Introduction
Non-Resident Indians (NRIs) often have financial ties to India such as property, investments, or business interests. Filing an Income Tax Return (ITR) in India is mandatory in certain cases even if you live abroad. Filing correctly ensures compliance, avoids penalties, and helps in smooth fund transfers or claiming refunds.
This blog explains how NRIs should file their tax returns in India for the Assessment Year 2025–26 (Financial Year 2024–25), with direct steps and detailed guidance.
Legal Reference and Tax Code Explanation
- Income Tax Act, 1961: Section 139(1) – Mandates return filing for individuals meeting income thresholds.
- Section 6(1) – Defines residential status based on the number of days stayed in India.
- Section 5 – Explains taxability of income depending on residential status.
- Double Taxation Avoidance Agreements (DTAAs): Relief from paying double taxes in two countries.
Who is an NRI for Income Tax Purposes?
As per Section 6 of the Income Tax Act, 1961, an individual is considered an NRI if:
- They stay in India for less than 182 days during the financial year,
or - They stay in India for less than 60 days in the financial year and less than 365 days during the preceding four years.
Special relaxations exist for Indian citizens working abroad as crew members or for Indian citizens leaving India for employment purposes.
When Should an NRI File an Income Tax Return (ITR) in India?
You must file an ITR if any of the following conditions are met:
- Your gross total income (before deductions) in India exceeds ₹2,50,000.
- You have earned taxable income such as rent, capital gains, dividends, or interest in India.
- You want to claim a tax refund for TDS deducted on Indian income.
- You have earned short-term or long-term capital gains (even if below ₹2,50,000).
Note: NRIs cannot opt for the new concessional tax regime under Section 115BAC unless specifically eligible.
Income Sources Taxable in India for NRIs
| Source of Income | Taxable in India? |
|---|---|
| Income earned or accrued in India | Yes |
| Salary received in India | Yes |
| Rental income from property in India | Yes |
| Capital gains from sale of Indian assets | Yes |
| Interest on savings account/NRO account | Yes |
| Interest on NRE/FCNR account | No (exempt under specific conditions) |
| Foreign income | No (unless received directly in India) |
Step-by-Step Guide to File ITR for NRIs
Step 1: Determine your residential status under Section 6 of the Income Tax Act.
Step 2: Collect all necessary documents: Form 16A, bank statements, rent receipts, capital gain statements, Form 26AS, and AIS report.
Step 3: Select the correct ITR Form:
- ITR-2: For NRIs having income from salary, more than one house property, capital gains, etc.
- ITR-3: If you have business or professional income in India.
Step 4: Calculate your total taxable income considering applicable deductions (like 80C, 80D, 80G).
Step 5: Pay self-assessment tax if any tax is payable.
Step 6: File the ITR using the income tax portal (pre-filled data available).
Step 7: E-verify your return using Aadhaar OTP, net banking, or sending signed ITR-V to CPC Bengaluru (if Aadhaar OTP is not available).
Detailed Example: NRI Tax Filing Scenario
Case Study:
Mr. Aditya Sharma is working in Dubai and stayed in India for 50 days during FY 2024–25. His Indian income:
- Interest from NRO account: ₹75,000
- Rental income from property: ₹4,00,000
- TDS deducted by tenants and banks: ₹75,000
Computation:
- Gross Total Income: ₹4,75,000
- Less: Standard Deduction on Rental Income: 30% of ₹4,00,000 = ₹1,20,000
- Net Taxable Income: ₹3,55,000
Since his gross total income exceeds ₹2,50,000, he must file ITR-2. He is also eligible to claim a refund if TDS exceeds tax liability.
Important Documents Needed for NRI ITR Filing
- Passport copies (for verifying days of stay)
- Form 16A (for TDS on rent, interest)
- Rental agreements
- Capital gains statements (for sale of property, mutual funds)
- Bank statements (NRE/NRO accounts)
- Investment proofs (if claiming deductions under Chapter VI-A)
- Form 26AS and Annual Information Statement (AIS)
Conclusion
Filing an Indian tax return as an NRI can seem complex, but with proper documentation and compliance, it becomes manageable. Filing the correct ITR form, claiming rightful deductions, and avoiding double taxation through DTAAs ensures peace of mind and financial security.
Reach out Today!
Need expert help in filing your NRI Income Tax Return correctly and claiming your rightful refunds?
Schedule a meeting with our Chartered Accountant, Anshul Goyal, by visiting:
Disclaimer: I am Anshul Goyal, a Chartered Accountant licensed with ICAI, India. The information provided here is for educational purposes only and should not be construed as personalized tax advice.
Frequently Asked Questions
1. Can an NRI file ITR without an Aadhaar card?
Yes, NRIs are exempt from mandatory Aadhaar enrollment. You can file and verify ITR using net banking or by sending ITR-V to CPC.
2. Is income earned outside India taxable for NRIs?
No. Only income earned or accrued in India is taxable for NRIs.
3. Which ITR form should an NRI use?
Generally, ITR-2 is used. If you have business/profession income in India, then ITR-3 applies.
4. Can NRIs claim deductions under Section 80C?
Yes. Investments like life insurance, ELSS, PPF (if account was opened before becoming an NRI) are eligible.
5. Do NRIs need to disclose foreign assets in their Indian tax returns?
No. Only Residents and Residents but Not Ordinarily Residents (RNOR) are required to disclose foreign assets.