20 Mar 2026Updated: May 2026
Step 1: Confirm Your Residential Status for FY 2025–26
Your tax liability is determined by your residential status for the year — not by your visa or passport.
Under Section 6 of the Income Tax Act:
- Non-Resident (NR): Present in India for fewer than 182 days during the financial year. Taxed only on India-sourced income.
- Resident but Not Ordinarily Resident (RNOR): Applies broadly in the two years after returning to India permanently. Taxed on India-sourced income and foreign income derived from a business controlled in India.
- Resident and Ordinarily Resident (ROR): Taxed on global income.
Count your days carefully. A single year of miscounting can draw global income into India's tax net.
Step 2: Identify Your Taxable Income in India
NRIs are taxed only on income that accrues, arises, or is received in India. This covers:
- Rental income from Indian property
- Capital gains on sale of Indian property or listed/unlisted shares
- Interest from NRO accounts (NRE and FCNR interest is exempt)
- Dividends from Indian companies
- Salary for services rendered in India
- Income from a business or profession set up in India
- Pension from an Indian employer where services were rendered in India
Income not taxable in India: foreign salary earned abroad, overseas interest and dividends, rental income from property outside India.
Step 3: Gather Documents Before Filing
| Document | Purpose |
|---|---|
| PAN card | Mandatory for filing |
| Aadhaar | Required if linked; NRIs with foreign address Aadhaar can use passport |
| Form 26AS / AIS / TIS | TDS credit statement — download from ITR portal |
| Bank statements (NRO account) | For interest income reporting |
| Form 16A | TDS certificate from bank or company |
| Sale deed / purchase deed | For capital gains computation |
| Stamp duty valuation (Circle Rate) | For property capital gains — Section 50C applies |
| TRC and Form 10F | If claiming DTAA relief (Form 10F now filed online on ITR portal) |
The AIS (Annual Information Statement) now captures property registrations, mutual fund redemptions, share sales, and bank interest. The ITR portal pre-populates much of this data. Review your AIS before filing to avoid mismatches.
Step 4: Choose the Correct ITR Form
| Form | Who Files |
|---|---|
| ITR-2 | NRIs with capital gains, rental income, NRO interest, or foreign income — no business income |
| ITR-3 | NRIs with business or professional income in India |
| ITR-1 (Sahaj) | NOT available to NRIs |
Most NRIs use ITR-2. If you sold property in India during FY 2025–26, you must use ITR-2 and fill Schedule CG (Capital Gains) carefully.
Step 5: Capital Gains — Updated Rates Post Budget 2024
The Finance (No. 2) Act, 2024, changed capital gains tax rates significantly, effective from 23 July 2024.
Property sold after 23 July 2024:
- LTCG (held > 24 months): 12.5% without indexation (indexation removed for post-1-July-2001 acquisitions, with a grandfathering election available for older properties)
- STCG (held ≤ 24 months): At applicable slab rates
Listed equity and equity mutual funds:
- LTCG (held > 12 months): 12.5% (₹1.25 lakh exempt per year)
- STCG (held ≤ 12 months): 20%
Reinvestment exemptions still available: Section 54 (purchase another residential property within 2 years or construct within 3), Section 54EC (NHAI/REC bonds — lock-in 5 years, limit ₹50 lakh), Section 54F (net sale consideration reinvested in residential property for non-property capital assets).
Step 6: Claim DTAA Benefits
India has DTAAs with 95+ countries. Key DTAA benefits for NRIs:
| Country | Typical DTAA Benefit |
|---|---|
| UAE | Capital gains on shares/MFs may be exempt from Indian tax |
| USA | Reduced dividend withholding; pension income taxed in USA |
| UK | Reduced withholding on interest and dividends |
| Singapore | Capital gains on shares may be exempt |
| Australia | Interest and dividends at reduced rates |
To claim DTAA relief, file Form 10F on the ITR portal before or at the time of filing (online filing is mandatory — paper Form 10F is no longer accepted). Attach the TRC from your country of residence. Select Schedule FSI or FA in ITR-2 if you have foreign income to declare.
Step 7: File on the Income Tax Portal
Go to incometax.gov.in → e-Filing → File Income Tax Return.
- Select AY 2026–27 (for FY 2025–26 income)
- Select ITR-2
- Choose the applicable tax regime (old or new) — compare both; if you have no significant deductions, the new regime is often more efficient
- Verify pre-filled data against your AIS and Form 26AS and correct any discrepancies before submission
- Complete Schedule HP (house property), CG (capital gains), and EI (exempt income) as applicable
Key Deadlines for AY 2026–27
| Category | Due Date |
|---|---|
| NRI — no audit requirement | 31 July 2026 |
| NRI — accounts subject to tax audit (business income) | 31 October 2026 |
| Belated return (with penalty u/s 234F) | 31 December 2026 |
| Updated return u/s 139(8A) | Within 2 years of end of assessment year |
Late filing fee under Section 234F: ₹5,000 (₹1,000 if total income is below ₹5 lakh). Interest under Section 234A applies on outstanding tax liability from the due date.
Common Mistakes NRIs Make When Filing ITR
- Wrong residential status — leads to global income being incorrectly included or excluded
- Not reporting NRO interest — TDS is deducted but the income must still be declared
- Missing capital gains from property sale — property transactions appear in AIS; the department knows even if you don't report
- Not claiming DTAA — results in paying more tax than legally required
- Filing ITR-1 instead of ITR-2 — ITR-1 does not support NRI status; it is treated as a defective return
- Ignoring Form 26AS mismatches — leads to demand notices post-processing
Filing a clean, accurate ITR not only avoids scrutiny — it also establishes a refund track record, which matters when you need to repatriate sale proceeds through the banking channel.
Regi Tom Antony And Associates files ITRs for NRIs across the UAE, USA, UK, Australia, Canada, Singapore, and GCC countries. Our NRI taxation team is based in Kochi (Kakkanad). Write to letstalk@rtaandassociates.com.