How NRIs Can File Income Tax in India: A Practical 2025/26 ITR Guide

Living outside India does not automatically mean that you have no Indian income-tax obligations.

Many Non-Resident Indians still have income connected with India, such as:

• NRO bank interest
• Rent from an Indian property
• Capital gains from Indian shares or mutual funds
• Sale of property in India
• Salary connected with services performed in India
• Business or professional income connected with India
• Dividends or other investment income
• TDS deducted in India that you may want to claim back as a refund

The good news is that most NRIs can file their Indian Income Tax Return online through the official e-Filing portal.

The important part is getting five things right:

Residential status → taxable Indian income → correct ITR form → TDS/tax calculation → verification

This guide explains the process step by step.

Important: Indian tax law is fact-specific. Residency, capital gains, property transactions, DTAA claims, business income, trusts, ESOPs, stock options and high-value transactions can become complex. This article is an educational guide, not personal tax or legal advice. For a complicated case, use a Chartered Accountant or qualified tax professional.

1. First Understand What "NRI" Means for Income Tax

One of the biggest mistakes is assuming:

"I live abroad, so I am automatically an NRI for Indian income tax."

Indian income-tax residency is determined year by year, mainly by the number of days you spend in India and certain special rules for Indian citizens and Persons of Indian Origin.

For the basic rule, an individual can become resident in India if the person is in India for:

• 182 days or more during the relevant year, or
• 60 days or more during the year and 365 days or more during the preceding four years

However, special rules apply to some Indian citizens leaving India for employment and to Indian citizens or PIOs visiting India.

Official guidance: Income Tax Department – Non-Resident FAQs

Special Rule: Leaving India for Employment Abroad

If an Indian citizen leaves India for employment outside India, the normal 60-day test is generally replaced by the 182-day test for that year.

This can be important in the year you move abroad.

Example:

Suppose you leave India in July to begin employment in the United States, UAE, Singapore or another country.

Do not simply count from the day you obtained your visa.

You need to calculate your actual physical days in India during the relevant tax year and apply the correct residency rule.

Special Rule: NRIs Visiting India

For an Indian citizen or Person of Indian Origin visiting India, the residency test can change depending on Indian income and days spent in India.

The Income Tax Department explains that where Indian income exceeds ₹15 lakh—excluding income from foreign sources—the 120-day rule can become relevant together with the 365-day look-back condition.

This can result in Resident but Not Ordinarily Resident (RNOR) status in some cases.

There is also a deemed-residency rule for certain Indian citizens with Indian income above ₹15 lakh who are not liable to tax in another country because of domicile, residence or similar criteria.

If you spend substantial time in India, especially 120 days or more, do not automatically file as Non-Resident without checking your status.

2. 2026 Has Two Different Tax Frameworks

This is especially important in 2026.

If you are filing income earned from 1 April 2025 to 31 March 2026

You are filing for:

Assessment Year 2026-27

That return continues to be governed by the Income-tax Act, 1961.

Even though you are filing after 1 April 2026, the income belongs to FY 2025-26.

If you are earning income from 1 April 2026 to 31 March 2027

That falls under:

Tax Year 2026-27

and the new Income Tax Act, 2025 applies.

The return for that income will be filed in 2027.

Why this matters

Forms, section numbers and terminology are transitioning.

For example, some familiar forms under the old law are being renumbered under the new system.

When reading tax articles online, always check which year the article is talking about.

3. What Income Is Taxable in India for an NRI?

A genuine Non-Resident is generally taxed in India on income that:

• Is received or deemed to be received in India, or
• Accrues, arises or is deemed to accrue or arise in India

In simple terms, an NRI is generally not taxed in India on worldwide income in the same way as an ordinary resident.

This is one of the most important differences between resident and non-resident taxation.

Official guidance: Income Tax Department – Residential Status

Common Examples of Income That May Be Taxable in India

NRO Account Interest

Interest on an NRO account is taxable in India.

Banks normally deduct TDS on NRO interest.

If too much tax has been deducted compared with your final liability, you may be able to claim a refund through your ITR.

NRE and FCNR Interest

For a qualifying non-resident, interest on eligible NRE and FCNR accounts is generally exempt from Indian income tax under the applicable provisions.

This is a major difference between NRE and NRO accounts.

Do not simply combine all bank interest into one number.

Review each account separately.

