NRI Tax Filing in India: Which Forms, What Income, What Deadlines

When Must an NRI File a Tax Return in India?

Not every NRI needs to file an Indian tax return. The filing obligation depends on your Indian income level and whether taxes have been adequately withheld at source. You must file an income tax return in India if:

• Your gross total income from Indian sources exceeds Rs. 2.5 lakh in a financial year (the basic exemption limit under the old tax regime) or Rs. 4 lakh under the new tax regime for FY 2026-27
• You want to claim a refund of excess TDS deducted on Indian income
• You have sold property or other capital assets in India and want to compute capital gains accurately
• You have losses that you want to carry forward to future years (requires filing by the due date)
• You hold signing authority in a foreign account or have foreign assets to report (applicable if you are RNOR or ROR, not if you remain NRI)

Even if your income is below the threshold, filing a return is advisable if TDS has been deducted and you want a refund, or if you need an ITR acknowledgment for visa applications, loan approvals, or other documentation purposes.

What Income Is Taxable for NRIs in India?

NRIs are taxed only on income that is received in India or deemed to accrue or arise in India. Foreign income (earned and received abroad) is not taxable for NRIs. Here is the breakdown by income category:

Income Taxable in India for NRIs

Income NOT Taxable in India for NRIs

• Salary earned for services rendered outside India
• Interest from NRE accounts and FCNR deposits
• Income earned and received outside India (foreign salary, foreign rental income, foreign dividends)
• Capital gains from foreign assets

Which ITR Form Should NRIs Use?

NRIs cannot use ITR-1 (Sahaj), regardless of how simple their income is. The correct form depends on your income sources:

ITR-2: The Default Form for Most NRIs

Use ITR-2 if you have income from:

• Salary (Indian)
• House property (Indian rental income)
• Capital gains (from sale of Indian property, shares, or mutual funds)
• Other sources (NRO interest, dividends, etc.)
• Foreign assets or foreign income (Schedule FA and FSI)

ITR-2 is the most commonly used form for NRIs. It covers all non-business income categories and includes Schedule FA for foreign asset reporting (relevant for RNOR and ROR taxpayers).

ITR-3: For NRIs with Business or Professional Income

Use ITR-3 if you have business or professional income in India, in addition to the income types covered by ITR-2. This includes:

• Income from a business controlled or managed from India
• Professional fees earned from Indian clients (consulting, freelancing)
• Income from a proprietorship business in India

ITR-4 (Sugam): For Presumptive Taxation

NRIs with small business income can use ITR-4 under the presumptive taxation scheme (Section 44AD/44ADA) if their turnover is below Rs. 2 crore (business) or Rs. 75 lakh (professionals). Under presumptive taxation, 8% of turnover (6% for digital receipts) is deemed profit for businesses, and 50% of gross receipts for professionals.

Tax Rates and Slabs for NRIs: FY 2025-26

NRIs are taxed at the same slab rates as resident individuals. There is no age-based benefit for NRIs (the higher exemption limits for senior and super-senior citizens do not apply to non-residents).

New Tax Regime (Default from FY 2023-24)

A rebate under Section 87A makes income up to Rs. 12 lakh effectively tax-free under the new regime. Plus 4% Health and Education Cess on total tax.

Old Tax Regime (Optional)

The old regime allows deductions under Sections 80C, 80D, 80G, and others. NRIs should compare both regimes to determine which is more beneficial. For most NRIs without significant Indian deductions, the new regime yields a lower tax bill. For detailed comparison, see our guide on old tax regime vs new tax regime.

Capital Gains Tax Rates

• Short-term capital gains on listed equity: 20% (held for less than 12 months)
• Long-term capital gains on listed equity: 12.5% on gains exceeding Rs. 1.25 lakh (held for 12+ months)
• Short-term capital gains on property: At slab rates (held for less than 24 months)
• Long-term capital gains on property: 12.5% without indexation (held for 24+ months, as per Budget 2024-25 changes)

Filing Deadlines for NRIs: AY 2026-27

The filing deadlines for NRI tax returns follow the same schedule as resident individuals, with extensions for certain categories:

Standard Filing Deadlines

Note: The government may extend these deadlines as they did for AY 2025-26 (extended to September 15, 2025 due to portal issues). Monitor the CBDT website for notifications.

