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Filing Income Tax Returns in India is not just for residents. Non Resident Indians (NRIs) are also required to comply with Indian tax laws if they earn income from Indian sources. This includes rental income, capital gains, interest from NRO accounts, or any business or professional income within India. Many NRIs are unaware of their tax obligations or assume that being outside the country exempts them entirely. That is not the case. The Income Tax Department mandates return filing under specific conditions and failure to comply can lead to penalties and notices. In this guide, we explain the basics of ITR filing for NRIs, when it is required, which ITR forms apply and the practical steps to complete the process.
Latest updates
- ITR filing Due date for FY 2024-25 (2025-26) has been extended from 31st July 2025 to 15th September 2025
How to calculate NRI Status?
Essentially, your tax liabilities are influenced by your residential status for a particular financial year. Let’s look into what constitutes NRI status:
Residential Criteria: Your residential status is determined based on the number of days you have spent in India during the financial year.
An individual qualifies as a Non-Resident Indian (NRI) if they have spent less than 182 days in India during the financial year or less than 60 days in India during the financial year and less than 365 days in the preceding four financial years.
Financial Year Duration: The financial year is the period from April 1st to March 31st of the following year. So, if you’ve spent less than 183 days in India during this period, you qualify as an NRI.
Global Income vs. Indian Income: As an NRI, you are liable to pay tax only on income earned or accrued in India. Income earned outside India is not taxable in India for NRIs.
Residential Status Implications: Your residential status affects various aspects of taxation, including the tax rates applicable to your income, eligibility for certain tax deductions and exemptions and the forms you need to use for filing your income tax return.
Change in Residential Status: It’s essential to monitor your residential status each financial year, especially if you’re transitioning between being a resident and an NRI. This change can impact your tax filing requirements.
Understanding your NRI status is the first step towards ensuring compliance with Income tax act. It helps you determine your tax liabilities accurately and ensures that you fulfill your obligations without any legal complications.
Key Components of Income tax return filing for NRI
Filing income tax returns as a Non-Resident Indian (NRI) involves understanding specific components tailored to your unique tax situation. Here’s a detailed look at the essential elements:
Income Sources: NRIs need to report income earned or accrued in India during the financial year. This includes income from various sources such as:
- Rental income from properties in India.
- Interest earned on savings accounts, fixed deposits, or bonds held in India.
- Capital gains from the sale of assets like real estate or securities situated in India.
- Salary received from Indian employers for services rendered in India.
Double Taxation Avoidance: NRIs residing in countries with which India has signed Double Taxation Avoidance Agreements (DTAA) can benefit from provisions to avoid being taxed twice on the same income. These agreements provide mechanisms such as tax credits, exemptions, or deductions to prevent double taxation and promote cross-border trade and investment.
Income tax on salary of NRI
If an NRI earns salary income in India for services rendered in the country, such income is taxable in India, irrespective of the individual’s residential status. This includes salary received from Indian employers or income earned from employment or services provided in India.
If an NRI earns salary income outside India, such income is not taxable in India.
Income tax on Rent income of NRI
Rental income earned by NRIs from properties located in India is considered taxable income under the Income Tax Act. This includes income from residential properties, commercial properties, vacant land, or any other property generating rental income.
NRIs can claim deductions against rental income like property taxes paid, 30% standard deduction, interest on housing loan, principal repayment of housing loan.
Income from house property is taxed at slab rates as applicable.
When paying rent to an NRI landlord, tenants should keep in mind the requirement to deduct TDS at a rate of 30%. This deduction must be made before paying the rent amount.
The rental income can be deposited into either an account in India or the NRI owner’s account in their current country of residence.
What are Deductions and exemptions available to NRI?
Section 80C: Life insurance premium, ELSS, principal repayment of home loan, tuition fees (only for education in India) and investments in PPF (only if account was opened before becoming NRI)
Section 80D: Health insurance premium for self, spouse, children, and parents
Section 80E: Interest on education loan for higher studies (in India or abroad)
Section 80G: Donations to eligible charitable institutions
Section 80TTA: Deduction up to 10,000 on interest from savings account (only NRO savings account, not NRE/NRO fixed deposits)
Exemption on interest earned on NRE and FCNR accounts (fully exempt)
Exemption on long-term capital gains under Section 54, 54EC, and 54F (if conditions are met)
DTAA (Double Taxation Avoidance Agreement) benefits, if applicable, to avoid double taxation on the same income in two countries
Income tax Slab rates for Non resident
Old tax Regime
| Income | Tax rates |
| Upto ₹ 2.50 lakh | 0% |
| ₹ 2.50 lakh – ₹ 5 lakh | 5% |
| ₹ 5 lakh – ₹ 10 lakh | 20% |
| Above ₹ 10 lakh | 30% |
You Can claim deduction under Section 80C, 80D, 80G, etc
For senior citizen (age between 60 & 80 years), tax rate is 0% upto ₹ 3 lakhs. Rest of the rates are same.
