“Synopsis”
Many Non-Resident Indians (NRIs) are unsure about when they are legally required to file Income Tax Returns (ITR) in India. With the recent updates for Assessment Year 2025–26, this blog explains the latest mandatory ITR filing rules, thresholds, and exceptions. We also clarify when an NRI can skip filing and how the rules differ from resident taxpayers.
If you’re a Non-Resident Indian (NRI) earning income in India, you might wonder whether you’re required to file Income Tax Returns (ITR). The rules for NRIs are slightly different from resident Indians, and it’s important to understand these to avoid penalties or legal trouble.
Let’s break down the ITR filing rules for NRIs for Assessment Year 2025–26, based on Financial Year 2024–25.
Who is an NRI for Tax Purposes?
An individual qualifies as a Non-Resident Indian (NRI) for tax purposes in India if:
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They spend less than 182 days in India in a financial year, OR
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They spend less than 120 days in India and earn more than ₹15 lakh (as per the new rule for high earners), and do not have a place of business or control in India.
When is ITR Filing Mandatory for NRIs?
You must file an Income Tax Return (ITR) in India if any of the following apply:
1. Total Taxable Income Exceeds ₹2.5 Lakhs
If your total income earned or accrued in India (before exemptions) exceeds ₹2.5 lakh in a financial year.
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Includes: rental income, interest from bank accounts or FDs, capital gains, etc.
2. TDS Deducted but Refund is Expected
If TDS (Tax Deducted at Source) is cut on your income (e.g., on FDs or rent), but your final tax liability is lower — filing a return is the only way to claim a refund.
3. You Have Long-Term or Short-Term Capital Gains
Even if your income is below ₹2.5 lakh, filing ITR is mandatory if you earned capital gains from shares, mutual funds, or property in India.
4. You Own Foreign Assets (in India)
If you are a resident who turns NRI mid-year or become a deemed resident, you may have to report foreign assets or bank accounts, even if there’s no income.
5. For Carry Forward of Losses
If you want to carry forward any losses (capital loss, business loss), ITR filing is compulsory — even if income is below the threshold.
When Can an NRI Skip Filing ITR in India?
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If total Indian income is below ₹2.5 lakh, and there is no capital gain.
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If TDS is deducted and you’re not claiming a refund.
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No income accrued or received in India during the financial year.
Important Documents Needed for NRI ITR Filing:
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Passport (for travel details & residential status)
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PAN Card
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Bank statements (NRO/NRE)
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Form 26AS
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Details of income (rent, capital gains, interest)
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Tax deduction proofs (TDS certificates)
Form Type for NRI ITR:
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ITR-2: If NRI has income from rent, capital gains, or interest.
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ITR-3: For income from business or profession in India.
Penalty for Missing ITR Deadline:
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₹5,000 to ₹10,000 for delayed returns.
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Higher scrutiny if you file late despite having taxable income.
Best Practices for NRI Tax Compliance:
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Track days spent in India to avoid becoming a deemed resident.
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Maintain NRO/NRE accounts separately.
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File ITR by July 31, 2025 for AY 2025–26.
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Use Form 10FA and Form 10FB for DTAA benefit.
Conclusion:
As an NRI, you are only liable to pay tax on income earned in India, but that doesn’t mean you can ignore ITR rules. Filing an income tax return helps maintain financial transparency and secure refunds. With recent rule changes, it’s wise to stay updated and compliant.