Rental Income from Property in India

If you own a flat, house or other property in India and receive rent, the rental income may be taxable in India under the head:

Income from House Property

You may need details such as:

• Gross rent received
• Municipal taxes
• Home-loan interest, where applicable
• Property ownership percentage
• Tenant details where required

Capital Gains from Indian Investments

Capital gains can arise from:

• Indian shares
• Mutual funds
• ETFs
• Bonds
• Property
• Other Indian capital assets

Short-term and long-term capital gains may be taxed under special rules and rates.

Do not calculate tax simply by adding the sale proceeds to income.

You normally need the capital gain, not the gross sale value.

Sale of Indian Property

Selling property as an NRI is one of the areas where TDS can be significant.

The buyer may be required to deduct tax under the rules applicable to payments to non-residents.

Because the amount deducted may differ from your final capital-gains tax liability, the ITR becomes especially important for:

• Reporting the capital gain correctly
• Claiming eligible cost deductions
• Reporting tax already deducted
• Claiming any refund due

Property-sale cases are often worth reviewing with a CA.

Salary Connected with India

Salary taxation depends on where services are performed and other facts.

For example, salary for employment exercised in India can be taxable in India even when the employee is a non-resident.

By contrast, foreign employment income earned for services performed outside India and received outside India will generally not become taxable in India merely because the person is an Indian citizen.

What About Salary Earned Abroad?

If you are genuinely Non-Resident and you:

• Work abroad
• Earn salary abroad
• First receive that salary outside India

that foreign salary is generally outside the Indian tax net unless a specific India-source or deeming rule applies.

Transferring money later from your foreign bank account to India generally does not by itself convert already-earned foreign income into new Indian income.

The source and first receipt of the income matter.

4. Do NRIs Have to Report Foreign Bank Accounts and Foreign Assets?

This is another area of confusion.

For ITR-2, the Income Tax Department specifically states that Schedule FA does not need to be completed by a Non-Resident or RNOR.

Schedule FA is primarily the foreign-asset disclosure schedule for residents.

That means a genuine NRI does not normally list every foreign bank account, foreign house, 401(k), brokerage account or foreign investment in Schedule FA simply because the asset exists overseas.

However, your residential status must be correct.

If you are actually Resident and Ordinarily Resident, foreign-income and foreign-asset disclosure rules can be very different.

Official guidance: Income Tax Department – ITR-2 User Manual

5. Do You Need to File an Indian ITR?

An NRI may need to file an Indian return where taxable Indian income exceeds the applicable threshold or another filing requirement applies.

Even when filing is not strictly mandatory, filing can still be useful.

Common reasons include:

• Claiming an Indian tax refund
• Recovering excess TDS
• Reporting sale of Indian property
• Reporting capital gains
• Carrying forward eligible losses
• Claiming deductions
• Claiming DTAA treaty relief
• Maintaining a tax-filing record for financial or legal purposes

Example

Suppose your Indian bank deducted ₹80,000 of TDS, but after calculating your actual taxable income, your final tax liability is ₹45,000.

You generally need to file the ITR to claim the excess ₹35,000 as a refund.

6. Which ITR Form Should an NRI Use?

For AY 2026-27, the Income Tax Department lists ITR-2 and ITR-3 as the main individual forms applicable to non-residents.

Use ITR-2 if you do not have business or professional income

Typical examples:

• Salary
• Pension
• House-property income
• Bank interest
• Dividends
• Capital gains
• Indian investments

ITR-2 can be used by both residents and non-residents.

Official guidance: File ITR-2 Online

Use ITR-3 if you have business or professional income

ITR-3 is generally relevant if your income includes:

Profits and Gains from Business or Profession

Examples can include certain:

• Business income
• Consultancy income
• Professional income
• Partnership-related income

The facts can become complex when work is performed abroad but clients or operations are connected with India.

Seek advice if you are unsure.

NRIs Cannot Use ITR-1

ITR-1 is for eligible resident individuals.

A Non-Resident cannot use ITR-1 simply because the return looks simple.

NRIs Cannot Use ITR-4

ITR-4 is also restricted to eligible resident taxpayers.

The Income Tax Department specifically states that a Non-Resident Indian is not eligible to file ITR-4.

This is a common mistake when someone has freelance or consulting income.

7. New Tax Regime vs Old Tax Regime for NRIs

For AY 2026-27, the new tax regime is the default regime for individuals.

Under the new regime, the general slab structure begins with:

Special-rate income such as certain capital gains may not simply follow these slab rates.

Important: NRIs Do Not Get the Section 87A Rebate

You may see headlines saying:

"No income tax up to ₹12 lakh."

That statement can be misleading for NRIs.

The Section 87A rebate is available only to a resident individual.

