Does an NRI Need to File a Tax Return in India? NRI Tax Rules for AY 2025–26
If you’re a non resident Indian residing overseas and have income in India, you may ask: Do NRIs need to file an income tax return in India? The short answer: yes — if your income from Indian sources crosses the tax-free limit (₹2.5 lakh under the old regime, or ₹4 lakh under the new regime) or if you have certain types of income such as capital gains, rent, interest, etc.
In this guide we explain how to check your status, what income counts, which ITR form to pick, key deadlines (for AY 2025-26), country-specific points (USA, UK, Canada, Australia), treaty/DTAA aspects, common mistakes and practical steps you should follow.
Does NRI Need To File An ITR In India?
If you are a non-resident Indian (NRI) for tax purposes and you earn or receive income in India, you must file a tax return if your taxable income in India exceeds the basic exemption limit. Even if your income is below that limit, you might still file: for example to claim a refund of tax deducted at source (TDS), or to carry forward losses. For AY 2025-26 (i.e., financial year 2024-25), you should be aware of updated deadlines and form changes.
Are you an NRI for filing taxes this year?
To know whether you must file, you first check your non residential residential status under the Income-tax Act, 1961. The rules say:
- If you stay in India 182 days or more during the previous year, you are a resident of India.
- Or, if you stay 60 days or more in India during the previous year and 365 days or more in the four preceding years, you also become resident.
- If you don’t meet either, you are a non-resident.
- For Indian citizens or persons of Indian origin with foreign income exceeding ₹15 lakh, the “60 days” rule is substituted with “120 days”.
Why this matters: If you are non-resident (NRI) you are taxed only on Indian-sourced income, not your global income.
When an NRI must file an ITR in India?
Here are the main triggers:
- Your income from Indian sources (after deductions) exceeds the basic exemption limit (for many NRIs that is ₹2.5 lakh under the old regime).
- You have capital gains (sale of shares/MFs/property) in India. Even if your total income is under the limit, capital gains often require filing.
- You have rental income, interest from Indian bank accounts (NRO), dividend from Indian companies.
- You want to claim refund of excess TDS.
- You wish to carry forward losses (say a capital loss) – to do that you must file before deadline.
Important note: NRIs may not enjoy some exemptions that residents do. Make sure to check your own case.
Deadlines for AY 2025-26 (what changed)
- The due date for most individuals (including NRIs) for filing return for FY 2024-25 (AY 2025-26) has been extended to 15 September 2025.
- However, the deadline to pay self-assessment tax (final tax liability) remains 31 July 2025 if you want to avoid extra interest.
- If you miss 15 September, you can still file a belated return up to 31 December 2025 (for individuals), but you may lose benefits (e.g., carry forward of loss) and face late fee under section 234F.
It’s wise to prepare earlier so you have time for review and correction.
What income is taxable for NRIs in India?
Here are typical income heads and how they apply to NRIs:
- Interest on Indian bank accounts: Interest earned from NRO accounts is taxable; interest from NRE/FCNR often is tax-free (subject to conditions).
- Rent from property in India: If you own property in India and rent it, that rent (minus standard deduction) is taxable.
- Capital gains from sale of assets in India:
- If you sell shares or equity-oriented mutual funds: STCG or LTCG apply.
- If you sell property: you pay tax on gains after indexation (for long-term) and TDS may apply at point of sale.
- Dividend from Indian companies: Taxable in India for NRIs (though some treaty relief might apply).
- Salary or business income: If you earn salary in India (even if you live abroad) or have business in India, that counts.
Examples for clarity: - Suppose you live in the USA, you own a flat in India and rent it for ₹6 lakh/year. You’ll need to report that rent income, pay tax on it in India.
- Suppose you have an NRO FD which paid you ₹3 lakh interest and TDS of ₹90,000 was already deducted. If the net income crosses threshold, you file to claim refund or pay any tax balance.
These are simplified – always check your full situation.
Do NRIs Get a Separate Tax Slab in India?
Short answer: No. NRIs do not have a separate tax slab. For FY 2024–25 (AY 2025–26), NRIs are taxed on Indian income using the same slabs as other individuals under the default new tax regime.
Your regular Indian income (salary received in India, rent, interest from NRO, business income, etc.) is taxed as per the slab table below. Capital gains and a few other incomes are taxed at special rates, shown later.
NRI Income Tax Slabs – New Regime (FY 2024–25, AY 2025–26)
| Total taxable Indian income (per FY) | Tax rate under new regime |
|---|---|
| Up to ₹3,00,000 | Nil |
| ₹3,00,001 – ₹7,00,000 | 5% of income above ₹3,00,000 |
| ₹7,00,001 – ₹10,00,000 | ₹20,000 + 10% of income above ₹7,00,000 |
| ₹10,00,001 – ₹12,00,000 | ₹50,000 + 15% of income above ₹10,00,000 |
| ₹12,00,001 – ₹15,00,000 | ₹80,000 + 20% of income above ₹12,00,000 |
| Above ₹15,00,000 | ₹1,40,000 + 30% of income above ₹15,00,000 |
Rebate note: Under the new regime, many individuals with total income up to ₹7,00,000 may get a rebate under section 87A, which can bring tax to nil. This rebate usually does not apply to certain special incomes like some capital gains.