For super senior citizen (age above 80 years), tax rate is 0% upto ₹ 5 lakhs. Rest of the rates are same.
In Old tax regime, a maximum tax rebate under section 87A of Rs. 12,500 is available for income upto Rs. 5 lakhs meaning your income is totally tax free till Rs. 5 lakhs. The rebate under section 87A is not allowed to a Non-resident.
New tax Regime (FY 23-24)
| Income | Tax rates |
| Upto ₹ 3 lakh | 0% |
| ₹ 3 lakh – ₹ 6 lakh | 5% |
| ₹ 6 lakh – ₹ 9 lakh | 10% |
| ₹ 9 lakh – ₹ 12 lakh | 15% |
| ₹ 12 lakh – ₹ 15 lakh | 20% |
| More than ₹ 15 lakh | 30% |
New tax Regime (FY 24-25)
Income | Tax Rate |
Upto ₹ 3 lakh | 0% |
₹ 3 lakh – ₹ 7 lakh | 5% |
₹ 7 lakh – ₹ 10 lakh | 10% |
₹ 10 lakh – ₹ 12 lakh | 15% |
₹ 12 lakh – ₹ 15 lakh | 20% |
Above ₹ 15 lakh | 30% |
New tax Regime (FY 25-26)
| Income Range (₹) | Tax Rate |
|---|---|
| Upto ₹ 4 lakh | Nil |
| ₹ 4 lakh – ₹ 8 lakh | 5% |
| ₹ 8 lakh – ₹ 12 lakh | 10% |
| ₹ 12 lakh – ₹ 16 lakh | 15% |
| ₹ 20 lakh – ₹ 20 lakh | 20% |
| ₹ 20 lakh – ₹ 24 lakh | 25% |
| Above ₹ 24 lakh | 30% |
Which ITR form is applicable to NRI?
The applicable ITR form for an NRI depends on the nature and sources of income in India. In most cases, NRIs file ITR-2, which is meant for individuals who do not have income from business or profession. ITR-2 is suitable if the NRI has income from salary (for services rendered in India), rental income, capital gains, or other sources like interest.
However, if the NRI is earning income from business or profession in India, then ITR-3 must be used. Forms like ITR-1 are not available for NRIs, even if their income is below the threshold, as it is restricted to resident individuals only. Choosing the correct form is important to avoid defective return notices from the income tax department.
TDS on income recieved by NRI in India
TDS on NRI income is deducted at higher and specific rates, depending on the type of income earned from India. Here is a quick summary:
Salary income: TDS is deducted as per applicable slab rates after considering eligible deductions if the NRI is employed in India.
Interest from NRO account: 30% TDS plus applicable surcharge and cess is deducted.
Interest from NRE and FCNR accounts: No TDS applicable as it is fully tax free.
Rent income: The tenant must deduct TDS at 30% before paying rent to the NRI.
Short-term capital gains (on listed shares/equity funds): 15%
Long-term capital gains on listed securities (above Rs 1 lakh): 10% without indexation
Long-term capital gains on property: 20% with indexation (12.5% from FY 24-25 onwards)
Professional or technical fees: 10% or applicable DTAA rate
Dividend income: TDS at 20%
Other income: TDS rates vary but are generally 30% for most other taxable payments to NRIs
NRIs can avail lower TDS rates under DTAA by submitting Form 10F, TRC (Tax Residency Certificate) and a self-declaration to the payer.
