Introduction

Good news for NRI taxpayers. The ITR forms for Assessment Year 2026-27 are now available, and many NRIs who were waiting for ITR-2 and ITR-3 can finally start filing their returns.

One important thing to remember is that NRIs cannot file ITR-1 or ITR-4. In most cases, an NRI will either file ITR-2 or ITR-3 depending on the nature of income earned from India.

If you have earned capital gains from shares, mutual funds, crypto assets, rental income, bank interest, or dividend income in India, then proper reporting in the Income Tax Return becomes very important. At the same time, taxpayers should ensure that AIS and Form 26AS are properly verified before filing the return.

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Main Discussion

First Step: Verify AIS and Form 26AS

Before starting ITR filing, the first thing you should check is whether your AIS and Form 26AS have been properly updated.

Important Documents to Verify

Document	Purpose
AIS (Annual Information Statement)	Shows transactions reported against PAN
Form 26AS	Shows TDS, tax payments and reported transactions
Broker Statements	Capital gain reporting
Bank Statements	Interest income verification

One common mistake people make is filing the return without matching AIS and Form 26AS.

If the sale of securities, mutual funds, dividends, or TDS entries appearing in AIS do not match the ITR, future notices may arise.

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Which Income Is Taxable for NRIs?

Only income earned or arising in India generally needs to be reported by an NRI.

Common Taxable Income for NRIs

Income Type	Taxability
Capital Gains	Taxable
NRO Account Interest	Taxable
Dividend Income	Taxable
Rental Income	Taxable
Fixed Deposit Interest	Taxable

Common Non-Taxable Income

Income Type	Taxability
Foreign Salary Earned Outside India	Not taxable in India
Foreign Income Earned Abroad	Not taxable in India
NRE Account Interest (subject to conditions)	Exempt

If you are an NRI, you do not need to report your foreign salary merely because it was earned outside India.

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Is Schedule FA Mandatory for NRIs?

Many NRIs get confused about Schedule FA (Foreign Assets).

One important clarification is that Schedule FA reporting requirements primarily apply to resident taxpayers.

Foreign Asset Reporting

Particulars	NRI
Schedule FA Mandatory	No
Schedule FSI Mandatory	Generally No
Foreign Asset Disclosure	Not required merely due to NRI status

This is one area where many taxpayers unnecessarily worry.

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Capital Gains Reporting

For most NRIs, capital gains reporting is the most important part of ITR filing.

Capital Gains Categories

Type	Section
Short-Term Capital Gain (STCG)	Section 111A
Long-Term Capital Gain (LTCG)	Section 112A
Crypto / Virtual Digital Assets	Schedule VDA

A practical approach is to prepare a broker-wise summary before filing.

Suggested Capital Gain Working

Particulars	Amount
Total Purchase Value	Consolidated Broker Data
Total Sale Value	Consolidated Broker Data
Expenses	Brokerage and Charges
Net Gain / Loss	Final Reporting Figure

Preparing a consolidated summary helps reduce calculation mistakes and ensures easier matching with AIS.

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Crypto Reporting for NRIs

If you have traded in crypto, reporting must be done transaction-wise.

Information Required

Particulars	Required
Date of Acquisition	Yes
Date of Transfer	Yes
Cost of Acquisition	Yes
Sale Consideration	Yes
Profit / Loss	Yes

Unlike normal capital gains, crypto transactions cannot be aggregated in many situations and should be reported carefully.

One important thing to remember is that income from Virtual Digital Assets is generally taxable at a special rate.

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New Tax Regime vs Old Tax Regime

Many NRIs ask which tax regime is better.

The answer depends on deductions available.

Quick Comparison

Particulars	Old Regime	New Regime
Most Deductions Available	Yes	No
Simpler Compliance	No	Yes
Lower Slab Rates	No	Yes

However, one important point discussed is that rebate under Section 87A is not available to NRIs.

Therefore, taxpayers should compare both regimes before final submission.

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TDS Refund for NRIs

Many NRIs have TDS deducted on:

• Dividend income
• FD interest
• Capital gains
• Rental income

Common TDS Sources

Income Type	TDS Applicable
Dividend	Yes
FD Interest	Yes
Rental Income	Yes
Capital Gains	Yes

Any excess TDS deducted can be claimed as a refund through ITR filing.

Before filing, always match TDS with Form 26AS.

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Practical Impact

From a practical compliance perspective:

• Verify AIS before filing.
• Verify Form 26AS before filing.
• Match broker statements with reported gains.
• Report crypto transactions carefully.
• Keep residential status updated as NRI.
• Compare old and new tax regimes before submission.
• Claim eligible TDS refunds through the return.

These simple steps can help avoid notices, refund delays, and reporting errors.

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Conclusion

ITR filing for NRIs is not complicated if the process is followed step by step. The most important areas are residential status selection, capital gains reporting, crypto reporting, TDS reconciliation, and verification of AIS and Form 26AS.

In most cases, NRIs filing ITR-2 should focus on properly reporting Indian income, matching tax records, and claiming eligible refunds. A little extra review before submission can help avoid future compliance issues and ensure smooth processing of the return.

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Key Takeaways

• NRIs generally file ITR-2 or ITR-3, not ITR-1 or ITR-4.
• Verify AIS and Form 26AS before filing.
• Foreign salary earned outside India is generally not taxable in India.
• NRO interest is taxable, while NRE interest may be exempt.
• Schedule FA is generally not mandatory for NRIs.
• Capital gains should be reconciled with broker statements.
• Crypto transactions require detailed reporting.
• Excess TDS can be claimed as a refund through ITR filing.
• Section 87A rebate is not available to NRIs.
• Always compare old and new tax regimes before submission.

For more practical updates on Income Tax, GST, NRI Taxation, ITR Filing, and Compliance Matters, visit www.taxclear.in or connect on WhatsApp at +91 81715 82583 for professional assistance.