Advance Tax Due Dates

NRIs with Indian tax liability exceeding Rs. 10,000 in a financial year must pay advance tax in quarterly installments:

Interest under Section 234B (1% per month on shortfall if advance tax paid is less than 90% of assessed tax) and Section 234C (1% per month on quarterly shortfalls) applies for non-compliance.

TDS on NRI Income: Key Rates and Refund Process

Tax Deducted at Source (TDS) is the primary mechanism through which NRI income is taxed in India. The payer (bank, tenant, buyer) deducts tax before paying the NRI and deposits it with the government.

Key TDS Rates for NRIs Under Section 195

These rates may be reduced if a DTAA exists between India and the NRI's country of residence. To claim the lower DTAA rate, provide your Tax Residency Certificate (TRC) and Form 10F to the payer.

How to Claim TDS Refund

If TDS deducted exceeds your actual tax liability (common when the flat 30% TDS rate applies but your effective rate is lower), you can claim a refund by:

1. Filing your ITR accurately with all income and TDS details
2. Verifying your return (e-verification via Aadhaar OTP, net banking, or DSC)
3. The refund is processed by the CPC (Centralized Processing Centre) and credited to your Indian bank account
4. Track refund status on the income tax e-filing portal or via NSDL TIN website

Refund processing typically takes 4-8 weeks after e-verification. Ensure your bank account linked to PAN is pre-validated on the e-filing portal.

Repatriation and Form 15CA/15CB

NRIs sending money from India to their overseas accounts must comply with Form 15CA and 15CB requirements:

When Are These Forms Required?

• Form 15CA Part A: For remittances up to Rs. 5 lakh in a financial year where the payment is chargeable to tax. No CA certificate needed.
• Form 15CA Part B: For remittances exceeding Rs. 5 lakh where you have obtained a certificate from the Assessing Officer under Section 195(2)/195(3)/197. No Form 15CB needed.
• Form 15CA Part C + Form 15CB: For remittances exceeding Rs. 5 lakh without an AO certificate. Form 15CB is a CA certificate confirming taxability, applicable TDS rate (including DTAA benefits), and tax compliance.
• Form 15CA Part D: For remittances not chargeable to tax (e.g., transfer of own NRE/RFC funds).

Practical Tips

Engage a CA to prepare Form 15CB before initiating the remittance. Most CAs charge Rs. 2,000-10,000 depending on complexity. Submit Form 15CA online on the income tax e-filing portal before the remittance date. Banks will not process the transfer without these forms when required.

How to File Your NRI Tax Return: Step-by-Step

Step 1: Gather Documents

• Form 26AS (Annual Tax Statement showing all TDS credits)
• AIS (Annual Information Statement) for comprehensive transaction data
• Interest certificates from banks for NRO account interest
• Property sale documents if applicable (sale deed, purchase deed for cost computation)
• Rent receipts or rental agreement if you have rental income
• Capital gains statements from brokers/mutual funds
• Tax Residency Certificate from your country of residence (for DTAA benefits)

Step 2: Compute Tax Liability

Calculate income under each head (salary, house property, capital gains, other sources). Apply deductions if using the old tax regime. Compute total tax, set off TDS credits from Form 26AS, and determine tax payable or refund due.

Step 3: File on the E-Filing Portal

Log in to incometax.gov.in with your PAN. Select the correct ITR form (ITR-2 for most NRIs, ITR-3 for business income). Fill in all schedules. For NRIs, ensure you select "Non-Resident" as your residential status in the personal information section.

Step 4: Verify the Return

E-verify within 30 days of filing using:

• Aadhaar OTP (if Aadhaar is linked to PAN)
• Net banking of a linked bank account
• Digital Signature Certificate (DSC)
• Bank ATM validation

If you cannot e-verify, send a signed ITR-V (acknowledgment) to CPC Bangalore within 30 days by speed post.