Benefits of ITR Filing for NRI
- Claim refund of excess TDS deducted
- Carry forward and set off capital losses
- Required for obtaining personal loan, home loan, business loan, credit card and term insurance policies
- Acts as valid proof of income for visa applications and government tenders
- Establish financial track record in India
- Helps prevent late fees and interest by filing within the due date
- Avail benefits under Double Taxation Avoidance Agreement (DTAA)
- Easier repatriation of funds through documented income
- Helps in property transactions and investments in India
Documents Required for Income tax return filing for NRI
- Passport
Form 16 (for salary)
Details of Income Earned in India like Rental income from properties located in India, Interest income from savings accounts, fixed deposits, bonds, or other investments held in India, Capital gains from the sale of assets like real estate, stocks, mutual funds, or other securities situated in India, Income from any business or profession carried out in India.
Details of Foreign Income and Assets like Statements of foreign bank accounts, including Non-Resident External (NRE) accounts, Foreign Currency Non-Resident (FCNR) accounts, or Non-Resident Ordinary (NRO) accounts, Statements of foreign investment accounts, such as Foreign Institutional Investor (FII) accounts, or Foreign Direct Investment (FDI) accounts, Details of foreign assets like properties, stocks, bonds, or any other investments held abroad.
Proof of Tax Deductions and Exemptions:
- Investment proofs for deductions under Section 80C, including contributions to Provident Fund, Public Provident Fund (PPF), Equity Linked Savings Schemes (ELSS), National Savings Certificate (NSC), etc.
- Receipts or certificates for health insurance premiums paid, eligible for deductions under Section 80D.
- Donation receipts for contributions made to eligible charitable institutions, qualifying for deductions under Section 80G.
- Interest certificates for deductions on education loan interest under Section 80E, or savings account interest under Section 80TTA.
Foreign Tax Residency Certificate (if applicable): If you are claiming benefits under a Double Taxation Avoidance Agreement (DTAA) between India and your country of residence, you may need to provide a Foreign Tax Residency Certificate (TRC) obtained from the tax authorities in your country of residence.
ITR filing process for NRI
Login to the Portal
Go to www.incometax.gov.in/iec/foportal/ and log in using your PAN and password.Check Profile and Update Residential Status
Go to ‘My Profile’ and ensure your residential status is marked as NRI and contact details, including foreign address and email are updated.Select ‘e-File’ > ‘Income Tax Return’
Choose the relevant assessment year, and online or offline mode. Most NRIs choose ITR-2 unless they have business/professional income (then use ITR-3).Fill in the ITR Form
Declare all income earned in India (salary, rent, capital gains, interest, etc.)
Claim TDS as per Form 26AS
Mention assets and liabilities if total income exceeds Rs 50 lakh
Claim DTAA relief if applicable
Choose Tax Regime
If you are eligible, select between the old and new tax regime as per your preference.Verify Tax Calculation
Check if any tax is payable. Pay self-assessment tax, if required, via Challan 280 and enter the details in the form.Validate and Submit
Review the entire return, validate all details, and click on Submit.e-Verify the Return
Complete e-verification using Aadhaar OTP, net banking or by sending a signed ITR-V to CPC Bengaluru within 30 days.
Once done, you will receive an acknowledgment on your registered email.
Due date of ITR filing for NRI
The Due date to file Income tax return for FY 2024-2025 (AY 2025-2026) is 31st July,2025 which is extended to 15 th September, 2025.
In case you miss this deadline then you can file belated ITR till 31st December, 2025 with late fees.
Also for any mistake made while filing ITR before due date, you can make corrections by filing Revised ITR any number of times till 31st December, 2025
If you miss deadline of Belated income tax return filing then you can file Updated ITR (ITR U) till 4 years from the end of relevant assessment year with late fees and additional taxes.
What are the Consequences of non-payment of Tax and non-filing of ITR?
Failing to pay taxes and file your Income Tax Return (ITR) has severe consequences. Firstly, unreported income is deemed illegal, equating to tax evasion, and can result in a penalty of 100% to 300% of the evaded tax under Section 271(C). Secondly, a penalty ranging from 10% to 90% of the undisclosed amount may be imposed under Section 271AAB, depending on the circumstances. Lastly, if you miss the filing deadline, a 1% interest per month or part thereof will be charged on the unpaid tax amount as per Section 234A.
Looking for help?
Whether you are an NRI, salaried professional, business owner, or senior citizen, A R Dhorajiya offers expert and reliable ITR filing services tailored to your income profile. Avoid penalties, claim eligible refunds, and stay fully compliant with Indian tax laws.
