NRI Tax Return Filing: Complete Step-by-Step Guide
Everything you need to know about NRI tax filing, DTAA benefits, and compliance
Written by
CA Ashama Rajawat
Who is Considered an NRI?
As per Income Tax Act, you are a Non-Resident Indian (NRI) if you stay in India for less than 182 days during the financial year. Understanding your residential status is crucial as it determines your tax liability in India.
Quick Tip
Your residential status can change every year depending on your physical stay in India. Always calculate your stay carefully before filing ITR.
Income Taxable for NRIs in India
NRIs are taxed only on income that is earned or accrued in India:
Salary Income
Salary earned for services rendered in India is fully taxable
Rental Income
Income from house property located in India
Capital Gains
Gains from sale of property or investments in India
Interest Income
Interest from savings, FDs, and bonds in India
Which ITR Form Should NRIs File?
| ITR Form | When to Use |
|---|---|
ITR-1 | Salary income and one house property (total income up to ₹50 lakh) |
ITR-2 | Capital gains, multiple properties, foreign income |
ITR-3 | Business or professional income |
Step-by-Step Filing Process
Gather Documents
Form 16, bank statements, investment proofs, rental agreements, TDS certificates
Calculate Foreign Tax Credit
If you paid taxes abroad, claim credit under DTAA to avoid double taxation
File ITR Online
Login to Income Tax e-filing portal, select appropriate ITR form, and fill details
E-Verify Return
Verify using Aadhaar OTP, net banking, or by sending ITR-V to CPC Bangalore
Understanding DTAA Benefits
Double Taxation Avoidance Agreement (DTAA) ensures you don't pay tax twice on the same income in India and your country of residence.
Scenario: You earn rental income of ₹10 lakh from property in India
Tax in India (30%)
₹3,00,000
Tax in USA
Should be lower due to DTAA provisions
Foreign Tax Credit
Claim credit in USA for ₹3 lakh tax already paid in India
Common Mistakes to Avoid
- ✗Not maintaining Form 15CA/15CB for foreign remittances
- ✗Forgetting to disclose foreign assets in Schedule FA
- ✗Not claiming TDS deducted on Indian income
- ✗Missing the July 31st deadline for ITR filing
Conclusion
NRI tax filing can be complex, but with proper planning and documentation, you can ensure full compliance while optimizing your tax liability. Always consult a qualified CA who specializes in NRI taxation for personalized advice.