The Income Tax Department specifically confirms that a non-resident cannot claim the Section 87A rebate.

Therefore, an NRI should not assume that taxable income up to ₹12 lakh automatically results in zero Indian tax.

Official guidance: ITR-2 FAQs

Can an NRI Choose the Old Tax Regime?

Depending on the taxpayer's income type and the applicable rules, the old regime may still be available.

The old regime can be relevant where eligible deductions produce a better result.

Potential deductions can include, subject to conditions:

• Section 80C
• Section 80D
• Certain NPS deductions
• Section 80TTA for eligible savings-bank interest

Not every deduction available to residents is available to NRIs.

For example, Section 80TTB is specifically for eligible resident senior citizens, not an NRI simply because the NRI is over age 60.

Do not choose a tax regime based only on a social-media chart.

Calculate both where applicable.

8. Documents an NRI Should Collect Before Filing

Create one tax folder for the year.

Suggested structure:

India_ITR_AY2026-27/
├── PAN.pdf
├── Passport.pdf
├── India_Travel_Dates.xlsx
├── AIS.pdf
├── Form_26AS.pdf
├── TIS.pdf
├── Form_16A/
├── NRO_Bank_Statements/
├── NRE_FCNR_Statements/
├── Rental_Property/
├── Capital_Gains/
├── Property_Sale/
├── Tax_Payments/
└── DTAA_Documents/

Useful documents include:

• PAN
• Passport
• India arrival/departure dates
• Form 26AS
• AIS
• TIS
• Form 16, if applicable
• Form 16A
• NRO account statements
• NRE/FCNR account statements
• Broker capital-gain reports
• Mutual-fund capital-gain reports
• Property rent records
• Home-loan interest certificate
• Property purchase/sale documents
• TDS certificates
• Advance-tax or self-assessment-tax challans
• DTAA documents, where applicable

9. Always Check AIS, TIS and Form 26AS

Do not file only from your own spreadsheet.

Compare your records against the government's information.

Form 26AS

Useful for checking:

• TDS
• TCS
• Certain tax payments

AIS – Annual Information Statement

AIS can include broader information such as:

• TDS/TCS
• Interest
• Securities transactions
• Property information
• Other reported financial activity

TIS – Taxpayer Information Summary

TIS provides summarised information used in the filing ecosystem.

Why this matters for NRIs

An NRI may forget:

• One old fixed deposit
• A dividend
• A mutual-fund redemption
• TDS on NRO interest
• Property-related TDS

AIS and Form 26AS can help identify missing items.

But do not assume that every prefilled number is automatically correct.

If the information is wrong, reconcile it rather than copying it blindly.

10. DTAA: Avoiding Double Taxation

India has Double Taxation Avoidance Agreements with many countries.

A DTAA may affect how a particular income item is taxed when both India and your country of residence have taxing rights.

Examples can include:

• Interest
• Dividend income
• Capital gains
• Salary
• Pensions
• Royalties
• Fees for technical services

Treaty treatment depends on the specific country and income.

Tax Residency Certificate

A non-resident seeking treaty relief generally needs a Tax Residency Certificate (TRC) from the country of residence.

Under the rules applicable to AY 2026-27, additional information may also be required in Form 10F.

For tax years under the Income Tax Act, 2025, the corresponding treaty-information form is Form 41.

Do not automatically use Form 67 for this purpose.

Form 67 is generally associated with foreign-tax-credit claims by resident taxpayers where foreign income is also taxable in India.

For an NRI, treaty claims on Indian-source income typically involve a different analysis.

If a significant amount of income is covered by a DTAA, professional review is worthwhile.

11. Step-by-Step: How an NRI Can File ITR Online

Go to the official portal:

Income Tax e-Filing Portal

12. What If an NRI Does Not Have Aadhaar?

A genuine non-resident under the Income-tax Act is among the categories for whom PAN-Aadhaar linking is not compulsory, subject to the applicable government notifications.

Therefore, being an NRI does not necessarily mean you need Aadhaar just to remain compliant with PAN-Aadhaar linkage.

However, make sure the Income Tax Department's records correctly recognise your exempt status.

If you cannot use Aadhaar OTP for ITR verification, alternatives can include:

• Bank-account EVC
• Demat-account EVC
• Net banking
• DSC
• Physical ITR-V

Official guidance: Income Tax Department – Link Aadhaar FAQ

13. Current 2026 Filing Deadlines: What NRIs Should Know

As of October 2026, the normal filing deadline for many non-audit individual returns for AY 2026-27 has already passed.

