NRI Income Tax Return Filing FY 2025-26 | Complete Guide for Indians Abroad
File your NRI ITR for AY 2026-27 accurately. Understand your residential status, which Indian income is taxable, NRO vs NRE account rules, DTAA benefits, TDS refunds, and property sale capital gains – all in one place.
In This Guide – NRI ITR Filing FY 2025-26
- NRI, RNOR, or Resident? – Determine Your Status
- What Income is Taxable in India for NRIs?
- NRO vs NRE Account – Tax Treatment
- DTAA Benefits – Avoid Double Taxation
- NRI Property Sale – TDS & Capital Gains
- NRI TDS Refund – How to Claim
- Documents Required for NRI ITR Filing
- Step-by-Step NRI ITR Filing Process
- Common NRI Tax Mistakes to Avoid
- Frequently Asked Questions
NRI, RNOR, or Resident? – How to Determine Your Residential Status
Your residential status under the Income Tax Act determines what income is taxable in India. It is determined based on the number of days you stayed in India during the financial year – NOT your passport, visa, or citizenship.
Ordinarily Resident (ROR)
Taxed on global income – both Indian and foreign income.
- Stay in India ≥ 182 days in current FY, OR
- Stay ≥ 60 days in current FY AND ≥ 365 days in last 4 years
- Been resident in India for 2 of last 10 years
Resident but Not Ordinarily Resident
Taxed on Indian income + foreign income derived from India. Foreign income NOT taxable.
- Returned to India but was NRI in 9 of last 10 years, OR
- Was in India for ≤ 729 days in last 7 years
- Transition period – returning NRIs often have RNOR status for 2-3 years
Non-Resident Indian
Taxed only on income earned or received in India. Foreign income is NOT taxable.
- Stay in India < 182 days in current FY, AND
- Does not meet the 60-day + 365-day condition
- Salary earned abroad, foreign bank interest, foreign assets – all exempt
For an Indian citizen or Person of Indian Origin (PIO) who is a member of a crew of an Indian ship, or who left India for employment outside India, the 60-day condition is relaxed to 182 days. Additionally, under Budget 2020, an Indian citizen who is not taxable in any other country becomes a deemed resident in India, even if they visit for only 120 days and have Indian income above ₹15 lakh.
What Income is Taxable in India for NRIs?
As an NRI, only income that is received, accrued, or arises in India is taxable. Your overseas salary and foreign bank interest are NOT taxable in India.
Taxable in India for NRI
- Salary received in India or salary for services rendered in India
- Interest on NRO (Non-Resident Ordinary) savings account and FD
- Rental income from property located in India
- Capital gains on sale of property, shares, or mutual funds in India
- Dividends from Indian companies
- Income from Indian business or profession
- Pension received in India from Indian employer
- Winnings from lottery, crossword, horse races in India
NOT Taxable in India for NRI
- Salary earned and received outside India (your foreign employer salary)
- Interest on NRE (Non-Resident External) savings and fixed deposits
- Interest on FCNR (Foreign Currency Non-Resident) deposits
- Capital gains on overseas assets (foreign property, stocks)
- Foreign bank account interest income
- Income from business situated outside India
- Any income received outside India (subject to source rules)
The basic exemption limit for NRIs is ₹2.5 lakh under both Old and New Tax Regime. Unlike resident individuals, NRIs do NOT get the enhanced exemption of ₹4 lakh under the New Regime (Budget 2026) or the enhanced limits for senior citizens. The 87A tax rebate (NIL tax up to ₹12 lakh) is also NOT available to NRIs.
NRO vs NRE vs FCNR Account – Tax Treatment
The type of bank account you hold in India determines whether interest earned is taxable. This is one of the most important distinctions in NRI taxation.
| Account Type | Full Form | Currency | Interest Tax | TDS Rate | Repatriable? |
|---|---|---|---|---|---|
| NRO | Non-Resident Ordinary | Indian Rupee (INR) | Fully Taxable | 30% + Surcharge (~31.2%) | Only USD 1M/year limit |
| NRE | Non-Resident External | Indian Rupee (INR) | 100% Exempt | NIL | Fully repatriable |
| FCNR | Foreign Currency Non-Resident | Foreign Currency (USD, GBP etc.) | 100% Exempt | NIL | Fully repatriable |
When an NRI returns to India and becomes a Resident, their NRE account must be converted to a Resident account or FCNR deposit within a reasonable time. Interest earned on the NRE account becomes taxable from the date of residential status change. Many returning NRIs overlook this transition and face notices. Convert your NRE account promptly after returning to India permanently.
