How to File Income Tax Returns (ITR) for NRI?

Filing an income tax return as an NRI is overwhelming, especially when you need to get through both the Indian tax laws and your resident country tax regulations. Hence, understanding the ITR filing for NRIs process and its associated requirements is essential for you to ensure cross-border compliance and avoid penalties.

In this guide, we will understand how to file ITR in India for NRIs with 100% compliance and what common ITR filing mistakes to avoid.

Determine Your NRI Status

Before you file your ITR for FY 2025-26. You must check whether you are legally classified as an NRI under the Income Tax Act 1961.

With respect to the 182-day rules (Section 6, Income Tax Act 1961), you are a tax resident of India if you spend more than 182 days in India during your FY 2025-26 (1 April 2025 - 31 March 2026), or 60+ days in FY 2025-26 and 365+ days across the preceding four years. If you do not satisfy these conditions, you may qualify as an NRI. 

Generally, there are three residential categories, each with different tax implications. The following table demonstrates the three residential statuses.

For NRIs filing taxes in the financial year 2025-26, only the income that arises or accrues in India is taxable. This includes rental income from Indian property, capital gains on Indian assets, interest from NRO accounts, salary for services you have provided in India, and dividends from various Indian companies.

NRIs, Please Note: the Section 87A Rebate Does Not Apply to You

Unlike resident Indians, NRIs are not eligible to avail the Section 87A tax rebate, which makes income up to Rs 12 lakh tax-free for residents under the new income tax regime for FY 2025-26. NRIs are required to pay tax on the first rupee that exceeds the basic exemption limit. The senior citizen, however, has a higher tax exemption limit under the old regime, but even this is not applicable to NRIs.

Documents Required for Filing Income Tax Return for NRIs

For filing your ITR for FY 2025-26 (AY 2026-27), you need to have all of your documents in place before you begin. The official income tax portal for AY 2026-27 pre-fills many fields from 26AS and AIS; however, having the original documents handy is essential.

The Identity & Residency Proof

• The PAN Card. This is non-negotiable: If an NRI has Aadhaar and is required to link it with PAN under applicable rules, ensure the linking is completed.
• Your passport with entry/exit stamps confirming the number of days spent in India in FY 2025-26.
• Aadhaar card, if available and linked. This document is generally used for e-verification via the OTP.
• Proof of foreign country residence with valid visa details.
• Tax Residency Certificate (TRC) from your country of residence to support your DTAA claims, and it is now mandatory to submit Form 10F electronically on the portal.

Income-Related Documents

• Form 16/16-A. These are your TDS certificates from deductions and employers in India, issued quarterly.
• For the NRO account statement for the full FY 2025-26, interest is taxable; TDS at the 30% rate is applicable.
• NRE/FCNR account statements ( however, their interest is tax-exempt and no reporting is generally required, but still keep them for your records).
• Rental income receipts, tenancy agreements, TDS is generally deducted at 31.2% on gross rent payable to an NRI.
• The capital gains statement from the brokers, equity, mutual funds, and property sale deeds.
• The dividend income statements (they are taxable at the individual's slab rates; TDS at 20% by the companies for NRIs).

Deduction & Investment Proof (The Old Regime Only)

• Home loan interest certificates to avail a deduction under Section 24(b).
• Life insurance premium receipts to avail a deduction under Section 80C (up to Rs 1.5 lakh).
• ELSS mutual fund investment statements- Section 80C.
• Health insurance premium receipts - Section 80D.
• Education loan interest certificate - Section 80E
• Donations receipts for Section 80G claims.
• NPS contribution for statements - Section 80CCD(1B), additional Rs 50,000 deduction.

A Step-By-Step Guide For Filing Income Tax Return

To file your NRI income tax return, you have to file it online at incometax.gov.in for AY 2026-27. It is highly advisable for NRIs to hire a CA who understands cross-border taxation and NRI compliance to ensure nothing goes wrong.

The following are the steps for you to file your NRI ITR in India.

