NRI Income Tax Return Filing in India: A Practical Guide

NRI income tax return filing in India starts with a question many people skip: are you actually a non-resident this year? Residential status is decided afresh every year, by the days you spend in India, and it decides what India can tax. Once that is settled, the rest follows in order: which Indian income is taxable, whether you must file, how much tax has already been deducted, which form to use and whether a tax treaty gives you relief. This guide walks through each step, as of 2026.

Step one: work out your residential status

Under the tests on the Income Tax Department e-filing portal, an individual is resident in India for a year if they are in India for 182 days or more in that year, or for 60 days or more in that year and 365 days or more in the four years before it. If neither test is met, you are non-resident for that year.

Indian citizens get modified rules. If you leave India during the year for employment abroad or as a crew member, the 60-day test does not apply and only the 182-day test counts. Indian citizens and persons of Indian origin who visit India also use the 182-day test, except that where their income from Indian sources is above ₹15 lakh, the 60-day limb becomes 120 days, combined with 365 days in the four earlier years. There is also a deemed-resident rule for Indian citizens with Indian income above ₹15 lakh who are not liable to tax in any other country because of domicile or residence. A resident may further be "not ordinarily resident", which changes how foreign income is treated. Count your days from your passport stamps, not from memory.

What the new Income-tax Act changes, and what it does not

The Income-tax Act, 2025 took effect on 1 April 2026 and repealed the Income-tax Act, 1961 from that date. The 1961 Act still governs tax years that began before 1 April 2026. In practice, the return filed in 2026 for the financial year 2025-26 (assessment year 2026-27) is a 1961 Act return. Income earned from 1 April 2026 falls under the new Act, which uses a single "tax year" in place of the old previous year and assessment year.

The department's FAQs say the residency tests carry over to section 6 of the new Act without change in substance, and that the new Act does not impose any new tax. What does change is the numbering: sections, rules and many forms have new numbers under the Income-tax Rules, 2026.

Which Indian income is taxable for an NRI

A non-resident is taxed in India on income received in India or accruing or arising in India. Salary earned abroad for work done abroad, and interest on a foreign bank account, are generally outside the Indian net. The common items that are inside it:

• Rent from a house, flat or shop you own in India, after the deductions allowed for house property.
• Interest on NRO savings accounts, NRO fixed deposits, company deposits and bonds in India.
• Capital gains when you sell property, shares or mutual fund units in India.
• Dividends from Indian companies and income distributed by Indian mutual funds.
• Salary or fees for work done in India, even if paid into a foreign account.

Interest on an NRE account maintained under the FEMA rules is exempt. Under the 1961 Act this was section 10(4)(ii); the department confirms the exemption continues in Schedule IV of the new Act. Interest on an NRO account has no such exemption, which is one reason NRO and NRE balances should be tracked separately.

When an NRI must file a return in India

Filing is not only about owing tax. Work through these questions in order:

• 1. Is your total taxable Indian income above the basic exemption limit for the year under the regime you are using? If yes, you generally have to file.
• 2. Was more tax deducted than you actually owe? The only way to get the excess back is to file a return and claim the refund.
• 3. Did you make a loss, for example on a sale of shares, that you want to carry forward? A return filed on time is usually needed to keep that loss.
• 4. Is all your income investment income or long-term capital gains on which tax was fully deducted? The special NRI provisions (section 115G of the 1961 Act, section 216 of the new Act) can remove the need to file in that narrow case.
• 5. Have you received a notice or communication from the department? Respond to it whether or not you would otherwise have filed.

TDS on NRI income, and how refunds work

Anyone paying a non-resident a sum that is taxable in India is required to deduct tax at source. Under the 1961 Act this was section 195. A tenant paying you rent, a buyer purchasing your flat and the bank paying NRO interest are all deductors. Because the person deducting does not know your deductions, exemption limit or actual gain, the tax deducted is often higher than what you finally owe. On a property sale in particular, tax may be deducted on far more than the gain.