DTAA Benefits – How NRIs Can Avoid Double Taxation
India has DTAA agreements with over 90 countries. NRIs can claim DTAA benefits to pay lower tax or get tax credit for Indian taxes paid against their foreign tax liability.
Step 1 – Get TRC
Obtain a Tax Residency Certificate (TRC) from the tax authority of your country of residence (IRS in USA, HMRC in UK, ATO in Australia etc.)
Step 2 – File Form 10F
Submit Form 10F on the Income Tax e-filing portal with your TRC details. This is mandatory from FY 2022-23 onwards. File it before claiming DTAA benefit.
Step 3 – Claim in ITR
Claim DTAA relief in your ITR under Schedule TR (Tax Relief) or claim lower TDS rate from the deductor by submitting TRC + Form 10F to your bank/employer.
| Country | Interest Rate (DTAA) | Dividend Rate (DTAA) | vs Normal TDS 30% |
|---|---|---|---|
| 🇺🇸 USA | 15% | 25% / 15% | Save 15% |
| 🇬🇧 UK | 15% | 15% | Save 15% |
| 🇦🇪 UAE | 12.5% | 10% | Save 17.5% |
| 🇨🇦 Canada | 15% | 25% / 15% | Save 15% |
| 🇦🇺 Australia | 15% | 25% / 15% | Save 15% |
| 🇸🇬 Singapore | 15% | 15% / 10% | Save 15% |
| 🇩🇪 Germany | 10% | 10% | Save 20% |
To benefit from DTAA at the time of TDS deduction itself (rather than claiming refund later), submit your TRC and Form 10F to your bank or Indian company before interest or dividend is credited. Once TDS is deducted at 30%, you must wait for ITR processing to get a refund – which can take months.
NRI Property Sale in India – TDS, Capital Gains & Exemptions
Selling a property in India as an NRI has very different TDS rules compared to residents. The buyer is legally obligated to deduct TDS before paying the NRI seller.
TDS on NRI Property Sale (Sec 195)
How to Reduce TDS – Lower Deduction Certificate
NRIs can apply for a Lower Deduction Certificate (LDC) under Section 197 to reduce TDS from the high default rate to the actual tax payable on gains only.
- Apply online at TRACES portal (Form 13) before property sale
- Attach computation of capital gains with purchase and sale deed
- Processing takes 2-4 weeks – apply well in advance of sale
- LDC specifies lower TDS rate (e.g., 5% or NIL) – give this to buyer
- If Sec 54 exemption will be claimed, mention in LDC application
NRIs can also claim LTCG exemption under Section 54 (reinvestment in a new residential property in India) and Section 54EC (investment in NHAI/REC bonds within 6 months). The new property under Sec 54 must be purchased in India – not outside India. If you plan to claim Sec 54, mention this in your LDC application to avoid excess TDS deduction.
NRI TDS Refund – How to Claim Excess TDS Back
Most NRIs have excess TDS deducted on NRO accounts (at 30%) and property sales. Filing ITR is the only way to claim this refund.
NRO FD Interest – Refund Scenario
Bank deducts TDS at 30% on NRO interest. But your actual tax rate may be lower after DTAA benefit or because total income is below the slab threshold.
Property Sale – Excess TDS Refund
When buyer deducts TDS on full sale consideration, but actual LTCG (after cost and Sec 54 exemption) is much lower – large refunds are possible.
How to Claim TDS Refund
- File ITR-2 before 31 July 2026 for full refund with interest
- Pre-validate NRO bank account on IT portal for refund credit
- Refund with interest @ 6% p.a. under Sec 244A if filed on time
- NRIs can only receive refund in Indian bank account (NRO/NRE)
- Typical processing: 3-6 months after ITR filing
Documents Required for NRI ITR Filing
NRI ITR filing requires more documents than resident filing due to DTAA claims, foreign income details, and property transactions.
