How to File Income Tax Return in India as an NRI

How to File Income Tax Return in India as an NRI?

Living outside the country does not exempt you from income tax obligations in India. You have to pay tax and file your income tax return (ITR) in India if you receive income from any of the following sources: rent from your property in India, any interest earned from deposits with banks in India, income from investments made in India, stocks or any other assets. However, your tax liability depends on your residential status, the nature of your income and the applicable provisions of Indian income tax laws.

Understanding how to file ITR in India for NRI is important to ensure accurate income reporting, claim eligible tax refunds and avoid unnecessary compliance issues. NRIs must determine their residential status, calculate taxable Indian income, select the appropriate ITR form and reconcile Tax Deducted at Source (TDS) before submitting their returns.

This guide explains the NRI ITR filing procedure, applicable forms, required documents, tax treatment of different income sources and important filing considerations.

Who is Considered an NRI Under Indian Income Tax Laws?

An individual is considered a Non-Resident Indian (NRI) for income tax purposes when they do not qualify as a resident of India under the applicable residential status provisions.

For income earned during FY 2025-26, residential status is determined under Section 6 of the Income Tax Act, 1961.

An individual generally qualifies as a resident if either of the following conditions is satisfied:

They stay in India for 182 days or more during the relevant financial year.
They stay in India for 60 days or more during the relevant financial year and 365 days or more during the four preceding financial years, subject to applicable exceptions and special conditions.

Different rules apply to Indian citizens leaving India for employment abroad, Indian citizens and persons of Indian origin visiting India, and certain individuals with substantial Indian income. There is also a deemed residency provision for certain Indian citizens with income exceeding Rs. 15 lakh who are not liable to tax in another country.

Therefore, simply holding a foreign passport, living overseas or maintaining an NRI bank account does not independently establish your residential status for income tax purposes.

Who Needs to File an Income Tax Return in India as an NRI?

Not all NRIs are required to file their income tax returns. This is dependent upon the nature and amount of income that the NRI receives in India, among others. NRIs should verify their financials and see if the filing of tax return is necessary.

NRIs may need to file an ITR in the following situations:

Rental Income: If you earn rental income from residential or commercial property situated in India.
Interest Income: If you receive taxable interest from NRO accounts, fixed deposits or other Indian investments.
Capital Gains: If you sell property, shares, mutual funds or other capital assets in India and generate taxable gains.
Salary Income: If you receive salary for services rendered in India.
Business or Professional Income: If you earn taxable business or professional income from India.
Other Taxable Income: If you receive dividends or other income taxable under Indian income tax provisions.

An NRI may also have a filing obligation under specific statutory conditions even when total income is below the basic exemption limit.

Certain non-residents earning specified investment income or long-term capital gains may qualify for an exemption from filing a return if all prescribed conditions are satisfied, including applicable TDS requirements.

Which Income is Taxable in India for NRIs?

The income of NRI is liable to be taxed if it is received/earned/generated in India or if it can be deemed to have been generated in India under the relevant tax law provisions. Foreign income which has been earned and received outside India is usually non-taxable for individuals who qualify to be called NRIs.

Some examples of Indian incomes which would be taxable include:

1. Rental Income from Indian Property:

Rental income earned from residential or commercial property located in India is generally taxable. Eligible deductions under the house property provisions can be considered while calculating taxable income.

2. Interest from NRO Accounts:

Interest earned from a Non-Resident Ordinary (NRO) account is generally taxable in India. Banks usually deduct TDS according to applicable provisions.

3. Capital Gains from Investments:

Profit earned from selling Indian property, shares, mutual funds and other capital assets may attract capital gains tax for NRI. The applicable tax treatment depends on the nature of the asset and relevant transaction details.

4. Salary Income:

Salary received for services performed in India may be taxable in India, even if the employer or payment arrangement involves a foreign country.

5. Business and Professional Income:

Income arising from business or professional activities carried out in India may also be taxable, depending on the applicable provisions.

6. Dividend Income:

Dividends received from Indian companies are generally taxable according to the applicable provisions.

But income from interest from qualifying NRE/FCNR bank accounts is exempt if all necessary requirements are satisfied. The residential status should always be verified before computing total tax liability.

Which ITR Form is Applicable for NRIs?

Selecting the correct ITR form is an important part of the NRI ITR filing procedure. The appropriate form depends on the nature of income earned during the relevant financial year.

The two commonly applicable forms are ITR-2 and ITR-3.

