partner's hands, and the return for individuals and partners with business or professional income is where it goes, resident or not. Living abroad does not move it to a simpler form. Two things follow for a non-resident partner. The firm's accounts have to be settled before the partner's return can be finalised, which puts part of the timetable outside your control. And the firm's activity raises the question of what your own presence in India amounts to, which is separate from the partnership share and answered on facts.
Do freelancers with Indian clients file ITR-3?
Professional income sits within this return, so a freelancer billing Indian clients generally belongs in its population rather than a simpler form's. The harder question for someone working from outside India is not the form but the characterisation: whether the Indian work amounts to a business presence in India, or is income arising from India without one. Those lead to different treatment, and the answer comes from what is actually done, where, and through whom, rather than from where the invoice is raised. Establish that first, because it determines what the return has to say.
Does filing ITR-3 mean my accounts have to be audited?
Not automatically, but business income brings the audit question with it, and the answer changes the shape of the whole exercise. It depends on the year's facts and has to be settled early, because an audit requirement carries its own preparation and its own timetable, both of which sit ahead of the return. The related question is books of account. A return in this family assumes books exist and are capable of supporting the figures in it. Where they do not, reconstructing them is the work, and the return becomes the last step rather than the first.
Is my Indian consulting work a business presence in India?
That is the permanent-establishment question, and for a non-resident with Indian business or professional income it is usually the most consequential thing on the file. It is decided by facts: what is done, where it is done from, who does it, and what the arrangement looks like in practice as opposed to on paper. The reason to settle it before filing is that the return takes a position on it by implication, whether or not you have thought about it. A conclusion reached from the facts and written down is what makes that position defensible afterwards.
Which return covers both salary and professional fees from India?
The professional income is what decides it. Salary alongside it does not push the year into a simpler form; the return carrying business and professional schedules carries the salary as well. The practical trap is treating the fees as incidental because the salary is larger, and reporting the year as a salary year with something extra on the side. That understates what the return has to show, because the fees bring the books question with them at whatever scale they arise. Separate the two sources at the record-keeping stage, so the professional side has accounts instead of being reconstructed from a bank statement later.
Do I have to file in India if my business there made a loss?
The obligation follows from what you carry on, not from how the year turned out, so a loss year is still a filing year. There is a second reason not to skip it. A loss is only useful later if it has been reported in a return for the year in which it arose, and how and when that return goes in can affect whether it remains available. A year left unfiled because there was nothing to pay is therefore capable of costing real money in a later profitable year, which is usually the point at which people discover the problem.
Do foreign shares, ESOPs and RSUs count as foreign assets in an Indian return?
Yes. Equity held directly, shares acquired under an employee plan once they have vested to you, units in foreign funds, the custodial account they sit in and the foreign bank account that funds it are all disclosable by a resident — separately, with acquisition cost, peak value and income for the year. This is where returning employees of multinational groups most often have a gap, because the plan administrator reports to the employer, not to you. See Schedule FA reporting.
What is DTAA?
DTAA — a Double Taxation Avoidance Agreement — is India's term for a tax treaty. It allocates taxing rights between India and the other country, caps withholding on cross-border payments, and gives relief for income taxed twice by either exempting it or crediting the foreign tax. Relief is claimed, and from the Indian side that normally means a tax residency certificate, Form 10F and Form 67. See DTAA relief.
