Does an NRI need to file an income-tax return in India? Status, taxable income, TDS and the right form
Short answer. Yes, if your income taxable in India (rent, NRO interest, capital gains, salary for work done in India) exceeds the basic exemption: ₹4 lakh in the default new regime, ₹2.5 lakh in the old. File also to get excess TDS refunded or to carry forward losses. NRE and FCNR interest is exempt. NRIs use ITR-2, or ITR-3 with business income.
Am I an NRI for tax purposes?
Tax residence depends on days spent in India between 1 April and 31 March, not on your passport or visa. The tests are in Section 6 of the Income-tax Act, 2025 (the same number as before).
| Test for the year | Status |
|---|---|
| In India for 182 days or more | Resident |
| In India for 60 days or more, and 365 days or more in the four preceding years | Resident. For an Indian citizen who leaves for employment abroad or as ship's crew, and for a citizen or person of Indian origin who visits India, read 60 as 182 |
| Visiting citizen or person of Indian origin with Indian income above ₹15 lakh: 120 days or more, and 365 days in the four preceding years | Resident but not ordinarily resident (RNOR) |
| Indian citizen with Indian income above ₹15 lakh who is not liable to tax in any other country | Deemed resident, treated as RNOR |
| None of the above | Non-resident |
What income is taxable in India for an NRI?
Only income received in India or arising in India: salary for work done here, rent from Indian property, NRO interest, dividends, and capital gains on Indian shares, funds and property. Salary and investments abroad are outside the Indian net.
| Account | Interest taxable in India? | TDS |
|---|---|---|
| NRE savings and deposits | Exempt while you are a person resident outside India under FEMA (Schedule IV of the 2025 Act; formerly s.10(4)(ii)) | Nil |
| FCNR(B) deposits | Exempt for non-residents and RNORs | Nil |
| NRO savings and deposits | Fully taxable at slab rates | 30% plus 4% cess (31.2%), plus surcharge where it applies; a tax treaty may reduce it |
Does an NRI need to file an ITR?
You must file when your total income taxable in India exceeds the basic exemption limit. You should also file when:
- TDS exceeds your actual tax. The refund comes only through a return.
- You have capital gains on shares or equity funds. A non-resident cannot use the basic exemption against these special-rate gains (20% short-term, 12.5% long-term), so tax can be due even when total income is small.
- You have a capital loss to carry forward. That needs a return filed by the due date.
The Section 87A rebate, which makes income up to ₹12 lakh tax-free for residents in the new regime, is not available to non-residents. One narrow relief exists: under Section 216 (formerly s.115G) no return is needed if the only Indian income is investment income or long-term gains from specified foreign-exchange assets and TDS has been deducted on it.
Worked example. Your only Indian income is ₹3,00,000 of NRO deposit interest. The bank deducts 31.2%, which is ₹93,600. Your total income is below ₹4 lakh, so new-regime tax is nil and the full ₹93,600 is refundable, but only if you file. Our tax-regime calculator assumes a resident, so ignore its rebate if you are an NRI.
How much TDS applies when an NRI sells property or earns rent?
- Property sale. The buyer deducts tax under Section 393(2) (formerly s.195): 12.5% on long-term gains (held more than 24 months) and 30% on short-term gains, plus surcharge and cess. In practice the buyer applies the rate to the whole sale price unless you hold a lower-deduction certificate under Section 395 (formerly s.197; the application is Form 128, formerly Form 13). On an ₹80 lakh sale, 12.5% with 10% surcharge and 4% cess is 14.3%, or ₹11.44 lakh withheld, while the tax on a ₹20 lakh gain is about ₹2.6 lakh. The 20%-with-indexation option on older property is for residents only.
- Buyer's paperwork. Until 30 September 2026 the buyer needs a TAN. From 1 October 2026, Finance Act 2026 lets a resident buyer deposit this TDS with a PAN-based challan. The rates do not change.
- Rent. The tenant deducts 30% plus cess (31.2%) from the first rupee, with no threshold. The tenant needs a TAN, files a quarterly TDS statement and submits Form 15CA, with Form 15CB where required, before remitting (now Forms 145 and 146).
How do DTAA, TRC and Form 10F help?
If you are tax resident in a country that has a tax treaty (DTAA) with India, the treaty can lower Indian tax or TDS on some income, or give you credit abroad for Indian tax. To claim treaty rates in India you need a Tax Residency Certificate (TRC) from that country's tax authority and Form 10F filed on the e-filing portal (renumbered under the Income-tax Rules, 2026). Give copies to the bank or tenant before the income is paid, not after.
What ITR form for an NRI, and how do refunds work?
ITR-2 for salary, rent, interest and capital gains; ITR-3 if you have business or professional income in India. An NRI cannot use ITR-1 or ITR-4; see which ITR form to file. The due date is 31 July (31 August for non-audit business cases), and a belated return is possible until 31 December.
Refunds are credited only to a bank account pre-validated on the e-filing portal and linked to your PAN; an NRO or NRE account works. If Aadhaar OTP is not practical, e-verify through net banking or a bank-account code, or post the signed ITR-V within 30 days. Before filing, match every TDS entry with your AIS.
FAQ
Does an NRI need to file an ITR if Indian income is below the exemption limit?
Can an NRI file ITR-1 or ITR-4?
Do NRIs declare foreign income in the Indian return?
What happens to my NRE interest exemption when I move back to India?
Sources: Income Tax Department: non-resident FAQs; Income Tax Department: returns for non-resident individuals, AY 2026-27; ClearTax: income tax for NRIs; Dinesh Aarjav & Associates: TDS on property sale by NRI; Patron Accounting: PAN-based challan from 1 Oct 2026. All checked 19 Sep 2026. Education only, not tax advice for your situation.
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