Non-Resident Indians (NRIs) earning income in India are subject to income tax regulations and must comply with tax filing requirements. Filing Income Tax Returns (ITR) for NRIs is different from that for resident Indians, as different tax rules and exemptions apply. With the advent of digital services, online NRI ITR filing has become more accessible and hassle-free. This article will guide you through the process, requirements, and FAQs related to NRI ITR filing in India.
Who is Considered an NRI as Per Income Tax Rules?
As per the Income Tax Act, 1961, the residency status of an individual is determined based on the number of days spent in India during a financial year (April 1 to March 31). A person is considered an NRI if:
They have stayed in India for less than 182 days in the current financial year, or
They have stayed for less than 60 days in the financial year and less than 365 days in the last four years.
There are certain exceptions, such as for Indian citizens working abroad or crew members of an Indian ship, where the 60-day rule is extended to 182 days. NRIs must determine their residency status carefully to ensure compliance with tax obligations.
Who Should File an NRI ITR?
NRIs must file an income tax return in India if they earn income from sources such as:
Salary Income: If earned in India or received in an Indian bank account.
Rental Income: From property owned in India.
Capital Gains: From the sale of property, stocks, or other assets in India.
Interest Income: On fixed deposits (FDs), savings accounts, or other investments in India.
Business Income: If the business is set up in India.
Dividend Income: From shares or mutual funds held in Indian companies.
Royalty or Professional Fees: For work done in India or services provided to Indian entities.
Even if no tax is payable due to deductions or exemptions, an NRI should file ITR if their total income exceeds the basic exemption limit (Rs. 2.5 lakhs for individuals below 60 years). Additionally, if TDS has been deducted from an NRI’s income, filing an ITR can help them claim refunds.
Documents Required for NRI ITR Filing
To file an ITR as an NRI, the following documents are required:
PAN (Permanent Account Number): A valid PAN is essential for filing taxes.
Aadhaar Card: While not mandatory for NRIs, it is helpful for verification.
Bank Statements: Both Indian and foreign bank account statements for income verification.
Form 16: If earning salary income from an Indian employer.
Form 26AS: Summary of tax deducted at source (TDS) on income earned in India.
Investment Proofs: Evidence of tax-saving investments in India.
Property Details: If rental income or capital gains from property sales are involved.
NRO/NRE Account Statements: For interest earned in India.
DTAA Documents: If claiming benefits under the Double Taxation Avoidance Agreement.
Capital Gains Statements: If involved in the sale of shares, mutual funds, or property.
Which ITR Form Should NRIs Use?
The selection of the correct ITR form is crucial to ensure proper filing. The applicable forms for NRIs are:
ITR-2: Used by NRIs who have income from salary, property, capital gains, or other sources, but not business income.
ITR-3: For NRIs earning business income or income from a profession in India.
NRIs cannot file ITR-1 (Sahaj), as it is only applicable for residents. Filing the incorrect form may result in rejection or processing delays.
Steps for Online NRI ITR Filing
With digital advancements, NRIs can conveniently file their returns online. Here’s how:
Step 1: Register on the Income Tax e-Filing Portal
Visit www.incometax.gov.in.
Log in or register using PAN.
Step 2: Select the Correct ITR Form
Choose ITR-2 or ITR-3 based on income sources.
Step 3: Download and Fill Out the Form
Download the Excel/JSON utility from the e-filing portal.
Fill in the required details.
Step 4: Compute Tax Liability
Use the Income Tax Calculator on the portal to estimate the tax payable.
Step 5: Pay Tax (if applicable)
If tax is due, pay using challan ITNS 280 via net banking.
Step 6: Upload the ITR Form
Validate the form and submit it online.
Step 7: E-Verify the ITR
Use Aadhaar OTP, net banking, or send a physical ITR-V to CPC, Bengaluru.
FAQs Related to NRI ITR Filing
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Can an NRI file ITR from abroad?
Yes, NRIs can file their income tax returns online from anywhere in the world. The entire process can be completed digitally.
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Do NRIs need to have an Aadhaar card for filing ITR?
No, Aadhaar is not mandatory for NRIs but can be used for e-verification.
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What happens if an NRI does not file ITR?
Failure to file ITR may lead to penalties, interest on unpaid taxes, and difficulty in future financial transactions in India.
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Can an NRI claim deductions under Section 80C?
Yes, NRIs can claim deductions on investments like ELSS, ULIPs, NPS, and PPF (if opened before becoming an NRI).
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How can NRIs avoid double taxation?
India has Double Taxation Avoidance Agreements (DTAA) with multiple countries. NRIs can claim tax credits in their resident country for taxes paid in India.
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Is TDS deducted on NRI income?
Yes, TDS is applicable on rental income, interest, and capital gains. NRIs can claim a refund while filing ITR if excess TDS was deducted.
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Can NRIs file ITR without an Indian bank account?
Yes, but for refunds, it’s recommended to have an NRO account.
NRI ITR filing is an essential compliance requirement for those earning income in India. With online ITR filing services, the process has become much easier. Choosing the right ITR form, keeping track of income, and adhering to tax deadlines will ensure smooth filing. For complex cases, it is advisable to seek professional tax consultation.
By staying informed about tax obligations, NRIs can manage their financial affairs efficiently while staying compliant with Indian tax laws. Understanding DTAA, TDS implications, and claiming deductions strategically can help NRIs reduce their tax liabilities and avoid unnecessary financial burdens
By staying informed about tax obligations, NRIs can manage their financial affairs efficiently while staying compliant with Indian tax laws. Please call us on 9719586772 or write us at info@sktaxlawfirm.com for Online NRI ITR filing, capital gain in property, ITR filing for shares and stocks, ITR filing online consultation for ITR 2, Online ITR Filing for NRI.