There are two ways to deal with this. Before the payment, you can apply to the Assessing Officer for a certificate allowing a lower or nil deduction where your estimated income justifies it (section 197 under the 1961 Act). The department has said certificates issued for projected receipts of tax year 2026-27 remain valid for payments from 1 April 2026. After the payment, you file a return showing your actual liability and claim the excess back as a refund. Either way, check every deduction against your PAN in Form 26AS and the Annual Information Statement before filing; a wrong PAN or late filing by the deductor is a common reason a credit goes missing.

Which ITR form generally applies

• ITR-1 (Sahaj) is meant for residents other than those who are not ordinarily resident, so it is not the form for an NRI.
• ITR-2 applies to individuals, resident or non-resident, whose income does not include profits from a business or profession. Most NRIs with rent, interest and capital gains use it.
• ITR-3 applies where you also have income from a business or profession in India.

That is the position for assessment year 2026-27. Returns for tax year 2026-27 onwards will be filed under the new Act, so confirm the form notified for your year on the e-filing portal rather than relying on last year.

DTAA relief, in general terms

India has double taxation avoidance agreements (DTAAs) with many countries. Depending on the treaty and the type of income, relief comes in one of two ways: India taxes the income at a lower treaty rate, or India taxes it and your country of residence gives credit for the Indian tax. Each treaty is different, so the article covering your income, whether interest, dividends, capital gains or salary, needs to be read for your country specifically.

To claim a treaty benefit in India you will generally need a tax residency certificate (TRC) from your country of residence, along with the details the department asks for in Form 10F. The return records whether a TRC is held; without one, income is taxed at the normal Indian rates. Keep the Indian return and TDS certificates for any credit claim abroad.

For example

This is an illustrative example, not a client case. An Indian citizen has worked abroad for several years and spent only a few weeks in India this year, so they are non-resident. They own a flat in Bengaluru that is let out, keep a fixed deposit in an NRO account and sold some mutual fund units during the year. The tenant deducted tax on the rent, the bank deducted tax on the NRO interest, and the fund house deducted tax on the gains. Once deductions and actual gains are worked out, the tax due is lower than the TDS already deducted. Filing ITR-2 brings the difference back as a refund, and the return, TDS certificates and computation become the papers they use to claim any credit in their country of residence.

Documents to keep

• Passport pages with entry and exit stamps, and a day count for the year and the four years before it.
• PAN details, and the bank account in India that will receive any refund.
• NRO and NRE account statements and interest certificates, kept separately.
• Rent agreements, rent receipts, municipal tax receipts and home loan interest certificates.
• Purchase and sale deeds for property, broker and mutual fund statements for securities.
• TDS certificates from tenants, buyers, banks and fund houses, checked against Form 26AS and the AIS.
• Your tax residency certificate and Form 10F details if you are claiming treaty relief.
• Copies of past returns, acknowledgements and any notices with your replies.

Frequently asked questions

Do I need to file if my only Indian income is NRE interest?

NRE interest is exempt, so it does not by itself push your income above the exemption limit. If you have no other taxable Indian income, no refund to claim and no loss to carry forward, you may not need to file. Check rent, NRO interest and any sale of assets before concluding that.

Can I file from outside India?

Yes. Returns are filed online on the e-filing portal and must then be verified within the time allowed. Settle early how you will verify, because verification is often what holds up an NRI return, not the preparation.

What if I missed the due date?

For assessment year 2026-27, the portal states that a belated return can be filed up to 31 December 2026, or before the assessment is completed if that is earlier, with a late fee under section 234F. Some benefits, such as carrying forward certain losses, can be lost when a return is late.

Does the new Income-tax Act change my residency?

According to the department's FAQs, the residency tests are carried over to the new Act unchanged in substance. What changes is the terminology, the section numbers and the forms, from tax year 2026-27 onwards.

Beyond Basics prepares NRI returns for clients who live abroad and still have income in Bengaluru or elsewhere in India. We start with the day count and residential status, reconcile TDS against Form 26AS and the AIS, and share a summary of income and tax for your approval before anything is filed. Returns are prepared with our partner Chartered Accountants, and we work over email and video calls so the filing does not wait for your next visit.

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