1: Confirm Your Residential Status

To begin with, your income tax filing journey counts your days in India during 1 April 2025 - 31 March 2026 using the passport stamps. Check and know whether you are an NRI, RNOR, or a resident Indian for FY 2025-26. Your residential status in India determines your scope of Indian tax liability and which ITR form to use.

2: Register / Log In To The e-filing Portal

Go to the official incometax.gov.in and log in using PAN + password. NRIs can e-verify via net banking or by sending a signed ITR-V to CPC Bengaluru if your Aadhar OTP is unavailable. Enable two-factor authentication.

3: Choose The Correct ITR Form

NRIs must use ITR-2 (salary, rental, capital gains, and with no business income) or ITR-3 (with business/professional income). Please ensure (Sahaj) is not applicable to NRIs - filing it would make your NRI return defective and is treated as not filed, explaining what happens if I file the wrong ITR.

4: Select Your Tax Regime

NRIs can choose between the new tax regime (also known as the default regime), which has lower rates, a basic exemption limit of Rs 4 lakh, and limited deductions) or the Old Tax Regime (higher rates but 80C, 80F, 24(b) deductions are applicable, and the basic exemption limit is Rs 2.5 lakhs). As an NRI with non-business income, you can switch the regimes each year.

5: Pre-fill & Verify Personal Details

The assessment year 2026-27 portal pre-populates the data from the Annual Information System and Form 26AS. Verify your name, bank account, PAN, and more. Fill in your residential country address in the NRI-specific residential details field. Cross-check the pre-filed TDS amount against your bank certificate; this step is quite important.

6: Enter all Indian Source Income

Once you have opted for the regime, report each and every Indian source of income, such as salary or services in India, house property for income (30% standard deduction on rent), capital gains (short-term and long-term separately under the updated rates), NRO account interest, and the dividend income. RNOR taxpayers may also be required to report certain foreign income depending on the source and taxability provisions.

7: Claim deductions and DTAA relief

In the old tax regime, you shall enter Chapter VI-A deduction. To claim the DTAA benefits as an NRI taxpayer, ensure that you have submitted Form TRC + Form 10F electronically to the deductors before filing. Report the DTAA relied on Schedule FSI and Schedule TR if applicable (for RNOR). Verify whether the reduced TDS is correctly applied.

8: Pay The Self-Assessment Tax (If Any)

Answer: After the TDS credit, if your tax is still due, pay it via Challan 280 through the net banking before submission. Note down the BSR code and the challan serial number for the ITR entry. Interest under section 234A is applicable if you file late; Section 234B and 234C for the advance tax shortfall.

9: Submit and e-verify The Return Within 30 Days

Before submitting the return preview, check it twice for each and every entered detail, and verify the return within 30 days via Net Banking, Bank ATM, or through Income Tax e-Verification through EVC, or by mailing a signed ITR V to CPC Bengaluru. For the FY 2025-26 (AY 2026-27), an ITR-U Updated Income Tax Return or revised income tax return can be filed up to 31 March 2027.

ITR Filing Deadlines For FY 2025-26 (AY 2026-27)

The following are the ITR filing deadlines for the financial year 2025-26.

• Original ITR (non audit) - 31 July 2026 (ITR-1 and ITR-2) and 31 August 2026 for (ITR-3 and ITR-4, non audit).
• Belated ITR: 31 December 2026
• Revised ITR: 31 March 2027 (new extended deadline effective from AY 2026-27).
• Late Filing Fees: Rs 5000 (the fee is reduced to Rs 1000 if the TTLA income is <= Rs 5 lakh) + interest under Section 234A.

What Are The Tax Deductions & Exemptions For NRIs Filing ITR

For the financial year 2025-26, NRIs can claim quite a lot of deductions under the Old Tax Regime. The new tax regime provides lower slab rates but significantly restricts deductions. The following table demonstrates what applies:

Updated Capital Gains Tax Rates For FY 2025-26

The short-term capital gains on listed equity and equity MFs (Section 111A): 20% (increased from 15% in Budget 2024, effective from 23 July 2024).