Identity & Status
- PAN Card (must be linked to Aadhaar if you have one)
- Passport with travel dates (to prove NRI status)
- Visa / work permit / residence permit from foreign country
- OCI / PIO card (if applicable)
- Foreign address proof
Indian Income Documents
- NRO account statement (full year Apr 2025 – Mar 2026)
- Form 16A / TDS certificates from Indian banks
- Form 26AS – verify all TDS credits
- Annual Information Statement (AIS)
- Rental agreement + rent receipts (if property let out)
- Dividend statements from Indian companies
DTAA Documents
- Tax Residency Certificate (TRC) from country of residence
- Form 10F (filed online on IT portal)
- Foreign tax return (to show tax paid abroad, if applicable)
- Foreign tax payment receipts / certificate
Property Sale Documents
- Original purchase deed + sale deed
- TDS certificate (Form 27Q) from buyer
- Lower Deduction Certificate (if obtained)
- Stamp duty / circle rate valuation certificate
- New property purchase deed (if Sec 54 claimed)
- CGAS deposit receipt (if applicable)
Indian Investments
- Capital gains statement from broker (Zerodha, Groww etc.)
- Mutual fund capital gains statement from CAMS / KFintech
- Demat account statement (full year)
- EPF / PPF / NSC statements (if investments in India)
Bank & Schedule FA
- NRO bank account details (for refund)
- Foreign bank account details (for Schedule FA disclosure)
- Foreign assets list (property, investments, employer stock)
- Note: NRIs must report foreign assets in Schedule FA if they are resident Indians – not mandatory for NRIs unless returning to India
How to File NRI ITR Online – Step-by-Step
NRIs can file ITR completely online from anywhere in the world on incometax.gov.in. Due date is 31 July 2026.
Login & Verify AIS
Login with PAN. Download AIS and Form 26AS. Verify all TDS credits from banks, brokers, and property buyer.
File Form 10F Online
If claiming DTAA, file Form 10F on the portal under e-File > Income Tax Forms before proceeding to ITR.
Select ITR-2 (Mandatory)
NRIs MUST use ITR-2. Select “Non-Resident” as residential status. Do not select ITR-1 under any circumstance.
Fill Indian Income
Enter NRO interest, rental income, capital gains from Indian assets. Skip salary earned abroad – it is not taxable.
Claim DTAA / Exemptions
Fill Schedule TR for DTAA relief. Fill Schedule 54 for property exemptions. Claim TDS credit in Schedule TCS/TDS.
Submit & e-Verify
Submit and e-verify within 30 days via Net Banking EVC, DSC, or send physical ITR-V to CPC Bengaluru.
Aadhaar-OTP e-Verification for NRIs: If your mobile number linked to Aadhaar is an Indian number that you no longer use abroad, Aadhaar OTP-based e-verification may not work. Use Net Banking EVC (if you have Indian net banking) or send a signed ITR-V to CPC Bengaluru by ordinary post within 30 days as an alternative.
Common NRI Tax Mistakes That Trigger Notices
These are the most frequent NRI tax compliance errors that lead to income tax notices, penalties, and interest demands.
Using Active PAN Without Filing ITR
If you have an Indian PAN and Indian income (NRO interest, rent, Indian salary), the IT Department tracks this through AIR (Annual Information Return) and AIS. Not filing ITR when taxable income exists leads to notices under Section 142(1) or 148A asking you to explain why no return was filed.
Filing ITR-1 as an NRI
ITR-1 is strictly for resident individuals only. NRIs filing ITR-1 (even if their Indian income is simple salary or interest) will receive a defective return notice. Always file ITR-2 regardless of how simple your Indian income is.
Not Converting NRE Account After Returning
When you return to India permanently and become a resident, NRE account interest becomes taxable. Many returning NRIs continue to treat NRE interest as exempt even after becoming resident – this is a common scrutiny trigger. Convert your NRE account to resident savings account within a reasonable time of returning.
Counting Days Wrongly
NRI status is determined by counting days of physical presence in India during the financial year (April 1 to March 31). Both the day of arrival and departure are counted as days in India. Miscounting days and claiming NRI status incorrectly can lead to your entire global income being taxed in India as a resident.
Not Deducting TDS When Paying Rent to NRI Owner
If you are a tenant paying rent to an NRI landlord, you are legally required to deduct TDS at 30% on rent under Section 195 and file Form 27Q. Failure to do this makes the tenant personally liable for the TDS amount plus interest and penalty under Section 201.
Missing Schedule FA Disclosure on Return to India
Once you become a Resident (not RNOR), you must disclose all foreign assets and accounts in Schedule FA of ITR-2 under the Black Money Act. This includes foreign bank accounts, property, investments, employer stock, and any signing authority. Non-disclosure attracts penalties up to ₹10 lakh per year under the Black Money Act.
FAQs – NRI Income Tax Filing FY 2025-26
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