Introduction
If you are an NRI and earning income from India, you may need to file an Income Tax Return in India.
Common Indian income sources for NRIs include:
- bank interest;
- fixed deposit interest;
- rental income from Indian property;
- dividend income;
- sale of shares;
- sale of mutual funds;
- sale of property in India;
- capital gains;
- business or professional income in India.
Many NRIs also have TDS deducted in India. If excess TDS has been deducted, the only practical way to claim refund is by filing ITR.
For NRI ITR filing, TDS refund, capital gains reporting and property-sale tax support, visit TaxClear.in’s NRI taxation services.
Why NRIs Should File ITR in India
An NRI should file ITR in India if income taxable in India exceeds the basic exemption limit or if any mandatory filing condition applies.
Even when ITR is not strictly mandatory, filing may be useful for:
| Reason | Benefit |
|---|---|
| TDS refund | Claim excess TDS deducted by bank, tenant, buyer or broker |
| Capital gains reporting | Avoid mismatch notice |
| AIS/Form 26AS matching | Report all Indian income correctly |
| Loan/visa records | Maintain income tax compliance history |
| Property sale | Report capital gain and claim refund if excess TDS deducted |
| Carry forward loss | Preserve eligible capital loss/business loss |
| Compliance safety | Avoid future notice due to missing Indian income |
Which ITR Form Should an NRI File?
NRIs generally use ITR-2 or ITR-3.
| Situation | ITR Form |
|---|---|
| NRI with bank interest only | ITR-2 |
| NRI with FD interest and dividend | ITR-2 |
| NRI with capital gains from shares/mutual funds | ITR-2 |
| NRI with rental income from Indian property | ITR-2 |
| NRI with property sale in India | ITR-2 |
| NRI with business/professional income in India | ITR-3 |
| NRI with F&O or intraday trading treated as business income | ITR-3 |
NRIs are generally not eligible to file ITR-1. ITR-4 is also not meant for non-residents in ordinary cases because it is mainly for resident taxpayers covered by presumptive taxation conditions.
ITR-2 vs ITR-3 for NRIs
| Point | ITR-2 | ITR-3 |
|---|---|---|
| Business/professional income | Not allowed | Allowed |
| Salary/pension | Allowed | Allowed |
| House property | Allowed | Allowed |
| Capital gains | Allowed | Allowed |
| Other sources | Allowed | Allowed |
| F&O/intraday business income | Not suitable | Suitable |
| NRI with investments only | Usually ITR-2 | Not needed unless business income exists |
If you are an NRI with only interest, dividend, rent and capital gains, ITR-2 is usually the correct form.
If you also have business or professional income in India, use ITR-3.
Residential Status Is the First Step
Before filing ITR, determine whether you are:
- Resident and Ordinarily Resident;
- Resident but Not Ordinarily Resident;
- Non-Resident.
This is important because taxability depends on residential status.
| Residential Status | Indian Taxability |
|---|---|
| Resident and Ordinarily Resident | Global income taxable in India |
| Resident but Not Ordinarily Resident | Indian income taxable; foreign income taxable only in specified cases |
| Non-Resident | Generally only Indian income taxable |
Do not file as NRI only because you have a foreign visa or foreign passport stamp. Residential status is determined mainly by days of stay and other conditions under income tax law.
182 Days Rule: Correct Understanding
The commonly known rule is that if an individual stays in India for 182 days or more during the financial year, they may become resident in India.
However, this is not the only rule.
Residential status may also depend on:
- stay of 60 days or more in the year and 365 days or more in the preceding 4 years;
- special relaxation for Indian citizens and Persons of Indian Origin visiting India;
- 120-day rule in specified high-income cases;
- deemed residency rules;
- RNOR rules.
Therefore, NRI residential status should be calculated carefully before filing ITR.
NRI vs Resident: Why Wrong Status Can Create Notice
If you file ITR with wrong residential status, it can create mismatch or scrutiny.
| Wrong Filing | Risk |
|---|---|
| Resident wrongly filed as NRI | Global income may be missed |
| NRI wrongly filed as resident | Foreign income confusion |
| RNOR not considered | Wrong foreign income reporting |
| Country and Tax Identification Number not provided | Return validation issue |
| Days of stay not computed properly | Residential status dispute |
For NRI residential status review, visit TaxClear.in’s NRI taxation services.
