NRIs comprise a significant portion of the Indian diaspora across the globe, including the Gulf Countries, the USA, the UK, etc. NRIs are Indian origin individuals who stay outside India for reasons such as employment, education, etc. Irrespective NRIs, they are also required to file their ITR in India.
However, NRI taxation can be complex. If you also find taxes confusing, consult our tax experts.
Who is an NRI?
A person staying in India for less than 182 days during the year is considered an NRI. If you are an NRI, the income earned by you in India is taxable in India. Any income earned outside India by NRIs is not taxable in India.
Income Rules for NRIs in India
- All the income earned by an NRI in India is taxable in India.
- Salary received in India or salary for services provided in India, income from house property situated in India, capital gains on transfer of asset situated in India, income from fixed deposits and interest on savings accounts are taxable in India for NRIs.
- Income that is earned outside India is not taxable in India.
- Interest earned on FCNR account and NRE account is tax-free. Whereas, the interest received on NRO accounts is taxable in the hands of an NRI.
NRI Taxation in India
- If you are an NRI and your income exceeds Rs.2.5 lakh (old regime) or Rs.4 lakhs (new regime) during the year, then, you are liable to file an income tax return. Generally, the deadline to file ITR for NRIs is 31st July. However, for FY 24-25, the ITR filing deadline has been extended to 15th September 2025.
- The tax liability for NRIs is calculated at the same tax rates as individuals.
Deductions Available for NRIs under 80C
- Payment towards Life Insurance Premium
- Tuition Fees Paid for Kids
- Payment towards ULIPs
- Amount spent to repay the principal amount of the loan taken for constructing or purchasing a residential property.
- Investment in ELSS
How to File ITR for NRIs?
Here are the steps that you need to follow to file ITR for NRIs –
Step 1. Determine the Residential Status in India
As an NRI you must determine your residential status every year. If the person has been in India for less than 182 days, he/she will be considered a non-resident.
Step 2. Reconcile Income and Taxes with Form 26AS
In the next step, match your income and tax details with the TDS details displayed in Form 26AS.
Step 3. Determine Taxable Income and Tax Liability
Now you need to determine your taxable income and tax amount that you aree required to pay.
Your tax liability can be reduced by claiming the right deductions and exemptions Consult a tax expert and minimize your tax outlay.
Step 4. Claim DTAA Relief
At this time, you can claim the relief under DTAA. If your income is taxable both in India and the country you reside in, you can claim a tax exemption on such income in India.
Step 5. Select ITR and File Details about Exempt Income
Before you file your ITR, you need to determine which ITR form will be applicable to you. For example, NRIs must file ITR 2 in cases other than business income. For NRIs having business income, one must file ITR-3.
Step 6. Disclosure of Bank Account Details
You must provide the details of atleast one foreign bank account if you are claiming an income tax refund in India and don’t have an Indian bank account.
Step 7. Provide Assets and Liabilities Details in ITR
Next, you need to provide the details of your assets and liabilities in the Income Tax Forms.
Step 8. ITR Verification
Now, you can submit yout ITR. Once submitted, you need to e-verify your ITR within 30 days for it to be considered valid.
Need Tax Help? Ask Experts
If you find taxes complicated or overwhelming, you can connect with our experts who are here to help you every step of the way. From tax planning to tax filing and post-filing assistance, tax2win can help you with everything related to taxes.
Why Choose Tax2win?
Tax2win’s tax experts have over a decade of industry experience. Our experts navigate through 300+ provisions to find the best ones for your needs. So, if you are someone who breaks out in a cold sweat hearing about taxes, don’t worry! Simply hire an online CA from tax2win and ensure a smooth and hassle-free ITR filing journey.
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