1. Is It Mandatory for NRIs to File Income Tax Returns?
Let’s get this straight: filing an Income Tax Return (ITR) isn’t always mandatory for NRIs, but it depends on your situation. As an NRI, you’re only taxed on income earned or accrued in India—like rent from a property in Mumbai, interest from an NRO account, or capital gains from selling Indian stocks. If this “Indian income” exceeds ₹2.5 lakh (the basic exemption limit for FY 2024-25, AY 2025-26), you’ve got to file an ITR. No exceptions.
But here’s where it gets interesting. Even if your income is below ₹2.5 lakh, you might still need to file in certain cases:
- If TDS (Tax Deducted at Source) or TCS (Tax Collected at Source) exceeds ₹25,000 in a year.
- If you’ve spent over ₹2 lakh on foreign travel (for yourself or someone else) from an Indian account.
- If you’ve deposited more than ₹1 crore in a current account or ₹50 lakh in a savings account in India.
- If your electricity bill in India crosses ₹1 lakh in a year.
Also, if you’re claiming a refund for excess TDS—like the 30% often deducted on NRO interest—you’ll need to file to get that money back. And here’s a kicker: even with no taxable income, filing can help you carry forward capital losses (say, from stock sales) or prove your financial status for loans or visas. So, mandatory? Not always. Smart? Often, yes.
2. Step-by-Step Guide to Filing ITR for NRIs
Filing your ITR as an NRI isn’t rocket science, but it does need some care. Here’s how to do it, step by step, based on the latest process for 2025:
Step 1: Check Your Residential Status
First things first—confirm you’re an NRI. You’re an NRI if you’ve spent less than 182 days in India during the financial year (April 1, 2024, to March 31, 2025). Double-check your passport stamps to be sure.
Step 2: Gather Your Documents
You’ll need:
- PAN card (linked to Aadhaar if you have one, though NRIs aren’t forced to link it).
- Form 26AS (shows TDS details—download it from the income tax portal).
- Bank statements (NRO, NRE, or FCNR accounts).
- Proof of income (rental agreements, interest certificates, sale deeds for capital gains).
- Foreign tax details (if claiming DTAA benefits).
Step 3: Calculate Your Taxable Income
Add up your India-sourced income—salary earned here, rent, interest (NRO, not NRE/FCNR), capital gains. Subtract deductions like Section 80C (up to ₹1.5 lakh for insurance, ELSS, etc.) if you’re on the old tax regime.
Step 4: Pick the Right ITR Form
More on this in the next section, but NRIs typically use ITR-2 or ITR-3. Log into the e-filing portal (incometax.gov.in) and select your form.
Step 5: Fill the Form
- Enter personal details (name, PAN, NRI status).
- Report your income under the right schedules (e.g., house property, capital gains).
- Claim deductions if applicable.
- Match TDS with Form 26AS. Any mismatch? Fix it before filing.
Step 6: Pay Any Tax Due
If you owe tax (beyond TDS), pay it online via net banking or challan. Keep the receipt handy.
Step 7: Submit and Verify
Hit submit on the portal. Then, verify your return within 30 days—e-verify using Aadhaar OTP, net banking, or a digital signature, or mail a signed ITR-V to CPC Bengaluru.
Step 8: Track It
Once verified, you’ll get an acknowledgment. Check the status under “View Returns/Forms” on the portal.
That’s it! Takes some time, but it’s worth the peace of mind.
3. ITR Forms for NRIs: Which One to Use?
Picking the right ITR form is half the battle. For NRIs in FY 2024-25 (AY 2025-26), here’s the deal:
- ITR-1 (Sahaj): Sorry, NRIs can’t use this anymore. It’s only for residents with income up to ₹50 lakh from salary, one house property, or other sources.
- ITR-2: Perfect if you’ve got income from salary, multiple properties, capital gains (like selling stocks or a house), or foreign assets—but no business income. Most NRIs land here.
- ITR-3: If you’re an NRI with income from a business or profession (say, freelancing managed from India) alongside other income, this is your form.
Quick tip: If your income’s over ₹50 lakh, you’ll also need to fill Schedule AL (assets and liabilities) in ITR-2 or ITR-3, but only for assets in India. Got foreign income or taxes paid abroad? Add Schedules FSI (Foreign Source Income) and TR (Tax Relief) for DTAA benefits. The portal’s “Help me decide” tool can nudge you toward the right choice if you’re unsure.
4. Common Mistakes to Avoid While Filing ITR
Even seasoned NRIs trip up sometimes. Here’s what to watch out for:
- Using the Wrong Form: Filing ITR-1 when you’re an NRI is a rookie move. Stick to ITR-2 or ITR-3, or your return’s invalid.
- Missing Deadlines: July 31, 2025, is the usual due date for AY 2025-26. Miss it, and you’ll pay a ₹5,000 penalty (₹1,000 if income’s below ₹5 lakh) plus interest under Sections 234A/B/C.
- Ignoring TDS Mismatches: If Form 26AS shows TDS but you don’t report it, expect a notice. Cross-check everything.
- Not Reporting Exempt Income: NRE/FCNR interest or long-term capital gains on listed shares (up to ₹1 lakh) are tax-free, but you still need to list them under “Exempt Income.”
- Forgetting DTAA: Paid tax abroad on Indian income? Claim relief via DTAA, or you’re overpaying.
- Skipping Verification: An unverified return is as good as not filed. Don’t let it sit.
One last thing—rushing through without double-checking can lead to errors. Take your time, or rope in a tax pro if it’s too much.
NRI Taxation Services in India: Hassle-Free ITR Filing for NRIs
Filing Income Tax Returns (ITR) as an NRI can be confusing, but expert NRI taxation services in India make it easy and stress-free. Whether you earn income from property, investments, or business in India, professional tax advisors help you calculate taxes, claim TDS refunds, and avoid double taxation. They assist with choosing the right ITR form, filing returns on time, and ensuring compliance with Indian tax laws. With expert guidance, you can save money, reduce tax liabilities, and stay worry-free about your financial obligations in India. Let professionals handle your taxes while you focus on growing your wealth!