ITR-2 for NRIs

ITR-2 is generally applicable to individuals and Hindu Undivided Families (HUFs) who do not have income taxable under the head Profits and Gains of Business or Profession.

It may be suitable for NRIs earning income from:

Salary or pension.
House property.
Capital gains.
Interest and dividend income.
Other applicable sources of income.

ITR-3 for NRIs

ITR-3 is generally applicable to individuals and HUFs having income from business or profession, along with other applicable income sources.

For example, an NRI earning taxable professional income or business income in India may need to file ITR-3.

NRIs are not eligible to file ITR-1 or ITR-4. These forms have residential-status eligibility restrictions. Choosing an incorrect form can result in filing errors, a defective return notice or difficulties during return processing.

Documents Required for NRI ITR Filing

Before starting your income tax return filing, collect the relevant financial and supporting documents. Proper documentation helps identify taxable income, reconcile TDS and claim eligible deductions or refunds.

The common documents required for NRI ITR filing include:

PAN Card: Required for income tax return filing and tax-related transactions.
Passport: Useful for verifying travel history and determining residential status.
Bank Statements: Statements of NRO, NRE and other relevant bank accounts to identify interest and financial transactions.
Form 16: Contains salary and TDS details provided by the employer.
Form 16A: Provides TDS details for income other than salary.
Form 26AS: Helps verify TDS, TCS and other tax credit information.
Annual Information Statement (AIS): Contains reported financial transactions and other tax-related information.
Rental Income Records: Rent receipts, property details and relevant expense records.
Investment Statements: Mutual fund, share and other investment transaction statements.
Capital Gains Statements: Purchase and sale details required to calculate capital gains.
Previous ITR Details: Useful for checking eligible losses carried forward and previous tax records.
Tax Payment Receipts: Records of advance tax and self-assessment tax payments, where applicable.
Foreign Tax Documents: Relevant foreign tax payment records and residency documentation when claiming DTAA benefits or foreign tax credit.

Additional documents may be required depending on your income sources, financial transactions and tax claims.

NRI Income Tax Return Due Dates in India

The NRI income tax return due date depends on the applicable return category and whether the taxpayer is required to undergo a tax audit or comply with other special reporting requirements.

For income earned during FY 2025-26, the return falls under Assessment Year 2026-27 and is governed by the Income Tax Act, 1961.

The commonly applicable original filing deadlines for individual taxpayers include:

ITR-2 non-audit cases: Generally 31 July 2026.
Eligible non-audit business cases: Generally 31 August 2026.
Applicable audit cases: Subject to the relevant statutory deadline and CBDT extensions.

For AY 2026-27, the general deadline for filing a belated return is 31 December 2026, subject to the applicable provisions and completion of assessment.

Late filing may attract applicable fees, interest and other consequences.

Since filing deadlines can change through CBDT notifications, NRIs should verify the applicable date on the Income Tax Department portal before submitting their returns.

NRI ITR Filing Procedure: How to File Income Tax Return in India

The filing of the return online saves time for the NRIs since the individuals get to file their return from overseas. But proper income reporting and proper selection of the right form will save the individual from future hassles.

These are the steps for NRI ITR Filing Procedure:

Check Your Residential Status: You need to check your stay in India during the financial year and then figure out your eligibility as per NRI criteria.
Collect Financial Documents: Get all the documents needed which are your PAN, passport, your bank details, investment details, Form 16A, AIS and Form 26AS.
Calculate Taxable Income: Search for rental income, interest income from banks, capital gains, and others from which you can earn money from India.
Choose ITR form: Decide whether you need to file an ITR 2 or ITR 3 depending upon the nature of your income.
Visit Income Tax Website: Now, you have to go to the website and log in with the help of your PAN and password.
Provide Details of Your Income: Enter the details about your income at the right place in the ITR form.
Compute and Pay Tax: This will be followed by computing the amount of tax payable and payment thereof.
Submit ITR and Get Verification: Submit the ITR form and verify through the permitted procedure.

NRI Capital Gains Tax Return Filing in India

NRIs can make capital gains if they dispose of any of their properties, stocks, mutual fund investments, or any other investment made in India. There are specific taxes to be paid, depending on the type of investment, the date of acquisition, the date of transfer, the holding period, among others. This means that NRI Capital Gains Tax Return Filing in India is associated with calculating all of the above factors correctly.

The applicable capital gains tax depends on several factors, including:

Nature and classification of the asset.
Date of acquisition.
Date of transfer.
Applicable holding period.
Purchase and transfer consideration.
Eligible deductions, exemptions and applicable tax provisions.