Long-term capital gains (LTCG) on listed equity and equity MFs (Section 112A): 12.5% above Rs 1,25,000 (threshold raised from Rs 1 lakh).

LTCG on property and other assets (Sec 112):

12.5% without indexation or 20% with indexation (taxpayer can choose whichever is lower for property acquired before July 23, 2024).

STCG on Property: Taxed at applicable income slab rates plus 4% cess and applicable surcharge in all cases.

What Are The TDS Rates On NRI Income For FY 2025-26

The following table demonstrates the TDS rates for NRIs along with their income type:

The DTAA Benefits For FY 2025-26

India has signed DTAAs with more than 90 countries, including the USA, UAE, UK, Canada, Singapore, and Germany. To claim the reduction of TDS rates and exemption under the applicable DTAA, NRIs must:

(1) Obtain a TRC (Tax Residency Certificate) from their county of residence and the

(2) Submit Form 10F electronically on the Income Tax portal (physical Form 10F is no longer accepted in a lot of cases). There have been recent updates from the UK, UAE, and Singapore that allow lower withholding on interest, capital gains, and dividends by verifying the current treaty provisions before filing.

Note: The NRE vs NRO tax treatment for FY 2025-26 means that the interests on NRE and FCNR accounts remain fully exempt from Indian income tax as long as NRI status is maintained. Whereas interest on NRO accounts is taxable at the 30% rate, with TDS deducted by the bank. The DTAA benefits may reduce the effective rate.

Common Mistakes NRIs Must Avoid While Filing Their ITR In India

The following are common mistakes made while filing ITRs that may result in notices, penalties, or excess tax payments.

NRIs Assuming Section 87A Rebate Applies: Many NRIs often incorrectly claim the Rs 12 lakh tax-free benefit under Section 87A introduced in the Budget 2025. This rebate is certainly available only to residents. NRIs owe the tax from the first rupee above the basic exemption limit.

Filing ITR 1 Instead of ITR-2: This is one of the most common mistakes NRIs end up making while filing the ITR. Know that ITR-1 is invalid for NRIs. From now on, always use ITR-2 (or, if you have business income, ITR-3) for AY 2026-27. Filing ITR with an incorrect form is treated as not filed and explains what happens if I file wrong ITR. and can trigger a defect notice under Section 139(9).

Not Filing Form 10F Electronically: The physical Form 10F submissions are largely discontinued. For FY 2025-26, the taxpayers must submit their Form 10F on the income tax portal along with the TRC. If you fail to do so, your reduced DTAA rates and TDS rates will not be honored, resulting in excess deduction.

Missing the Revised ITR Deadline: For AY 2026-27, the window for filing revised ITR extends to 31 March 2027, longer than before. Many NRIs miss the original 31 July 2026 deadline, assuming they can revise it later without incurring a late-filing penalty.

Ignoring Mandatory Asset Declaration: NRIs filing ITR-2 with assets in India exceeding Rs 1 crore must declare all assets, including real estate, MFs, shares, deposits, and FDs. Liabilities exceeding Rs 50 lakh (e.g., home loans) must also be included. Any non-compliance here invites scrutiny.

Incorrect Residential Status Declaration: As an NRI, declaring yourself as an Indian resident to access the benefits under 80C or 80D constitutes misrepresentation under Section 277. With technological advancements, AIS now receives data from foreign governments, making inconsistencies easier for the department to detect.

The Bottom Line

As an NRI filing your income tax return for the FY 2025-26 (AY 2026-27) comes at an important transitional moment in the Indian tax law. However, the old Income Tax Act 1961 still governs returns for these years; the new Income Tax Act 2025 came into effect on April 1, 2026, and your future ITR filings will follow the new framework. NRIs with financial interests in India should stay updated with these tax changes to remain compliant.

As an NRI, if you are seeking professional assistance in ITR filing in India, then Savetaxs is the name to trust. Our experts help NRIs determine their residential status, processes Indian sourced income (rent, capital gains, etc.), claim TDS refunds, and helps you reap the best out of the DTAA treaty benefits. Savetaxs experts ensure everything is in compliance with FEMA and Indian tax law.

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