When Is an NRI Required to File Income Tax Returns in India?

NRIs often wonder about tax filing obligations in India. Taxation applies only to Indian-sourced income, but filing becomes mandatory in many cases, even below exemption limits, due to high-value transactions or TDS.

This guide covers residential status, taxable income, filing triggers, deductions, slabs, ITR forms and tips. For personalized filing or compliance, consult experts at ezyLegal.

Determining Residential Status

Residential status decides tax scope:

• Resident: 182+ days in FY or 60+ days in FY + 365+ days in prior 4 years (exceptions for employment abroad).
• NRI: Does not meet resident criteria.
• Resident but Not Ordinarily Resident: Resident for <2 of prior 10 years or <730 days in prior 7 years.

Tax Scope:

• NRI: Only Indian income taxable.
• Resident: Worldwide income taxable.

Taxable Indian Income for NRIs

• Salary for services in India (or received in India).
• Rent from Indian property.
• Capital gains on Indian assets.
• Interest on NRO accounts (NRE/FCNR exempt).
• Business/profession income from India.

Non-Taxable: Foreign salary, overseas business, foreign property income.

Filing Triggers

Mandatory if:

• Indian income > exemption (₹2.5 lakh old regime, ₹4 lakh new regime FY 2025-26).
• High-value transactions:
  • Savings deposits >₹50 lakh.
  • Current deposits >₹1 crore.
  • TDS/TCS >₹25,000.
  • Foreign travel >₹2 lakh (excludes neighbouring countries).
• Voluntary: For refunds, loss carry-forward, visa/loan proof.

Slabs Comparison (FY 2025-26):

Slab (₹)	New Regime Rate	Old Regime Rate
Up to 4,00,000	Nil	Nil (up to 2.5L)
4,00,001 – 8,00,000	5%	5% (2.5–5L)
8,00,001 – 12,00,000	10%	20% (5–10L)
12,00,001 – 16,00,000	15%	30% (>10L)
16,00,001 – 20,00,000	20%	–
20,00,001 – 24,00,000	25%	–
Above 24,00,000	30%	–

Surcharge + 4% cess apply.

Deductions & Exemptions

NRIs eligible for:

• 80C: Up to ₹1.5 lakh (investments, home loan principal).
• House Property: 30% standard, Section 24 interest.
• 80D: Health insurance (₹25,000 self/family, ₹50,000 seniors).
• 80E: Education loan interest (no limit).
• 80G: Donations.
• 80TTA: ₹10,000 savings interest.

New regime: Fewer deductions (standard ₹75,000).

ITR Forms for NRIs

• ITR-2: Salary, house property, capital gains (most common).
• ITR-3: Business/profession.
• ITR-5/6: Firms/companies.

E-filing via incometax.gov.in; DSC/e-verification.

Real-World Examples

1. High Deposits: NRI with ₹60 lakh savings deposits, mandatory filing despite low income.
2. Rent Income: ₹3 lakh rent, taxable; file ITR for deductions.
3. Refund: Excess TDS on NRO interest, voluntary filing claims refund.
4. Capital Loss: Stock loss, file to carry forward.
5. Travel Expense: ₹3 lakh overseas travel from India, mandatory filing.

Practical Tips

• Use e-filing portal; video verification for new users.
• Claim refunds via ITR (excess TDS).
• File even nil return for compliance proof.
• Use DTAA for relief (Form 10F/TRC).
• Keep proofs (TDS certificates, rent agreements).
• Advance tax if liability >₹10,000.

Frequently Asked Questions:  When Is an NRI Required to File Income Tax Returns in India?

Q1. When is an NRI required to file an income tax return in India?

Ans1. If Indian income > exemption limit (₹2.5 lakh old regime, ₹4 lakh new regime FY 2025-26) or high-value transactions (deposits >₹50 lakh savings/₹1 crore current, TDS >₹25,000, travel >₹2 lakh).

Q2. What income of an NRI is taxable in India?

Ans2. Only Indian-sourced: salary for services in India, rent from Indian property, capital gains on Indian assets, NRO interest. Foreign income not taxable.

Q3. Is foreign income earned by NRIs taxable in India?

Ans3. No, foreign salary, business or property income not taxable if NRI status.

Q4. Do NRIs need to file ITR if income is below exemption limit?

Ans4. Yes, if high deposits, TDS >₹25,000 or travel >₹2 lakh from India.

Q5. Is rental income from property in India taxable for NRIs?

Ans5. Yes, taxable; tenant deducts TDS, files Form 15CA/CB.

Q6. Is interest on NRE and NRO accounts taxable for NRIs?

Ans6. NRE/FCNR exempt; NRO taxable (TDS ~30%, DTAA relief possible).

Q7. Which ITR form should an NRI file in India?

Ans7. ITR-2 for salary/house property/capital gains; ITR-3 for business.

Q8. Are NRIs eligible for zero-tax up to ₹12 lakh under new regime?

Ans8. No, Section 87A rebate for residents only; NRIs pay above exemption.

Q9. Is advance tax applicable to NRIs?

Ans9. Yes, if liability >₹10,000; interest under 234B/C if not paid.

Q10. Can NRIs claim deductions under Section 80C and others?

Ans10. Yes, 80C (₹1.5 lakh), 80D health insurance, 80E education loan, house property deductions.

Q11. Is ITR filing mandatory for NRIs if TDS deducted?

Ans11. Yes, if income > exemption or triggers apply; filing claims refunds.

Q12. Can NRIs file ITR voluntarily?

Ans12. Yes, for refunds, loss carry-forward, visa/loan proof.

Q13. What is e-filing process for NRIs?

Ans13. Use incometax.gov.in; DSC/e-verification; video KYC for new users.

Q14. How to claim TDS refund as NRI?

Ans14. File ITR; excess TDS refunded.

Q15. DTAA relief for NRIs?

Ans15. Reduces withholding on interest/rent/salary; Form 10F/TRC.

Q16. Capital gains TDS on property sale by NRI?

Ans16. Buyer deducts 12.5% (Section 195).

Q17. Exemptions for NRI property income?

Ans17. 30% standard deduction, Section 24 interest.

Q18. Advance tax calculation for NRIs?

Ans18. If liability >₹10,000; pay in installments.

Q19. Returning NRI filing?

Ans19. Status changes; worldwide income taxable.

Q20. Nil ITR benefits for NRIs?

Ans20. Compliance proof, visa/loan applications.