How NRIs Should File Their Indian Income Tax Returns in 2025
- Dipali Waghmode
- a few seconds ago
- 10 min read
Filing Indian income tax returns (ITR) as a Non-Resident Indian (NRI) in 2025 comes with specific considerations. From determining your residency status to selecting the right tax forms and understanding exemptions, NRIs must navigate complex tax rules to ensure compliance. The process is made easier with the right tools and knowledge. This article will walk you through the key steps, ensuring you understand the requirements for filing your ITR and the various forms you may need.
Through this article, NRIs will have a clear understanding of when they must file their returns and the documents they need. Filing your ITR will not only ensure compliance with Indian tax laws but can also help you claim refunds for any excess tax deducted at source (TDS).
Table of Contents
How NRIs Should File Their Indian Income Tax Returns in 2025?
Non-Resident Indians (NRIs) should file their Indian Income Tax Return (ITR) by selecting ITR-2 if they have income from capital gains, rental income, or other sources in India. NRIs are subject to tax on income earned in India, including capital gains from shares, mutual funds, or property, and must report these accurately. They should also ensure compliance with the latest tax provisions, such as changes in tax rates and exemptions on long-term capital gains. NRIs can file their returns online through the Income Tax Department's e-filing portal and must e-verify their returns using methods like Aadhaar OTP or net banking.
Who is Considered an NRI for Income Tax Purposes?
For income tax purposes, a Non-Resident Indian (NRI) is defined based on the individual’s physical presence in India during the Financial Year (FY) and the preceding four years. According to the Income Tax Act, a person is considered an NRI if they do not meet either of the following two conditions:
Stayed in India for 182 days or more during the Financial Year.
Stayed in India for 60 days or more in the current year and 365 days or more during the previous four years combined.
If an individual fails to satisfy either of these conditions, they are classified as an NRI for tax purposes. This classification is important because NRIs are taxed only on their income earned or accrued in India, and not on income earned abroad.
This residency status plays a critical role in determining which income is taxable, the tax filing obligations, and eligibility for exemptions or deductions. It is essential for NRIs to understand these residency rules to ensure accurate tax reporting and compliance.
When is ITR Filing Mandatory for NRIs?
Income exceeds the basic exemption limit: If the total income earned or accrued in India exceeds the basic exemption limit for the financial year, NRIs are required to file their income tax return (ITR). The basic exemption limit for the Assessment Year (AY) 2025-26 is ₹2.5 lakh for individuals under the old tax regime, and ₹3 lakh under the new regime.
TDS deduction but income below exemption limit: NRIs must file an ITR to claim a refund of Tax Deducted at Source (TDS) if their income is below the exemption limit, but tax has been deducted at source.
Exempt income under Double Taxation Avoidance Agreement (DTAA): If an NRI’s income is exempt from tax in India under the DTAA but TDS has been deducted, they must file an ITR to claim a refund of the excess tax deducted.
In addition to these, if an NRI wants to carry forward losses such as capital gains or business losses, they must file an ITR. Similarly, those opting for tax deductions and exemptions under sections like 80C, 80D, or others, should file returns to claim these benefits.
Income Sources Exempt from Filing ITR for NRIs
In some cases, NRIs may not need to file a tax return if their income sources are exempt from tax in India. These include:
Dividend Income: Income from dividends on Indian stocks or mutual funds is exempt from tax in India.
Interest Income on Foreign Currency Loans: Interest income earned from government or Indian entities on foreign currency loans is tax-exempt.
Infrastructure Debt Funds: Interest from investments in infrastructure debt funds is exempt from tax in India.
Government Securities and Bonds: Interest earned on rupee-denominated bonds, municipal bonds, and government securities is exempt from tax.
Income from Unit Trust of India (UTI): NRIs who have invested in UTI mutual funds with foreign currency are exempt from paying tax on interest from such funds.
Income from Category III AIFs: Income generated from certain Alternative Investment Funds (AIFs) is exempt, subject to specific conditions outlined by the tax authorities.
These exemptions help simplify tax filing for NRIs with limited income from taxable sources. If an NRI’s income falls under these categories, they are generally not required to file an ITR unless they have other taxable income.