Income Tax Rules for NRIs
An NRI is generally taxed in India only on income that:
- is received in India;
- accrues or arises in India;
- is deemed to accrue or arise in India.
Common taxable Indian incomes for NRIs include:
| Income | Taxable in India? |
|---|---|
| Interest from Indian bank account | Yes |
| Interest from NRO account | Yes |
| Interest from NRE account | Generally exempt, subject to conditions |
| Rent from Indian property | Yes |
| Dividend from Indian company | Yes |
| Capital gains from Indian shares/mutual funds | Yes |
| Sale of Indian property | Yes |
| Salary for services rendered in India | Yes |
| Foreign income earned and received outside India | Generally not taxable for NRI |
Basic Exemption Limit for NRIs
For AY 2026-27, under the new tax regime, the nil slab starts up to ₹4 lakh. Under the old regime, the basic exemption limit for individuals below 60 years is ₹2.5 lakh.
Important point:
The Section 87A rebate benefit is available only to resident individuals, not NRIs.
Therefore, the popular “₹12 lakh income with zero tax under new regime” benefit is not available to NRIs.
| Point | Resident Individual | NRI |
|---|---|---|
| New regime basic nil slab | ₹4 lakh | ₹4 lakh |
| Section 87A rebate up to ₹12 lakh | Available to eligible residents | Not available |
| Tax on income above basic limit | As per slab/special rates | As per slab/special rates |
| Capital gains tax | As per special provisions | As per special provisions |
Documents Required for NRI ITR Filing
Before filing ITR, keep these documents ready:
| Document | Purpose |
|---|---|
| PAN | ITR filing |
| Passport | Residential status and identity |
| Visa/residence permit | Stay and residency support |
| Indian bank statement | Interest and refund account |
| AIS/TIS | Income reporting verification |
| Form 26AS | TDS verification |
| Form 16A | TDS on interest/rent/other income |
| Broker capital gains statement | Shares/mutual funds |
| Dividend statement | Dividend reporting |
| Rent agreement | Rental income |
| Property sale deed | Capital gains |
| Purchase deed/indexation data | Property capital gain calculation |
| Tax payment challan | Self-assessment tax |
| Previous ITR | Carry-forward loss and history |
Step 1: Download AIS and TIS
Before filing ITR, download AIS and TIS from the income tax portal.
AIS and TIS may show:
- bank interest;
- dividend income;
- sale of securities;
- mutual fund transactions;
- TDS;
- TCS;
- foreign remittance reporting;
- property transactions;
- high-value transactions.
If you miss any income appearing in AIS/TIS, you may receive an income tax notice.
Step 2: Download Form 26AS
Form 26AS shows tax credits such as TDS and TCS.
For NRIs, Form 26AS may show TDS on:
- NRO bank interest;
- rent;
- property sale;
- dividend;
- professional receipts;
- other Indian-source income.
The ITR should match Form 26AS and AIS/TIS wherever applicable.
AIS vs TIS vs Form 26AS
| Statement | What It Shows |
|---|---|
| AIS | Detailed information statement |
| TIS | Taxpayer Information Summary |
| Form 26AS | Tax credit statement, mainly TDS/TCS/tax payments |
| ITR | Final taxpayer declaration |
If AIS contains wrong information, submit feedback on AIS. Do not ignore it.
Step 3: Select Correct ITR Form
For most NRIs with investment income, select ITR-2.
Choose ITR-3 only if you have business or professional income in India.
| Income Type | ITR Selection |
|---|---|
| Interest + dividend | ITR-2 |
| Interest + rent | ITR-2 |
| Shares/mutual funds capital gain | ITR-2 |
| Property sale capital gain | ITR-2 |
| Business income | ITR-3 |
| F&O/intraday business income | ITR-3 |
Step 4: Fill Personal Information
In ITR, fill:
- name;
- PAN;
- date of birth;
- email;
- mobile number;
- address;
- residential status;
- country of residence;
- Tax Identification Number, if available;
- passport number if TIN is not available;
- bank account details.
