1. What is NRI Tax Filing in India?
NRI tax filing India refers to the process by which a Non-Resident Indian reports and pays taxes on income earned in India. While foreign income is generally not taxable, any income sourced from India (such as rent, capital gains, or dividends) is subject to Indian tax laws. Even if TDS is deducted, NRIs are often required to file returns to claim refunds or comply with Indian Income Tax rules.
- 1. What is NRI Tax Filing in India?
- 2. Who is Considered an NRI (Residential Status Rules)?
- 3. Residential Status Test for FY 2025–26
- 4. Types of Income and Their Taxability for NRIs
- 5. Detailed Tax Rates on Various NRI Income
- 6. NRO vs NRE Account Taxation – Key Differences
- 7. DTAA (Double Taxation Avoidance Agreement) Benefits
- 8. How to Claim DTAA Benefits: Required Documents
- 9. Which ITR Form Should an NRI Use?
- 10. Documents Required for Filing NRI ITR
- 11. Step-by-Step Process of NRI ITR Filing in India
- 12. Common Mistakes NRIs Make While Filing Returns
- 13. Repatriation Rules for NRIs
- 14. Important Dates and Penalties
- 15. 📌 Conclusion – Mastering NRI Tax Filing India
- 16. FAQs
2. Who is Considered an NRI (Residential Status Rules)?
An individual is considered a Non-Resident Indian (NRI) if they do not satisfy either of the following two conditions:
- Stayed in India for 182 days or more during the financial year
- Stayed in India for 60 days or more during the financial year AND 365 days or more in the previous four years
✅ Exceptions for Indian Citizens and PIOs
| Condition | Status |
|---|---|
| Indian citizens working abroad with Indian income exceeding ₹15L | Allowed stay in India up to 120 days without losing NRI status |
| Indian citizens on crew of Indian ships | Stay outside India not counted as days in India |
3. Residential Status Test for FY 2025–26
Let’s break down residential status tests with examples.
| Scenario | Days in India (FY 23–24) | Days in Previous 4 Yrs | Residential Status |
|---|---|---|---|
| 100 days in FY 23–24, 300 days in last 4 yrs | ✅ >60 & ✅ >365 | Resident | |
| 150 days in FY 23–24, 350 days in last 4 yrs | ✅ >60 but ❌ <365 | Non-Resident (NRI) | |
| 119 days, income in India ₹20L | ✅ Exception used | NRI |
It’s essential to maintain passport stamp records to prove physical presence in/out of India.
4. Types of Income and Their Taxability for NRIs
NRIs are taxed only on income earned or accrued in India. Here’s how various income types are treated.
| Income Type | Taxable in India? | Tax Rate |
|---|---|---|
| Salary earned abroad | ❌ No | NA |
| Salary received in India (for services rendered in India) | ✅ Yes | Slab-based |
| Rental income from Indian property | ✅ Yes | 30% + cess |
| NRO account interest | ✅ Yes | 30% + cess |
| NRE account interest | ❌ No | Exempt |
| Capital gains on Indian assets | ✅ Yes | Depends on asset type |
| Dividends from Indian companies | ✅ Yes | 20% + cess |
Visit CBDT Official Circulars for latest tax clarifications.
5. Detailed Tax Rates on Various NRI Income
📊 Tax Slabs for NRIs (FY 2025–26)
| Income Range | Tax Rate |
|---|---|
| Up to ₹2.5 Lakhs | Nil |
| ₹2.5 – ₹5 Lakhs | 5% |
| ₹5 – ₹10 Lakhs | 20% |
| Above ₹10 Lakhs | 30% |
- No benefit of rebate under Section 87A for NRIs
- Surcharge applies above ₹50 lakh income
- Health & Education cess @ 4% on total tax
6. NRO vs NRE Account Taxation – Key Differences
| Feature | NRO Account | NRE Account |
|---|---|---|
| Interest Tax | Taxable @ 30% | Fully Exempt |
| TDS | 30% TDS | No TDS |
| Repatriation | Restricted | Fully repatriable |
| Joint Account | With Residents Allowed | Only with NRIs |
| Usage | Income from India | Remittance from abroad |
Smart Tip: Use NRE for investments to keep interest tax-free.
7. DTAA (Double Taxation Avoidance Agreement) Benefits
The DTAA prevents NRIs from being taxed twice on the same income—once in India and again in their country of residence.
⭐ Key DTAA Benefits
- Lower TDS rates: e.g., US NRIs pay 15% on FD interest instead of 30%
- Tax credits for foreign taxes already paid
- Pension exemptions or lower rates
- Avoid double taxation on capital gains and dividends
India has DTAA with 90+ countries including USA, UK, UAE, Canada, Australia, Germany, etc.