Applicable Income Tax Slabs and Rates for NRIs in AY 2025-26
The tax rates for NRIs in AY 2025-26 are the same as those applicable to residents, with some key differences based on the chosen tax regime. Here's a breakdown of the tax slabs under both the Old Regime and New Regime:
Old Tax Regime:
Income Slab (₹) | Tax Rate | Surcharge |
Up to ₹2,50,000 | Nil | Nil |
₹2,50,001 – ₹5,00,000 | 5% | Nil |
₹5,00,001 – ₹10,00,000 | 20% | Nil |
₹10,00,001 – ₹50,00,000 | 30% | Nil |
₹50,00,001 – ₹1,00,00,000 | 30% + 10% surcharge | 10% |
₹1,00,00,001 – ₹2,00,00,000 | 30% + 15% surcharge | 15% |
Above ₹5 crore | 30% + 37% surcharge | 37% |
A Health and Education Cess of 4% is applicable on the total tax, including surcharge.
New Tax Regime Income Tax Slabs for AY 2026-27 (FY 2025-26):
Income Slab (₹) | Tax Rate |
Up to ₹4,00,000 | Nil |
₹4,00,001 – ₹8,00,000 | 5% |
₹8,00,001 – ₹12,00,000 | 10% |
₹12,00,001 – ₹16,00,000 | 15% |
₹16,00,001 – ₹20,00,000 | 20% |
₹20,00,001 – ₹24,00,000 | 25% |
Above ₹24,00,000 | 30% |
Additionally, the Rebate has been increased to ₹60,000 from ₹25,000 for FY 2025-26. This means individuals earning up to ₹12,00,000 will have no tax liability due to the increased rebate.
For salaried individuals, the tax liability will be zero for incomes up to ₹12,75,000 due to the ₹75,000 standard deduction.
Which ITR Form Should NRIs Use?
NRIs must choose the correct ITR form based on their income sources. The two primary forms used by NRIs are:
ITR-2: This form is for NRIs who do not have income from business or profession. It is suitable for NRIs who earn income from sources like salary, house property, capital gains, etc.
ITR-3: If an NRI has income from business or profession, this form should be used. It is applicable for NRIs with business income, including income from freelance or contract work.
Choosing the correct form ensures that the tax return is processed efficiently and avoids any penalties or delays.
Specific Questions Related to Bank Account and Filing for NRIs
Can NRIs file ITR using interest income from NRO/NRE accounts?
NRO Account Interest: Interest earned on Non-Resident Ordinary (NRO) accounts is taxable in India. TDS is deducted at the rate of 30% (plus applicable surcharge and cess). NRIs must file an ITR to report this income and claim a refund if excess TDS has been deducted.
NRE Account Interest: Interest earned on Non-Resident External (NRE) accounts is exempt from tax in India. Hence, if the NRI has only NRE account income, they are not required to file an ITR unless they have other taxable income.
How to report income from foreign bank accounts?
Income earned in foreign bank accounts is typically not taxable in India unless the individual qualifies as a resident for tax purposes. However, income earned in India from foreign currency assets must be disclosed on the ITR form. If any foreign income is taxable in India, NRIs should report it in the appropriate section of the ITR form, along with details of the foreign bank accounts.
What documents are needed for filing ITR for NRIs?
NRIs need to provide the following documents to file their ITR:
PAN Card
Aadhaar (if applicable)
Bank Account Statements (NRO, NRE, FCNR)
Form 26AS (Tax Credit Statement)
Details of Income Earned in India
TDS Certificates (Form 16A)
Proof of Foreign Residency (if applicable)
These documents will help accurately file the ITR and claim any applicable refunds.
How to fill bank account details in ITR?
NRIs must provide details of all their Indian bank accounts (NRO, NRE, FCNR) when filing their ITR. This includes:
Account Number
IFSC Code
Account Type
Accurate bank details are necessary for refund processing and future communication from the Income Tax Department.
Can NRIs file ITR online?
Yes, NRIs can file ITR online through the official Income Tax Department's e-filing portal. Digital signatures or Aadhaar OTP can be used for verification. Many NRIs prefer using online tax filing platforms, such as TaxBuddy, for a more user-friendly experience.
Conclusion
Filing Indian Income Tax Returns as an NRI in 2025 may seem complex, but with the right understanding of income tax slabs, exemptions, and the appropriate forms, the process becomes much more manageable. By adhering to the residency rules and utilizing the correct documentation, NRIs can ensure that they comply with Indian tax laws while maximizing their benefits. For anyone looking for assistance with tax filing, it is highly recommended to download the TaxBuddy mobile app for a simplified, secure, and hassle-free experience. It offers easy-to-follow guidance, auto-filling of forms, and ensures that your tax return is filed accurately and on time.
FAQs
Q1: Does TaxBuddy offer both self-filing and expert-assisted plans for ITR filing, or only expert-assisted options?