For instance, disposing of an apartment in India by the NRI will either lead to short-term capital gain or long-term capital gain depending on the appropriate holding period. Withholding tax might also apply if the NRI disposes of his property.

DTAA Benefits and Foreign Tax Credit for NRIs

An NRI earning income in India and residing in another country may face taxation issues in both jurisdictions.

India has entered into Double Taxation Avoidance Agreements (DTAAs) with several countries to provide relief from double taxation.

Depending on the applicable treaty, relief may be available through an exemption method or a foreign tax credit mechanism.

To claim applicable benefits, NRIs may need supporting documents such as:

Tax Residency Certificate (TRC) issued by the foreign tax authority.
Form 10F, where applicable.
Proof of foreign tax paid.
Relevant income and TDS statements.
Other documents required under the applicable treaty and Indian tax provisions.

The availability and extent of DTAA benefits depend on the relevant agreement, income category and eligibility conditions.

Professional review can help identify applicable treaty provisions and avoid incorrect tax claims.

Income Tax on NRO Account Interest for NRI

Interest earned on an NRO account is generally taxable in India. Banks deduct TDS from such interest according to the applicable provisions. However, the amount deducted as TDS may differ from the actual tax liability of the account holder. NRIs should compare their bank interest certificates with Form 26AS and AIS to ensure that the income and tax credits are correctly reported.

If excess TDS has been deducted, an eligible refund can generally be claimed by filing the income tax return, subject to applicable filing conditions.

NRIs may also examine whether tax relief is available under an applicable Double Taxation Avoidance Agreement (DTAA).

Common Mistakes NRIs Should Avoid While Filing ITR

Even small mistakes in filing tax returns can give rise to notices, make the tax calculation wrong or even cause delays in refunds. NRIs must thoroughly check the information regarding their income, residential status and all relevant documentation before filling the return.

Some Common Mistakes NRIs Should Avoid While Filing ITR:

1. Incorrect Residential Status

Not checking the applicable residential status rules can result in incorrect income reporting and tax calculations.

2. Selecting the Wrong ITR Form

Choosing a form without checking its eligibility conditions may result in a defective return.

3. Ignoring Indian Income

Overlooking rental income, interest, dividends or capital gains can lead to incomplete income disclosure.

4. Not Reconciling TDS

Always compare Form 16A, Form 26AS and AIS to identify discrepancies in tax credits.

5. Incorrect Capital Gains Calculation

Ignoring the acquisition date, holding period or applicable tax provisions can result in an incorrect tax liability.

6. Missing DTAA Benefits

Failing to examine applicable treaty relief may result in missing eligible tax benefits.

7. Not Verifying the Return

Submitting an ITR without completing the prescribed verification process can prevent successful processing of the return.

Why Consult a CA for NRI Income Tax Return Filing?

NRI taxation may include various sources of income, residential status rules, TDS rules and international tax laws. The tiniest error in calculating the taxable income or gains from sale of assets will unnecessarily complicate things for you. You will be able to organize yourself better by consulting an experienced CA Arpit Gupta and Co.

Here are some of the reasons to take professional advice for NRI Income Tax Return filing:

Residential Status Determination: The CA will assist you in determining the appropriate residential status in accordance with your stay in India.
Income Computation: Proper guidance will help you understand the taxable income in India and also compute your tax liability.
Proper ITR Form Selection: With the help of the CA you will be able to choose the right form for filling the return.
Calculation of Capital Gains: Proper guidance will help you calculate the gains from property, share market or mutual fund transactions.
TDS Help: The professional will also help you reconcile TDS records.
DTAA Help: The CA will also help you analyze the applicability of DTAA and documentation.
Error-Free Filing: Checking financial records before filling the return will help in avoiding errors.

Contact NRI ITR Filing Consultant: +91-7081220600

Filing an income tax return becomes a challenge for those staying outside India in cases of earning through rentals, bank accounts in India, investments or capital gains. Professional assistance for NRIs is provided by CA Arpit Gupta & Co. to understand Indian taxation rules, calculate the income tax liability and file their income tax returns.

If you are facing difficulty in calculating your residential status, choosing the appropriate ITR form, figuring out the capital gains and claiming excess TDS refunds, you can seek professional assistance that would make the task easier for you. You can share your sources of income and available documents with the professionals to know about your filing requirements. For NRI Income Tax Return Filing in India, contact CA Arpit Gupta & Co. at +91-7081220600.