If you missed the regular deadline, the Income Tax Department states that a belated return for AY 2026-27 may generally be filed up to 31 December 2026, subject to the law and completion of assessment.

Late-filing fee can be:

• ₹1,000 where total income does not exceed ₹5 lakh
• ₹5,000 in other cases

Interest may also apply where tax was unpaid.

Taxpayers subject to audit follow separate deadlines. Check the latest CBDT notifications and the official e-Filing portal for any extension that applies to your case.

If you are unsure whether your return is an audit case, do not assume the deadline.

Official guidance: Income Tax Return FAQs

14. What If You Missed Earlier Years?

India now allows an Updated Return (ITR-U) in certain cases for older assessment years, subject to eligibility, time limits and additional tax.

The updated-return framework has been expanded to a longer period.

However, ITR-U is not a substitute for every missed-return situation and has restrictions.

For example, updated-return rules can limit cases involving:

• Refund creation
• Reduction of tax liability
• Certain losses
• Search, assessment or other specified situations

If you have not filed for several years, use a CA rather than guessing which year or form to use.

15. Common NRI Filing Mistakes

Avoid these mistakes:

• Assuming foreign residence automatically makes you NRI for tax
• Ignoring the 120-day rule for some high-income Indian citizens/PIO visitors
• Filing ITR-1 as a Non-Resident
• Filing ITR-4 as a Non-Resident
• Reporting NRE interest as taxable without checking exemption conditions
• Treating NRO interest as exempt
• Ignoring Indian rental income
• Forgetting Indian capital gains
• Claiming Section 87A rebate as an NRI
• Reporting worldwide foreign assets in Schedule FA even though you are genuinely NRI
• Failing to report TDS correctly
• Assuming TDS is the final tax
• Forgetting to claim excess TDS as a refund
• Selecting the wrong assessment year
• Failing to verify the ITR after filing
• Using an outdated DTAA article without checking the current treaty/form requirements

16. Example: NRI Working in the United States

Consider an Indian citizen who lives and works in the US and is Non-Resident for Indian tax purposes.

During FY 2025-26, the person has:

• US salary received in the US
• ₹2,00,000 NRO fixed-deposit interest in India
• Eligible NRE interest
• ₹3,60,000 rent from an Indian flat
• A redemption of Indian mutual funds
• TDS deducted by banks and other payers

A reasonable filing workflow is:

1. Confirm NRI status based on India day count.
2. Do not automatically include the US salary in Indian taxable income if it is genuinely foreign-source income earned and received abroad.
3. Report taxable NRO interest.
4. Review whether NRE interest qualifies for exemption.
5. Compute house-property income.
6. Compute capital gains from the mutual-fund redemption.
7. Match all TDS with Form 26AS/AIS.
8. Choose ITR-2 if there is no business or professional income.
9. Compare available tax regimes where relevant.
10. Pay any balance tax or claim the refund.
11. File and verify the return.

This example is simplified. Real facts can change the answer.

17. When Should an NRI Use a Chartered Accountant?

DIY filing may be reasonable when you have:

• NRO interest
• Simple rental income
• Straightforward listed investments
• Clear NRI status
• Clean AIS/Form 26AS

Professional help becomes more valuable if you have:

• Sale of Indian property
• Multiple properties
• Private-company shares
• ESOPs
• Business income
• Partnership income
• Trust income
• Complex capital gains
• DTAA claims
• Returned-to-India residency issues
• RNOR questions
• More than one country of tax residence
• Large TDS refund
• Tax notices
• Past unfiled returns
• High income or substantial Indian assets

Paying for correct tax advice can be much cheaper than fixing a serious filing error later.

18. A Practical NRI Tax-Filing Checklist

Before filing:

• Calculate your India day count.
• Confirm whether you are NR, RNOR or Resident.
• Select the correct assessment year.
• Download AIS.
• Download Form 26AS.
• Review TIS.
• Collect NRO interest certificates.
• Separate NRE/FCNR interest from taxable accounts.
• Collect rent and property records.
• Download capital-gain reports.
• Check property-sale TDS if applicable.
• Review dividend and other investment income.
• Decide whether ITR-2 or ITR-3 applies.
• Compare tax regimes where applicable.
• Do not claim Section 87A rebate if you are Non-Resident.
• Review DTAA requirements if treaty relief is relevant.
• Check all TDS credits.
• Pre-validate a bank account for refund where required.
• File the return.
• Verify the return within the required period.
• Save the acknowledgement and final ITR copy.