For NRIs, country of residence and foreign TIN/passport details are important.
Step 5: Select Residential Status
In the personal information section, choose:
Non-Resident
You may also need to mention:
- country of residence;
- Tax Identification Number;
- passport number;
- days stayed in India during the year;
- days stayed in India in earlier years, where asked.
Do not guess this section. Wrong residential status can affect taxability.
Step 6: Report Income from Other Sources
NRIs commonly have income from other sources, such as:
- savings bank interest;
- fixed deposit interest;
- dividend;
- income tax refund interest;
- bond interest;
- other Indian-source income.
These should match AIS, TIS, bank statements and Form 26AS.
Step 7: Report Rental Income from Indian Property
If you have property in India and receive rent, report it under “Income from House Property”.
You may claim:
| Deduction | Treatment |
|---|---|
| Municipal taxes paid | Deductible if paid by owner |
| Standard deduction | 30% of net annual value |
| Home loan interest | Subject to applicable rules |
| TDS by tenant | Claim credit if reflected in Form 26AS |
If the tenant deducted TDS, claim credit in ITR.
Step 8: Report Short-Term Capital Gains
If you sold listed shares or equity mutual funds within 12 months, it may be short-term capital gain.
For listed equity shares/equity-oriented mutual funds where STT is paid, special tax treatment may apply.
You need:
- sale value;
- purchase cost;
- broker charges;
- STT details;
- ISIN/security-wise details where required;
- capital gains report from broker.
Step 9: Report Long-Term Capital Gains
If listed shares or equity mutual funds were held for more than 12 months, gains may be long-term capital gains.
For certain listed equity shares and equity mutual funds, Section 112A reporting may apply.
In the ITR utility, long-term capital gains under Section 112A may require:
- ISIN;
- security name;
- number of units/shares;
- sale price;
- cost of acquisition;
- fair market value as on 31 January 2018, where applicable;
- transfer expenses.
Many broker reports provide this data.
Step 10: Confirm Capital Gain Schedules
After entering capital gains, confirm relevant schedules such as:
- Schedule CG;
- Schedule 112A, where applicable;
- Schedule SI;
- Schedule CYLA;
- Schedule BFLA;
- Schedule CFL.
These schedules handle capital gain tax, set-off and carry-forward of losses.
Step 11: Verify TDS Schedule
Check TDS schedules carefully.
For NRIs, TDS may be deducted at higher rates, especially on property sale and rent.
Verify:
- TAN of deductor;
- amount paid/credited;
- TDS amount;
- year of deduction;
- income offered in ITR;
- Form 26AS match.
If TDS is appearing in Form 26AS but income is not reported, mismatch notice may come.
Step 12: Check Final Tax or Refund
After entering all income and TDS, check tax computation.
| Result | Action |
|---|---|
| Refund | File and verify ITR |
| Tax payable | Pay self-assessment tax first |
| No tax/refund | Verify and submit |
| TDS mismatch | Correct before filing |
| Capital gain loss | Check carry-forward schedule |
If tax is payable, pay it first and then enter challan details under advance tax/self-assessment tax schedule.
Step 13: E-Verify ITR
After filing, ITR must be verified.
Verification options include:
- Aadhaar OTP;
- net banking;
- bank account EVC;
- demat account EVC;
- DSC, where applicable;
- sending signed ITR-V to CPC.
ITR verification must be completed within 30 days of filing.
If verification is delayed beyond 30 days, the date of verification may be treated as the date of filing and late filing consequences may apply.
ITR-V by Post
If e-verification is not possible, sign ITR-V and send it to CPC Bengaluru.
The envelope should be sent as per the department’s prescribed process. Keep proof of dispatch.
How NRIs Can Claim TDS Refund
Many NRIs have TDS deducted even when final tax liability is lower.
Common refund cases include:
| Case | Refund Reason |
|---|---|
| NRO FD interest with high TDS | Actual tax lower than TDS |
| Property sale with 20%/higher TDS | Capital gain lower after cost/indexation |
| Rent TDS deducted | Income below taxable limit or expenses/deductions available |
| Dividend TDS | Final slab tax lower |
| Capital loss | TDS exists but net gain lower |
To claim refund, file ITR and ensure bank account is validated.
