How NRIs File Income Tax Returns in India (AY 2026-27): ITR-2, Residential Status and Deadlines

20 Mar 2026

Quick answer: An NRI files an income tax return in India on Form ITR-2 (ITR-3 if there is business income) when Indian income such as rent, capital gains or NRO interest exceeds the basic exemption limit, or to claim a TDS refund. For FY 2025-26 (AY 2026-27) the belated return deadline is 31 December 2026, a revised return can be filed up to 31 March 2027, and an updated return up to 4 years from the end of the assessment year.

Updated: 23 October 2026 | Regi Tom Antony & Associates, Chartered Accountants, Kochi

Step 1: Confirm Your Residential Status

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, 1961 (section 6 rules are carried into the Income-tax Act, 2025 from tax year 2026-27):

• Resident: in India for 182 days or more in the year, or 60 days in the year and 365 days in the four preceding years. For an Indian citizen or person of Indian origin visiting India, the 60 days becomes 182 days, or 120 days if Indian income (other than foreign-source income) exceeds ₹15 lakh.
• Non-Resident (NR): anyone who does not meet the residence tests. Taxed only on income received, accruing or arising in India.
• Resident but Not Ordinarily Resident (RNOR): a resident who was non-resident in 9 of the 10 preceding years, or in India for 729 days or less in the 7 preceding years. Also RNOR: a citizen or PIO resident only under the 120-day rule, and a deemed resident under section 6(1A), an Indian citizen with Indian income above ₹15 lakh who is not liable to tax in any other country. RNORs are taxed on Indian income and on foreign income from a business controlled or profession set up 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

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

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 and other notified bonds, lock-in 5 years, limit ₹50 lakh), Section 54F (net sale consideration reinvested in residential property for non-property capital assets). The exemption under sections 54 and 54F is capped at ₹10 crore.

Step 6: Claim DTAA Benefits

India has DTAAs with 95+ countries. Key DTAA benefits for NRIs:

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

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.

Budget 2026 change for NRIs selling property

From 1 October 2026, a resident buyer who deducts TDS on property bought from an NRI can deposit it through a PAN-based challan without obtaining a TAN, which removes a common delay in property sales. See our guides to TDS on property sale by NRIs and lower TDS certificates under section 197.

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.