Filing Taxes in India for NRIs Complete FAQ
Short Answer: Yes, if your Indian income exceeds ₹2.5 lakh in a financial year.
Long Answer: NRIs are required to file an income tax return in India if their income earned in India (like rent, salary, or interest) exceeds the basic exemption limit of ₹2.5 lakh. Even if you have no tax liability but wish to claim a refund, you should still file a return.
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Short Answer: Only income earned or received in India.
Long Answer: NRIs are taxed in India on income sourced within India. This includes rental income from property in India, salary for services rendered in India, capital gains from selling assets in India, and interest on NRO accounts. Foreign income is not taxable in India for NRIs.
Short Answer: 31st July for most taxpayers.
Long Answer: For the financial year, the due date for filing your return is generally 31st July of the following assessment year. If your accounts require audit, the deadline is extended to 31st October.
Short Answer: Yes, with certain limits.
Long Answer: NRIs can claim deductions under Section 80C for investments like life insurance premiums, ELSS mutual funds, and principal repayment of home loans in India. However, some instruments like PPF and NSC are not available to NRIs.
Short Answer: No.
Long Answer: The rebate under Section 87A, which reduces tax for residents with income up to ₹5 lakh, is available only to resident individuals. NRIs cannot claim this rebate, even if their income is within the threshold.
Short Answer: At special rates based on holding period.
Long Answer: Short-term capital gains from shares and equity funds are taxed at 15%, while long-term capital gains above ₹1 lakh are taxed at 10% without indexation. For property sales, short-term gains are taxed at slab rates, and long-term gains at 20% with indexation benefits.
Short Answer: No.
Long Answer: NRIs cannot use ITR-1 (Sahaj). They must file returns using ITR-2 if they have income from salary, house property, or capital gains, and ITR-3 if they have business/professional income in India.
Short Answer: Yes, if tax liability exceeds ₹10,000.
Long Answer: NRIs must pay advance tax in four installments if their total tax liability in a financial year exceeds ₹10,000. Failure to pay advance tax attracts interest under Sections 234B and 234C.
Short Answer: Use DTAA benefits.
Long Answer: NRIs can avoid paying tax twice on the same income by using provisions of the Double Taxation Avoidance Agreement (DTAA) between India and their country of residence. This may allow tax credit or exemption depending on the treaty.
Short Answer: Yes.
Long Answer: NRIs can file returns online from anywhere in the world using the Income Tax Department’s e-filing portal. They will need a valid PAN, bank account in India, and an Aadhaar (if applicable) for certain verifications.