Check DTAA treaties here: India DTAA Treaties
8. How to Claim DTAA Benefits: Required Documents
To avail of DTAA benefits, submit these documents:
- Tax Residency Certificate (TRC) from foreign government
- Form 10F (if TRC lacks address, nationality, etc.)
- Self-declaration of beneficial ownership
- Proof of tax paid abroad
Submit to:
- Indian banks for reduced TDS
- Indian tax authorities while filing ITR
9. Which ITR Form Should an NRI Use?
| Income Type | Applicable ITR Form |
|---|---|
| Salary/rent/capital gains | ITR-2 |
| Business/professional income | ITR-3 |
| Only exempt NRE interest | Filing not required |
| Multiple sources incl. foreign income | ITR-2 or 3 |
| RNOR (Returning NRI) with foreign income | ITR-2/3 (same as resident) |
NRIs cannot file ITR-1 or use the new ITR-4 (Presumptive Taxation).
10. Documents Required for Filing NRI ITR
- PAN Card (Mandatory)
- Passport (to verify travel days)
- TRC, Form 10F (if claiming DTAA)
- Form 16A/26AS (TDS statements)
- Bank Statements (NRO/NRE)
- Property Documents (Rent, Sale)
- Capital Gains computation (with cost of acquisition, indexation)
11. Step-by-Step Process of NRI ITR Filing in India
✅ Step 1: Determine Your Residential Status
Use passport stamps to calculate stay in India.
✅ Step 2: Categorize Your Income
Separate India-sourced and foreign income.
✅ Step 3: Claim DTAA Benefits
Submit TRC + Form 10F to bank or payer.
✅ Step 4: Choose Right ITR Form
Mostly ITR-2 for rent/gains; ITR-3 for business.
✅ Step 5: File Electronically on Income Tax Portal
✅ Step 6: Pay Due Tax via Challan 280
✅ Step 7: E-Verify Return
Use Aadhaar OTP or send signed ITR-V to CPC, Bangalore.
12. Common Mistakes NRIs Make While Filing Returns
🚫 Not filing ITR for rental income
🚫 Using incorrect ITR form (like ITR-1)
🚫 Missing DTAA relief—ending up with 30% TDS
🚫 Not reporting foreign bank accounts (required for RNOR)
🚫 Incorrect PAN-Aadhaar linking
13. Repatriation Rules for NRIs
- NRE accounts: Freely repatriable
- NRO accounts: Up to USD 1 million/year with proper documentation
- Submit Form 15CA & 15CB (Chartered Accountant certification) for NRO repatriation
14. Important Dates and Penalties
| Event | Date |
|---|---|
| Due Date for Filing | 31st July (Non-audit cases) |
| Belated Return Deadline | 31st Dec |
| Penalty for Late Filing | ₹5,000 (₹1,000 if income < ₹5L) |
| TDS Certificate Issue | 31st May |
15. 📌 Conclusion – Mastering NRI Tax Filing India
NRI tax filing India can seem overwhelming with its rules around residential status, DTAA benefits, account types, and ITR forms. But once you understand the structure—what is taxable and what isn’t—it becomes easier to optimize your taxes and avoid unnecessary deductions.
NRIs should proactively gather documents, choose the correct ITR form, and leverage DTAA benefits to avoid double taxation. Most importantly, never skip filing, especially if you’ve earned rental, capital gains, or other taxable income in India.
16. FAQs
Do NRIs have to link PAN with Aadhaar?
Yes, NRIs must link their PAN with Aadhaar unless they have a non-resident status in PAN records.
Can an NRI invest in Indian mutual funds?
Yes, through NRE/NRO accounts. However, FATCA compliance is required.
Is rental income earned by NRIs taxed at slab rates or flat?
Flat 30% (plus cess), regardless of the income slab.
Can NRIs claim a refund on TDS deducted?
Yes, by filing ITR, especially if lower DTAA rates apply or income falls below taxable limits.
Are NRIs required to disclose foreign bank accounts?
Only RNORs or Residents. NRIs need not disclose unless converting to resident status.
📚 Sources
The information provided in this article on NRI tax filing India is based on guidelines and circulars issued by the Income Tax Department of India, official resources from the Central Board of Direct Taxes (CBDT), and government portals like the Income Tax e-Filing Portal. Additionally, insights regarding DTAA (Double Taxation Avoidance Agreements) were taken from treaty documents and policy summaries listed on the Ministry of Finance DTAA section. Bank taxation rules for NRO and NRE accounts were verified from FAQs and disclosures on major Indian bank websites like SBI and ICICI Bank. Capital gains and income slab structures were sourced from Union Budget notifications and clarified using inputs from TaxGuru, ClearTax, and other CA-reviewed tax consultancy platforms.