Get Your NRI Income Tax Filing Done – Fast, Accurate & Compliant

The applicable ITR form depends on the type of income you have in India:

• ITR-1 (Sahaj): Not applicable to NRIs.

• ITR-2: Most commonly used by NRIs with income from salary, pension, house property, capital gains, or other sources.

• ITR-3: Applicable if you’re an NRI with business or professional income in India.

• ITR-4 (Sugam): Generally not applicable to NRIs as it’s for residents with presumptive income.

So, for most salaried NRIs, ITR-2 is the go-to form. If you run a business or have freelance income in India, ITR-3 may apply.

For NRIs, the basic exemption limit is ₹2.5 lakhs for FY 2024-25 (AY 2025-26), just like resident Indians below age 60.

However, NRIs are not eligible for:

• Rebate under Section 87A

• Certain deductions available to residents (like for senior citizens)

• Certain exemptions like agricultural income, unless conditions are met

Income earned abroad (salary abroad, foreign interest, etc.) is not taxable in India, unless received or accrued in India.

While you can’t “avoid” taxes, you can reduce your tax liability legally by:

• Claiming DTAA (Double Taxation Avoidance Agreement) benefits if you’re taxed in both India and your resident country.

• Investing in tax-saving instruments (e.g., ELSS, PPF, NPS – wherever allowed for NRIs).

• Structuring your property sale properly to minimize TDS and capital gains tax.

• Using Section 54/54EC exemptions for reinvesting capital gains from property sale.

• Keeping NRE and FCNR accounts – income from these is often tax-free.

Consult a tax expert to ensure your strategies comply with Indian tax laws and FEMA.

Some recent updates and reminders for NRIs include:

• Residential Status Change: As per new rules, NRIs who spend 120 days or more in India and have Indian income exceeding ₹15 lakhs in a year may be treated as Residents (not ordinarily resident).

• Schedule FA: NRIs must disclose foreign assets and income held during the year.

• High TDS on property sale: If an NRI sells property in India, TDS at 20% (plus surcharge and cess) applies, even if actual tax liability is less.

• PAN-Aadhaar Linking is mandatory for compliance.

• Form 10IEA to switch tax regimes is required for certain NRIs with business income.

These rules aim to improve tax transparency and compliance for globally earning individuals.

Failing to declare NRI status can lead to:

• Wrong tax computation: Your income may be taxed as if you’re a resident, leading to higher taxes.

• Inaccurate ITR filing: Filing the wrong ITR form can result in notices or rejection.

• Penalties for false declarations under Section 270A or 277, which can go up to 200% of tax under-reported or imprisonment in serious cases.

• You may also lose out on DTAA benefits, TDS refunds, and deductions/exemptions specific to NRIs.

Always update your residential status correctly and disclose foreign assets if required.

There’s no tax on transferring money from abroad to India if:

• The money is transferred to your own NRE, NRO, or savings account

• The source of funds is legal and declared

• You are not bringing in money classified as income earned in India without declaring it

But once money is invested or earns income in India (interest, rent, capital gains), that income is taxable.

Using NRE accounts is the most common method for tax-free inward remittance, as interest earned is also tax-free in India.

Some key exemptions for NRIs under the Income Tax Act:

• Section 10(4)(ii): Interest earned on NRE accounts is tax-free in India (as long as you’re NRI).

• Section 10(15)(iv)(fa): Interest on FCNR deposits is tax-exempt.

• Section 54 / 54EC: Exemption on capital gains from property sale if reinvested properly.

• DTAA relief: Under Section 90/90A, NRIs can claim relief if tax has been paid in another country with a treaty.

Note: NRIs don’t get some benefits like Section 87A rebate, or certain deductions available to residents.