🌍 Introduction
India’s growing global diaspora often leads to one common question among Non-Resident Indians (NRIs): Do I need to file income tax returns in India?
While your income may originate overseas, you may still have taxable income in India. Whether it's rental income, capital gains, or interest from bank accounts, understanding NRI tax filing requirements is crucial to avoid penalties and stay compliant with Indian tax laws.
This guide outlines all the key considerations for NRIs when filing their Income Tax Return (ITR) in India for FY 2024-25 (AY 2025-26).
📌 Who is an NRI as per Indian Tax Law?
Your residential status is determined under Section 6 of the Income Tax Act, 1961.
You are considered an NRI (Non-Resident Indian) if:
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You were outside India for 182 days or more during the relevant financial year, OR
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You were in India for less than 60 days in the financial year and less than 365 days in the last 4 years.
📢 Important: The NRI status is determined every year, not permanently.
💼 Types of Income Taxable for NRIs in India
Only the income earned or accrued in India is taxable for NRIs. This includes:
| Income Type | Taxable in India for NRI? |
|---|---|
| Salary received in India | ✅ Yes |
| Rental income from property in India | ✅ Yes |
| Capital gains from sale of assets | ✅ Yes |
| Interest on NRO accounts | ✅ Yes |
| Interest on NRE/FCNR accounts | ❌ No (Exempt) |
| Foreign income (outside India) | ❌ No |
📊 Income Tax Slab Rates for NRIs – FY 2024-25
🧾 Under the Old Tax Regime
| Income Slab (INR) | Tax Rate |
|---|---|
| Up to ₹2.5 lakhs | Nil |
| ₹2.5 lakhs – ₹5 lakhs | 5% |
| ₹5 lakhs – ₹10 lakhs | 20% |
| Above ₹10 lakhs | 30% |
💡 No benefit of rebate under Section 87A is available for NRIs.
🧾 New Tax Regime (Optional for NRIs)
| Income Slab (INR) | Tax Rate |
|---|---|
| Up to ₹3 lakhs | Nil |
| ₹3 lakhs – ₹6 lakhs | 5% |
| ₹6 lakhs – ₹9 lakhs | 10% |
| ₹9 lakhs – ₹12 lakhs | 15% |
| ₹12 lakhs – ₹15 lakhs | 20% |
| Above ₹15 lakhs | 30% |
🧾 Which ITR Form Should an NRI File?
| ITR Form | Suitable for |
|---|---|
| ITR-1 | Not allowed for NRIs |
| ITR-2 | For NRIs with income from salary, house property, capital gains, or other sources (without business/profession) |
| ITR-3 | If NRI has income from business/profession in India |
🗓️ Due Date for NRI Tax Filing (FY 2024-25)
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31st July 2025 – For NRIs who are not required to get accounts audited
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31st October 2025 – For NRIs with business/profession requiring audit
🔍 Key Tax Considerations for NRIs
1. ✅ Double Taxation Avoidance Agreement (DTAA)
NRIs can avoid paying tax twice on the same income (India + foreign country) by claiming relief under DTAA.
Example: If you paid tax on rental income in India, you can claim relief in the US under DTAA.
2. 🔐 TDS Applicability on NRI Income
| Income Type | TDS Rate |
|---|---|
| Rent | 30% |
| Interest on NRO A/c | 30% + cess |
| Capital Gains | Depends on asset type and duration |
| Sale of Property | Up to 20% or more depending on capital gain type |
✳️ TDS is applicable at higher rates if PAN is not available.
3. 🏠 NRI Selling Property in India
When NRIs sell property in India:
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TDS @ 20% (LTCG) or 30% (STCG) is deducted.
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You may apply for a lower/NIL TDS certificate under Section 197.
4. 🧾 Claiming Deductions & Exemptions
NRIs can claim:
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Section 80C (LIC, ELSS, principal on home loan)
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Section 80D (Medical Insurance)
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Section 24(b) (Interest on housing loan)
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Section 54, 54EC, 54F (Capital gain exemptions)
5. 📂 Bank Account Considerations
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NRIs must hold:
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NRO Account – To manage income earned in India
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NRE Account – For income earned abroad, repatriable
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Income from NRO account is taxable, while NRE interest is exempt.
📋 Documents Required for NRI ITR Filing
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PAN card
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Aadhaar (if available)
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Bank account details (preferably NRO/NRE)
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Passport and visa details
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Income proofs (rent agreements, capital gains, interest statements)
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Form 16A or TDS certificates
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Details of foreign tax paid (if claiming DTAA)
💻 How to File ITR as an NRI
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Determine residential status
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Choose the correct ITR form
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Collect documents and calculate income
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Pay tax and self-assessment (if any)
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File ITR via e-filing portal (www.incometax.gov.in)
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E-verify return using Aadhaar OTP, Net Banking, or DSC
⚠️ Penalties for Non-Compliance
| Default | Penalty |
|---|---|
| Late filing | ₹1,000 to ₹5,000 u/s 234F |
| Non-filing of return | Risk of scrutiny, notices, penalties |
| Incorrect reporting | Penalty u/s 270A (50%-200% of tax) |
🏢 How Verotus Finlegal Solutions LLP Can Help NRIs
At Verotus Finlegal Solutions LLP, we specialize in:
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Accurate tax filing for NRIs
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DTAA relief and lower TDS applications
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Capital gains calculation & exemptions
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PAN & Aadhaar guidance
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Property sale compliance & repatriation advisory
📝 Conclusion
Filing income tax as an NRI in India may seem complex, but with proper knowledge and expert help, you can file seamlessly while optimizing your tax liability. Stay compliant, avoid penalties, and make informed decisions about your Indian income sources.
📞 Need Help with NRI Tax Filing?
Get in touch with our experts at Verotus Finlegal Solutions LLP
🌐 www.verotusllp.com
📧 verotusllp@gmail.com
📍 Kolhapur, Maharashtra
📞 +91-7066336680