What about capital gains and other special incomes for NRIs?
Some types of income are taxed at fixed rates, not by the slab. These are common ones for NRIs (broad view only):
| Type of income from India | How it is usually taxed for NRIs (FY 2024–25) |
|---|---|
| Short-term capital gains on listed equity / equity mutual funds (covered by section 111A, with STT) | Taxed at a special rate (20% for trades on or after 23 July 2024), plus surcharge and cess, not by the slab. |
| Long-term capital gains on listed equity / equity mutual funds | Taxed at 12.5% on gains above the exemption limit (post 23 July 2024), separate from slab rates. |
| Long-term capital gains on property, gold, debt funds and other assets | Taxed at 12.5% without indexation or 20% with indexation (choice-based), plus surcharge and cess. |
| Dividend from Indian companies | Generally taxed at a flat rate (often 20% for non-residents) subject to DTAA relief with your country of residence. |
| Interest on NRE / FCNR(B) deposits (banks in India) | Often exempt from Indian tax if you qualify as NRI under FEMA rules. Interest on NRO deposits is taxable (TDS usually at 30%). |
Simple takeaway: Slabs apply to your regular Indian income. Capital gains, dividends, and some interest incomes for NRIs use separate fixed rates. You have to look at both the slab table and the special-rate rules while planning your tax.
ITR form selection for Non Residents
Choosing correct ITR form is important:
- ITR-2: Most NRIs will use this if they have capital gains, property income, other income apart from business/profession.
- ITR-3: Use this if you have business or professional income in India.
- ITR-1 or ITR-4: Generally not for NRIs if you have capital gains, property, or foreign assets. (NRIs cannot file ITR-1 in many cases)
Tip: Before you file, double check which form is relevant for your income mix. Using wrong form could lead to notices.
New & notable for FY 2024-25 (AY 2025-26)
- Capital gains on equity: The rules around short-term vs long-term may have updates.
- Asset/liability reporting thresholds may have changed for high-value Indian holdings (e.g., if you hold assets in India above ₹50 lakh).
- The deadline extension (Sep 15 for filing) is important for planning.
- Also keep an eye on TDS/TCS changes – some payments to NRIs, property buyers etc face strict TDS rules.
TDS rules that catch NRIs off-guard
- When you receive rent in India, or you sell property, the buyer is supposed to deduct tax at source (TDS) under Section 195 in case of NRIs. Same if you earn interest, professional fees etc.
- Even if tax deducted at source (TDS) is deducted, that doesn’t always mean your tax liability is settled. You may still need to file ITR to claim refund or to account for accurate slab rates.
- Example: You sold property, buyer deducted 20% TDS immediately, but you may have long-term capital gains taxed differently; so you file return to compute correct tax.
Key message: TDS is not the final word — you filing can adjust your tax properly and unlock refunds or carry forwards.
DTAAs and withholding tax treaties
Since you live abroad, you may be covered by a double tax avoidance agreement (DTAA) between India and your country of residence. These agreements often allow:
- Relief from double taxation (you pay tax in India and claim credit in your country).
- Reduced rates of withholding tax (for instance, lower TDS on interest or dividends under treaty-provisions).
- You must claim the treaty benefit; it doesn’t apply automatically in many cases. For example: an NRI resident in the UK may claim treaty benefit under India-UK DTAA for property income or dividends; a US resident may claim relief under India-US DTAA.
In practical terms: - When you pay tax in India, keep the certificate (TDS certificate, tax payment proof).
- On your country of residence tax return, apply for foreign tax credit using those Indian taxes paid.
- At the time of Indian filing you should mention treaty details if relevant (e.g., in schedules, or claim of relief).
Make sure to check exact DTAA terms for your country, since different countries have different rates and conditions.
Deductions and reliefs you can still use
- Some deductions under Chapter VIA (like Section 80C, 80D) may apply to your Indian income, but availability for NRIs may be limited.
- Carry forward of capital losses: If you have a capital loss in India, you must file ITR before due date to carry it forward (so you can set it against future gains).
- Relief under DTAA: If you pay tax in India, your country of residence may allow credit so you avoid double tax.
Quick note: Just because something works for residents doesn’t mean it automatically works for NRIs — check case by case.
How To File a NRI Tax Return In India? (Step By Step Process Explained)
Here is a simple process flow for non resident Indians (NRIs) to submit their Indian ITR online from outside India:
- Check your residential status to confirm you are NRI for tax.
- Gather all documents:
- PAN
- Aadhaar linking status
- Form 26AS/AIS for Indian income and TDS
- NRO/NRE account statements
- Property documents (if rent or sale)
- Details of capital gains (purchase date, sale date, cost, indexation)
- Rent receipts, agreements, municipal tax paid etc.