TaxBuddy offers both self-filing and expert-assisted options. This flexibility allows NRIs to choose the filing plan that best fits their needs. Those who are comfortable with the process can opt for self-filing, where they can fill out and submit their forms independently with the assistance of step-by-step guidance. Alternatively, for those seeking professional support, TaxBuddy provides expert-assisted services, where tax experts help with form preparation, verification, and submission, ensuring everything is done correctly.
Q2: Which is the best site to file ITR?
TaxBuddy is one of the top platforms to file ITR for NRIs. With its user-friendly interface, advanced features, and dedicated services for NRIs, it simplifies the entire filing process. The platform offers automated form filling, error-checking, and personalized guidance, making it an excellent choice for those filing from abroad. Additionally, TaxBuddy ensures that users are always up to date with the latest tax regulations, ensuring accurate filings and maximum tax benefits.
Q3: Where to file an income tax return?
Income tax returns can be filed through the Income Tax Department’s official e-filing portal, where taxpayers can submit their returns directly. Alternatively, trusted platforms like TaxBuddy also provide a streamlined, efficient, and more convenient way for NRIs to file their ITRs. TaxBuddy offers features such as form auto-filling, expert advice, and real-time tracking, making the process easier and more reliable.
Q4: Is filing ITR mandatory for NRIs with only NRE account interest income?
No, filing an ITR is not mandatory for NRIs who have only NRE (Non-Resident External) account interest income. Interest earned from NRE accounts is tax-exempt in India, and since this income is not taxable, there is no requirement to file a return unless the individual has other taxable incomes. However, if tax has been deducted on other sources of income, an NRI should file an ITR to claim a refund.
Q5: What if TDS is deducted but my income is below the exemption limit?
In cases where Tax Deducted at Source (TDS) has been deducted but the total income is below the exemption limit, NRIs should file an ITR to claim a refund of the excess TDS. Filing the ITR is the only way to recover the amount of tax that has been deducted beyond the actual tax liability.
Q6: Which ITR form should an NRI with rental income file?
NRIs earning rental income from property in India should file ITR-2 if they do not have any income from business or profession. If an NRI also has business income, then they should file ITR-3. It is essential to choose the correct form, as filing the wrong form may result in delays or penalties. Rental income is typically reported under the 'Income from House Property' section of the ITR form.
Q7: Can NRIs claim deductions under Section 80C?
Yes, NRIs can claim deductions under Section 80C, which includes investments in schemes like PPF, EPF, and NSC, as long as the income is taxable in India. If an NRI has income that is subject to tax in India, they can make the most of this deduction. However, deductions related to income earned outside India or under other special regimes (such as DTAA) may not be applicable.
Q8: How to verify ITR after filing?
After filing the ITR, it must be verified. NRIs can do this electronically by using Aadhaar OTP, net banking, or through a digital signature. If they are unable to verify online, they may need to send a signed physical copy of the ITR-V (Income Tax Return Verification) to the Centralized Processing Centre (CPC) in Bangalore. The verification process ensures that the tax return is authentic and complete.
Q9: Can NRIs file ITR online?
Yes, NRIs can file their ITR online. The Income Tax Department’s e-filing portal supports online submissions, and TaxBuddy offers an alternative, providing a seamless, simplified filing process. Online filing is efficient and allows for real-time submission and verification. NRIs can easily track their returns, receive notifications, and handle their tax matters from anywhere in the world.
Q10: What documents are required to file ITR for NRIs?
The following documents are needed for NRIs to file their ITR:
PAN Card: Essential for tax filing.
Aadhaar (if applicable): For identity verification.
Bank Account Statements (NRO, NRE, FCNR): To report interest income.
Form 26AS: Tax credit statement showing TDS deducted.
TDS Certificates (Form 16A): If tax has been deducted on income.
Details of Income Earned in India: To report all taxable income from India.
Proof of Foreign Residency (if applicable): For tax determination under DTAA.
Having these documents ready ensures smooth filing and prevents delays or errors in the process.
Q11: How to report income from foreign bank accounts? Income earned in foreign bank accounts is generally not taxable in India unless the individual qualifies as a resident for tax purposes. However, NRIs must report any income earned in India from foreign assets, such as income from foreign investments or repatriated funds. Additionally, details of foreign bank accounts must be disclosed in the ITR form, including account numbers and balances, if applicable.
Q12: How to fill bank account details in ITR?
When filling out the ITR form, NRIs must provide accurate details of all their Indian bank accounts, including NRO, NRE, and FCNR accounts. This includes the account number, IFSC code, and account type. Providing this information is crucial for refund processing and for communication from the Income Tax Department. Accuracy in reporting these details ensures timely receipt of any tax refunds.
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