NRI Bank Account for Refund
Refund is usually credited to a validated bank account.
NRIs should ensure:
- bank account is active;
- PAN is linked;
- account is pre-validated;
- IFSC is correct;
- account is in taxpayer’s name;
- NRO/NRE account refund eligibility is checked with bank/portal.
Common NRI ITR Filing Mistakes
| Mistake | Risk |
|---|---|
| Filing as resident without checking status | Wrong taxability |
| Filing as NRI despite staying 182+ days | Notice risk |
| Ignoring 60/365-day rule | Wrong residential status |
| Not reporting Indian bank interest | AIS mismatch |
| Ignoring dividend income | Notice risk |
| Not reporting capital gains | AIS/Form 26AS mismatch |
| Claiming ₹12 lakh resident rebate as NRI | Incorrect tax calculation |
| Selecting ITR-1 | Wrong form |
| Not entering country/TIN/passport details | Validation issue |
| Not e-verifying within 30 days | ITR may become invalid/late |
| Not claiming TDS refund | Refund loss |
| Not checking broker statement | Wrong capital gain |
Practical Example: NRI With Indian Investments
Suppose an NRI has the following income in India:
| Income Source | Amount |
|---|---|
| NRO FD interest | ₹2,00,000 |
| Dividend income | ₹30,000 |
| Short-term capital gain | ₹1,20,000 |
| Long-term capital gain under 112A | ₹2,50,000 |
| TDS deducted | ₹80,000 |
The NRI should generally file ITR-2, report interest, dividend and capital gains, claim TDS credit and pay balance tax or claim refund as per final computation.
Practical Example: NRI With Rental Income
| Particulars | Amount |
|---|---|
| Gross annual rent | ₹6,00,000 |
| Municipal taxes paid | ₹20,000 |
| Net annual value | ₹5,80,000 |
| Standard deduction at 30% | ₹1,74,000 |
| Taxable house property income | ₹4,06,000 |
If TDS has been deducted by the tenant, the NRI can claim credit in ITR.
When Should an NRI Take Professional Help?
Take professional help if:
- you sold property in India;
- TDS was deducted at a high rate;
- you have capital gains;
- you have F&O/intraday trading;
- residential status is doubtful;
- you stayed in India for many days;
- you are RNOR;
- you have foreign income and Indian income;
- AIS shows mismatch;
- you received notice;
- you want DTAA benefit;
- you want lower TDS certificate support.
For professional NRI tax filing, visit TaxClear.in’s NRI taxation services.
TaxClear View
NRI ITR filing is not only about entering data on the portal. The most important points are:
- correct residential status;
- correct ITR form;
- proper matching with AIS/TIS and Form 26AS;
- correct reporting of capital gains;
- correct TDS refund claim;
- timely e-verification.
NRIs should not ignore Indian income only because they live abroad. Indian-source income may still be taxable and reportable in India.
Key Takeaways
- NRIs generally file ITR-2 if they have Indian interest, dividend, rent or capital gains.
- ITR-3 is used if the NRI has business/professional income in India.
- Correct residential status is the first step.
- A person staying 182 days or more in India may become resident, but other residency rules also exist.
- NRIs are generally taxable in India only on Indian-source income.
- Resident and ordinarily resident taxpayers are taxable on global income.
- NRIs do not get the resident-only Section 87A rebate.
- AIS/TIS and Form 26AS must be checked before filing.
- Capital gains from Indian shares/mutual funds must be reported.
- TDS refund can be claimed by filing ITR.
- ITR must be verified within 30 days of filing.
Conclusion
If you are an NRI earning income from India, do not ignore ITR filing.
Bank interest, rental income, dividend, capital gains from shares or mutual funds and sale of Indian property can create tax and reporting obligations in India.
Before filing, check residential status, download AIS/TIS and Form 26AS, choose ITR-2 or ITR-3 correctly, report all Indian income and claim eligible TDS refund.
For NRI ITR filing, capital gains computation, TDS refund, residential status review and Indian property-sale tax support, visit TaxClear.in.
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