Contact us today at +91 9769647582 for a consultation or to get started with your ITR filing
Frequently Asked Questions
Yes, if total income earned or received in India exceeds the basic exemption limit or if you want to claim a refund or carry forward losses.
Only income earned or received in India is taxable for NRIs. Global income is not taxed unless the NRI becomes a resident.
Yes, if you have taxable income in India or want to claim TDS refund or capital loss set-off.
It refers to your residential status under the Income Tax Act. You must select ‘Non-Resident’ while filing the return.
If an Indian citizen stays in India for 120 days or more and total Indian income exceeds Rs 15 lakh, they may be treated as resident under new rules (applicable from AY 2021-22).
Login to the income tax portal, choose the correct ITR form (mostly ITR-2), declare Indian income, claim TDS and DTAA relief, and file.
No, but it is advisable for recordkeeping, TDS refund, and compliance.
Wrong declaration may attract notice, interest, and penalties for incorrect filing.
Yes, if you are a US tax resident, but you can claim DTAA relief to avoid double taxation.
Varies by income type e.g., 30% on rent and interest, 20% on dividends, 15% on short-term capital gains on equity.
By submitting TRC, Form 10F, and self-declaration to avail DTAA benefit or reduced rate.
Yes, TDS applies on interest earned in NRO accounts. NRE and FCNR interest is tax-free.
Yes, by filing ITR and declaring actual taxable income, refund can be claimed.
It can happen, but India and USA have a DTAA to prevent it through credit or exemption methods.
If resident, it must be reported under ‘Foreign Income’ schedule. NRIs are not required to report foreign income.
Only if taxable income in India exceeds Rs 2.5 lakh or to claim refund or carry forward losses.
Shorter stay of 120 days may trigger resident status if Indian income exceeds Rs 15 lakh. Also, deemed residency for stateless individuals.
To determine RNOR status. If you were NRI for 9 out of 10 years or stayed less than 729 days in the past 7 years, you may qualify as RNOR.
Flat TDS rates apply since NRIs are taxed without slab benefit in most cases. No standard deduction or 87A rebate is available.
Gifts from relatives or foreign remittances for maintenance are exempt. For others, limit is Rs 50,000 per year unless specifically exempt.
Generally exempt under section 10(10D) if premium conditions are met. Else, it may be taxable.
Yes, if the NRI has income in India, invests in India, or is required to file ITR.
Interest in NRO is taxable. To reduce tax, use NRE or FCNR for tax-free interest or structure investments better.
Policy continues. Inform insurer about status change. Premiums can be paid from NRE/NRO accounts.
Yes, health insurance premiums paid for self, spouse, children, and parents are eligible for deduction.
Not mandatory unless the NRI has Aadhaar. If Aadhaar was issued, it must be linked.
Up to USD 1 million per financial year can be repatriated from NRO account with proper documentation.
No, you cannot transfer directly. Savings account must be converted to NRO or NRE as per status.
Yes, if account is compliant (NRE/NRO). Funds must come through proper banking channels.
Bank may freeze the account or impose penalties. It is a FEMA violation.
As per bank norms, similar to resident accounts, but repatriation is regulated from NRO.
Cannot deposit Indian income, returns are lower compared to NRO fixed deposits.
Yes, NRIs must convert resident savings accounts to NRO. Continuing a resident account is a FEMA violation.
Same basic slab applies – Rs 2.5 lakh exemption. But most income is taxed at flat TDS rates without rebate.
Rs 2.5 lakh per financial year under the old regime.
Rs 3 lakh per financial year under the new regime.
Yes, NRIs can buy residential or commercial property, but not agricultural land or farmhouses.
Yes, based on residential status. Income from global sources becomes taxable once you become a resident.
Not required if NRI. Only resident taxpayers need to declare foreign assets and income.
Yes. Aadhaar is not mandatory for NRI ITR filing if they do not possess one.
Notices are usually for mismatch, non filing, high value transactions, or wrong form used.
Yes, you must declare correct residential status in ITR each year based on physical stay.
While filing ITR, under personal information, select ‘Non-Resident’ in the residential status dropdown.
No limit to keep funds, but source must be disclosed and accounts must comply with FEMA.
Bank may freeze the account or impose penalties. It is a FEMA violation.
Bank may freeze the account or impose penalties. It is a FEMA violation.
Bank may freeze the account or impose penalties. It is a FEMA violation.
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