As the income tax return (ITR) filing season begins, many Non-Resident Indians (NRIs) have questions about their tax obligations in India. Although the filing window officially starts on 1 April, the practical filing period is much shorter because essential tax records such as the Annual Information Statement (AIS), Taxpayer Information Summary (TIS), and Form 26AS are generally updated only by mid-June.
For NRIs, filing an Income Tax Return involves more than simply reporting income. It requires proper disclosure of residential status, exempt income, foreign tax information, bank account details, and compliance with various reporting requirements under the Income-tax Act.
This article highlights some of the most important points every NRI should keep in mind while filing the Income Tax Return for Financial Year 2025–26 (Assessment Year 2026–27).
1. Income up to ₹12,00,000 Is Not Automatically Tax-Free for NRIs
One of the biggest misconceptions among NRIs is that income up to ₹12,00,000 is completely exempt from tax.
The rebate benefit under the Income-tax Act is available only to resident individuals, subject to the applicable conditions. NRIs are not eligible for this rebate, and therefore the normal income tax slab rates apply to them.
NRIs should also remember that capital gains are generally taxable at special rates. Even if the amount of capital gain is below the basic exemption limit, it should still be reported correctly in the Income Tax Return, and tax should be computed in accordance with the applicable provisions.
2. File Your Return Within the Due Date to Carry Forward Losses
If you have incurred eligible losses during the current year or have losses brought forward from earlier years, timely filing of the Income Tax Return becomes extremely important.
Losses such as:
- Capital loss from shares
- Mutual fund losses
- Property losses
- Other eligible business or capital losses
can generally be carried forward only if the return is filed within the prescribed due date.
Failure to file the return on time may result in the loss of the right to carry forward these losses for adjustment against future income.
3. File Your ITR Even if Your Income Is Below the Basic Exemption Limit
Many NRIs believe that if their income in India is below the basic exemption limit, there is no need to file an Income Tax Return.
However, filing the return is advisable in several situations, particularly where financial transactions have taken place in India.
Examples include:
- Maintaining bank accounts in India
- Regular financial transactions
- Purchase of property
- Sale of property
- Receipt of gifts
- Inheritance money
- Sale proceeds of rural agricultural land
Regular filing creates a proper tax record with the Income Tax Department and helps establish the source of funds as well as the taxpayer’s residential status.
4. Deduction of TDS Does Not Eliminate the Need to File an ITR
Many NRIs assume that once Tax Deducted at Source (TDS) has been deducted, no further tax compliance is required.
This is not correct.
If TDS has been deducted on:
- Sale of property
- Interest on NRO deposits
- Rental income
- Capital gains
- Any other taxable income in India
the Income Tax Return should still be filed.
Filing the return enables taxpayers to:
- Report the correct taxable income.
- Compute the actual tax liability.
- Claim a refund where excess TDS has been deducted.
Check Whether Your TDS Appears in Form 26AS
A common issue faced by NRIs is that TDS deducted on the sale of property sometimes does not appear in Form 26AS.
One possible reason is that although the buyer deposited the TDS challan, the buyer failed to file the corresponding TDS return.
Merely depositing the TDS is not sufficient. The buyer must also file the applicable TDS return before the credit becomes visible in Form 26AS.
If the TDS is not reflected, contact the buyer immediately and request them to file the pending TDS return so that you can claim the credit while filing your ITR.
5. Maintain an Active NRO Bank Account and Update Your Banking Status
NRIs should ensure that they maintain an active NRO bank account for receiving income tax refunds.
Income tax refunds are generally credited only to a valid and pre-validated Indian bank account.
Another important compliance requirement is that NRIs should not continue operating resident savings accounts after their residential status changes.
Once a person becomes an NRI, resident savings accounts should be converted into NRO accounts or closed, as applicable.
Similarly, investments held in India should also be updated to reflect the correct residential status.
6. Keep Your Income Tax Portal Profile Updated
Before filing the Income Tax Return, NRIs should verify that all profile information available on the Income Tax Portal is accurate.
The following details should be reviewed and updated wherever necessary:
- Mobile number
- Email ID
- Residential address
- Residential status
- Bank account details
- Other personal information
Keeping the profile updated helps avoid communication issues and delays during processing or refund.
7. Report Country of Residence, Tax Identification Number and Days Stayed in India
The Income Tax Return requires NRIs to furnish certain additional information.
This includes:
- Country of residence
- Tax Identification Number (TIN), such as SSN, SIN, TIN, UTR, NI or equivalent
- Number of days stayed in India during the relevant financial year
Accordingly, taxpayers should keep their travel history readily available before filing the return to ensure accurate reporting.
8. Report Exempt Income Correctly in the ITR
Certain categories of income may be exempt from tax in India, subject to the applicable provisions.
Examples include:
- Interest earned on NRE accounts
- Interest on FCNR deposits
- Inherited money
- Gifts
- Sale proceeds of rural agricultural land
Although these incomes may be exempt, it is advisable to report them appropriately in the Income Tax Return wherever required.
Proper disclosure helps the Income Tax Department understand the nature and source of such receipts and promotes transparency in tax reporting.
9. Consider Using a Digital Signature Certificate (DSC) Where Required
Some NRIs experience practical difficulties while completing the online verification of their Income Tax Return.
Common reasons include:
- Inactive Indian mobile number
- Non-availability of Aadhaar OTP
- Login issues
- Difficulty adding or validating bank accounts
- Problems updating profile information
In such cases, a Digital Signature Certificate (DSC) can be used for verification of the Income Tax Return and for resolving various portal-related issues.
10. Regular ITR Filing Helps If You Plan to Return to India
Even where filing is not mandatory, regular Income Tax Return filing is considered a good compliance practice for NRIs who:
- Plan to return to India in future
- Intend to purchase property in India
- Wish to make investments in India
- Maintain significant financial transactions in India
Regular filing creates a consistent tax history and helps maintain proper records with the Income Tax Department.
Missed the Due Date? File a Belated Return
If, for any reason, you are unable to file your Income Tax Return before the due date, you should not ignore your tax compliance altogether.
For Financial Year 2025–26, a belated return may be filed up to 31 December 2026, subject to the applicable provisions of the Income-tax Act.
Although delayed filing may result in:
- Late filing fees
- Interest liability
- Other consequences prescribed under the Act
filing a belated return is often preferable to not filing the return at all.
Remember, filing an Income Tax Return is not merely about paying taxes or claiming refunds. It is equally important for proper reporting, maintaining tax records, and avoiding future disputes or notices.
Conclusion
For NRIs, Income Tax Return filing involves several important compliance requirements beyond reporting taxable income. Understanding the applicable tax provisions, filing the return within the prescribed time, reporting exempt income correctly, maintaining updated bank and profile information, and ensuring proper disclosure of overseas details can help avoid unnecessary notices and future complications.
Whether you have income from salary, property, bank interest, capital gains, or investments in India, timely and accurate filing of your Income Tax Return is essential. Proper tax compliance not only helps claim eligible refunds but also creates a transparent financial record with the Income Tax Department.
Staying informed and maintaining complete documentation will ensure a smooth and hassle-free ITR filing experience for Financial Year 2025–26.
📞 Contact: +91-9910075924
Disclaimer
This article is for general informational purposes only and does not constitute professional advice. Income Tax Laws are subject to changes, and interpretations may vary.
Readers are advised to consult a qualified professional before making any decisions.