- Choose correct ITR form (ITR-2/ITR-3 generally).
- Compute your total income in India by head: interest, rent, capital gains, other sources.
- Deduct eligible deductions (if any) and compute tax liability per slab/regime.
- Pay self-assessment tax before 31 July 2025 if possible (to avoid interest).
- Go to the e-Filing portal of the Income Tax Department, fill the form online, upload required schedules, review.
- E-verify your return using Aadhaar OTP, net-banking, or sending signed ITR-V.
- Once filed, keep the acknowledgement safely, track refund (if any) and keep records for future (for carry forward losses or for treaty claims).
Tip: Do this ahead of deadlines; don’t leave until last minute.
List Of All Documents An NRI Might Need To File Income Tax Return In India
Keep these items ready while filing your income tax return:
- Indian PAN card
- Passport (to confirm NRI status and travel history, if required)
- Foreign address proof (rental agreement, bank statement, utility bill, etc.)
- Indian bank account details (especially NRO account for income earned in India)
- Form 26AS downloaded from the income tax portal
(shows TDS deducted by banks, tenants, buyers, etc.) - AIS (Annual Information Statement) for a full view of your income and transactions
- Income documents depending on your case:
- Salary received in India (Form 16)
- Rent receipts + tenant’s PAN and TDS details (Form 16C)
- Interest statements from NRO/NRE bank accounts
- Capital gains details for property or shares
- Dividend statements from Indian companies
- Home loan interest certificate (if claiming deductions)
- Proof of tax paid in a foreign country
(if claiming Double Taxation benefit under DTAA) - Investment proofs if claiming deductions under Section 80C/80D, etc.
- Bank statements for financial year
(Indian and, if needed, foreign bank statements)
Country-specific notes
Below are short notes for NRIs living in different countries. These are for a quick understanding only.
UK-based NRIs
- Your UK tax status plays a role.
- Income earned in India is taxed in India.
- You may claim tax relief in the UK under the India-UK DTAA.
- Rental income from India may also need to be reported in the UK.
Canada-based NRIs
- Canada gives credit for tax paid in India.
- Match income details in India (AIS/26AS) with your Canadian reporting.
- Make sure any Indian assets/investments are correctly disclosed in Canada.
Australia-based NRIs
- Indian-source income is taxed in India.
- You may then get relief in Australia under the DTAA.
- Capital gains on Indian property or investments may need reporting in both places.
USA-based NRIs
- India taxes income like rent, interest, and capital gains earned in India.
- In the US, you may claim Foreign Tax Credit (FTC) for tax paid in India under the DTAA.
- Indian mutual funds or shares may trigger US PFIC rules, so be careful while filing.
Note: These are basic points. For personal advice, speak with a tax expert in your country of residence.
5 common mistakes to avoid
- Using wrong ITR form — many NRIs pick ITR-1 by mistake when they have capital gains or property income. Fix: check form before filing.
- Assuming NRE interest is taxable — sometimes it is exempt, but NRO interest is taxable. Fix: segregate accounts properly and know tax treatment.
- Missing that TDS deduction ≠ final tax calculation — TDS may be more or less than actual liability. Fix: compute your slab and reconcile.
- Not filing to carry forward losses — you lose future benefit if you don’t file on time. Fix: file even if no tax is due, if you have losses to carry forward.
- Late filing / non-filing despite having taxable income — leads to late fee (Section 234F), interest, delayed refund. Fix: mark deadlines and prepare early.
Frequently Asked Questions
Q: Do NRIs need to file if their income in India is below ₹2.5 lakh?
A: If your total taxable Indian income is below the basic exemption limit, you may not be mandatorily required. But you might choose to file if you want to claim refund of TDS or carry forward losses.
Q: Which ITR form should I use as an NRI?
A: Usually ITR-2 if you have property income, capital gains, other income. If you have business/professional income in India, then ITR-3.
Q: Can I claim refund if excess TDS was deducted?
A: Yes. Filing an ITR lets you claim refund when TDS exceeds your actual liability.
Q: What is the last date to file for AY 2025-26?
A: For individuals not needing audit, due date is 15 September 2025.
Q: I paid full tax by 31 July. Do I still owe interest if I file late?
A: Possibly yes — interest under sections 234A/B/C may apply if tax isn’t paid timely or return is delayed. Paying tax early avoids part of that risk.
Q: Do I need Aadhaar to file as an NRI?
A: Usually yes – Aadhaar linking may be required. But if you are abroad and cannot link, consult the latest IT portal instructions for NRIs.
Q: Can I file the return without visiting India?
A: Yes — you can e-file online, verify digitally (Aadhaar OTP/net-banking) or send signed ITR-V from abroad.
Disclaimer: This article is meant for general information only. Tax rules may change and every person’s situation can be different. Before filing your tax return or taking any steps based on this information, please speak with a qualified tax expert such as a Chartered Accountant (CA) in India or a CPA/tax advisor in your country of residence. The author and publisher of this content do not accept responsibility for any decisions made without professional guidance.