Step 5: Track Processing and Refund

After verification, the CPC processes your return and issues an intimation under Section 143(1). If a refund is due, it is credited to your pre-validated bank account. If additional tax is assessed, you receive a demand notice.

Special Situations for NRI Tax Filing

NRI Selling Property in India

The buyer deducts TDS at 12.5% (long-term) or slab rates (short-term) on the full sale consideration, not just the capital gains. This often results in excess TDS, which you can claim back by filing your ITR and computing actual capital gains. You can also obtain a lower or nil withholding tax certificate from the Assessing Officer under Section 197 before the sale.

NRI with Only NRO Interest Income

Banks deduct 30% TDS on NRO interest. If your total Indian income is below Rs. 12 lakh (new regime), your effective tax rate is much lower. File ITR-2 to claim the excess TDS as a refund.

NRI Receiving Rental Income

Tenants must deduct 30% TDS (under Section 195) on rent paid to NRI landlords. After claiming the 30% standard deduction on gross rent and any home loan interest deduction, the effective tax may be significantly lower. File to claim the difference.

Deemed Resident NRIs (From April 2026)

Indian citizens with Rs. 15 lakh+ Indian income who reside in zero-tax countries will be deemed residents. They must file as residents and report worldwide income. Those spending 120+ days in India with Rs. 15 lakh+ Indian income and 365+ days in India over the previous 4 years will be classified as RNOR instead of NRI.

Common Mistakes NRIs Make When Filing

Mistake 1: Using ITR-1

NRIs are not eligible for ITR-1 (Sahaj), even if their income is simple. Using the wrong form leads to a defective return notice. Always use ITR-2 or ITR-3.

Mistake 2: Not Claiming DTAA Benefits

Many NRIs pay tax at full Indian rates without claiming double taxation relief. If your country has a DTAA with India, you can claim lower withholding rates and foreign tax credits. Obtain a Tax Residency Certificate and file Form 10F.

Mistake 3: Forgetting to File Form 67 for Foreign Tax Credit

If you are RNOR or ROR and have paid tax in a foreign country on income that is also taxable in India, you must file Form 67 before filing your ITR to claim the foreign tax credit. Missing Form 67 means losing the credit entirely.

Mistake 4: Incorrect Residential Status Selection

Selecting "Resident" instead of "Non-Resident" on the ITR form changes your tax computation entirely. Double-check your residential status for each financial year based on the 182-day and 60-day/120-day rules.

Mistake 5: Not Pre-Validating Bank Account

Refunds can only be credited to a bank account that is pre-validated on the e-filing portal and linked to your PAN. Many NRIs miss this step and face delayed refunds. Complete pre-validation before filing.

Mistake 6: Missing Advance Tax Deadlines

NRIs with income above the threshold (where TDS is not adequate) must pay advance tax quarterly. Interest under Section 234B and 234C at 1% per month applies for shortfalls. Estimate your tax liability at the start of the year and pay in installments.

Penalties for Non-Compliance

Key Takeaways

• File if Indian income exceeds Rs. 2.5 lakh (old regime) or Rs. 4 lakh (new regime). Also file if TDS has been deducted and you want a refund, even if income is below the threshold.
• Use ITR-2 for most NRI situations (salary, property, capital gains, interest). Use ITR-3 only if you have business or professional income in India. Never use ITR-1.
• Filing deadline is July 31 for non-audit cases (AY 2026-27). Pay advance tax quarterly if your tax liability exceeds Rs. 10,000. Late filing attracts Rs. 5,000 penalty plus interest.
• Claim TDS refunds proactively: Banks deduct 30% TDS on NRO interest and property rental income. Your actual tax rate may be much lower. File to get the excess back.
• Use DTAA to your advantage: Obtain a Tax Residency Certificate, file Form 10F, and claim lower withholding rates and foreign tax credits. Consult a tax advisor for country-specific DTAA optimization.