TaxBuddy for NRIs: How to File Income from Abroad Using DIY Tool
- PRITI SIRDESHMUKH
- Sep 15
- 11 min read
Updated: Oct 7
Filing Indian income tax as an NRI can be challenging due to multiple income sources, foreign residency, and specific exemptions under the Income Tax Act. NRIs must correctly report Indian income while excluding foreign earnings, choose the appropriate ITR form, and ensure compliance with deductions and TDS claims. Using a reliable DIY tool like TaxBuddy simplifies this process, allowing NRIs to file accurate returns securely from anywhere in the world. The platform helps identify the right tax regime, calculate liabilities, and e-verify returns efficiently.
NRIs can use TaxBuddy’s DIY platform to file Indian income tax returns by selecting the correct ITR form, accurately reporting Indian income, uploading required documents such as Form 26AS and TDS certificates, applying relevant deductions, and completing e-verification through secure methods. This ensures compliance with Indian tax laws while making filing convenient and error-free for those abroad.
Table of Contents
Understanding NRI Status for Tax Filing
A Non-Resident Indian (NRI) is an individual who does not meet the residential criteria specified under the Income Tax Act. The classification of NRI is crucial for determining tax liability in India. NRIs are generally taxed only on income that is earned or accrued in India, whereas income earned abroad is exempt from Indian taxation, except in specific scenarios involving certain foreign assets. For tax purposes, residency status is determined by the number of days an individual spends in India during a financial year and the preceding years. Properly establishing NRI status ensures accurate compliance, minimises unnecessary tax liability, and clarifies the scope of applicable ITR forms and deductions.
When Must NRIs File Indian Income Tax Returns?
NRIs must file an Indian Income Tax Return if their total taxable income in India exceeds the basic exemption limit for the respective financial year. Filing is also mandatory if the NRI has had taxes deducted at source (TDS) and seeks a refund, or if they have earned capital gains, income from property, or income from business or professional activities in India. Even if the total income does not exceed the taxable threshold, filing may be beneficial to claim refunds, report foreign income accurately, or comply with banking and regulatory requirements.
Which ITR Forms Are Applicable for NRIs?
The choice of ITR form for NRIs depends on the type of income earned:
ITR-2: For NRIs with income from salary, house property, capital gains, or other sources except business/professional income.
ITR-3: For NRIs with income from business or profession, including freelancers with Indian clients.
ITR-4 (Sugam): Typically not used by NRIs unless opting for presumptive income under certain conditions.
Correct selection of the ITR form ensures accurate reporting and reduces the likelihood of errors or notices from the Income Tax Department.
How to File Income from Abroad Using DIY Tools Like TaxBuddy
NRIs can report income earned outside India while filing their Indian ITR using tools like TaxBuddy. These platforms simplify the process by providing step-by-step guidance, auto-calculating taxes on Indian-sourced income, and correctly reflecting exemptions for foreign income. Users can easily enter details of foreign salary, interest, or capital gains, and the platform ensures that only Indian-taxable income is processed. TaxBuddy’s interface allows seamless upload of Form 26AS, proof of TDS, and foreign income documents, streamlining compliance and reducing errors.
Key Benefits of Using TaxBuddy for NRIs
Filing Income Tax Returns (ITR) as a Non-Resident Indian (NRI) can be complex due to multiple sources of income, foreign transactions, and regulatory requirements. TaxBuddy simplifies this process with tailored solutions that cater specifically to NRIs.
Simplified Filing TaxBuddy provides step-by-step guidance for NRIs to report both domestic and foreign income. This ensures that all income sources, including salary, investments, interest, and overseas earnings, are accurately captured. The platform streamlines the documentation process, making it easier to comply with Indian tax regulations without confusion or missed entries.
Error-Free Returns With automated calculations and integrated validation checks, TaxBuddy significantly reduces the chances of errors in your return. This is particularly important for NRIs, as misreporting foreign income or TDS can lead to notices from the Income Tax Department. The platform ensures all computations are precise and aligned with the latest tax rules, giving peace of mind.
Refund Tracking TaxBuddy allows NRIs to monitor TDS deductions and track refunds efficiently. Users receive real-time updates on refund processing status, enabling faster reconciliation of taxes and reducing delays that may occur due to mismatched credits or incomplete submissions.
Expert Support For complex cases such as capital gains from overseas investments, property income in India, or dual taxation issues, TaxBuddy offers access to expert professionals. These experts provide guidance on deductions, exemptions, and compliance, ensuring that your tax filing remains accurate and optimized.
E-Verification The platform integrates secure online verification, enabling NRIs to complete the e-verification process seamlessly. This ensures that returns are authenticated without the need for physical documentation, saving time and effort while maintaining full compliance with the Income Tax Act.
Common Deductions and Exemptions for NRIs
Non-Resident Indians (NRIs) are subject to Indian income tax on income earned or accrued in India. To optimize their tax liability, NRIs can avail several deductions and exemptions under the Income Tax Act. These provisions are designed to reduce taxable income legally and ensure efficient tax planning. Understanding each of these deductions helps NRIs claim their rightful benefits and process refunds smoothly.
Section 80C Deductions NRIs can claim deductions under Section 80C for investments in specified savings instruments and life insurance premiums. Eligible options may include Employee Provident Fund (EPF), Public Provident Fund (PPF) in certain cases, National Savings Certificates (NSC), and life insurance premiums. The overall deduction limit under Section 80C is ₹1,50,000 per financial year. Investing strategically in these instruments allows NRIs to reduce taxable income while simultaneously building long-term savings and financial security.
Section 80D – Health Insurance Premiums Premiums paid for health insurance policies are eligible for deductions under Section 80D. NRIs can claim deductions for premiums paid for themselves, their family, and parents (dependent or senior citizens). The deduction limits vary depending on the age of the insured: up to ₹25,000 for self and family, and an additional ₹25,000 for parents. For senior citizen parents, this limit increases to ₹50,000. Proper documentation of premium payments is essential for claiming these benefits.
Section 80E – Educational Loan Interest Interest paid on loans taken for higher education qualifies for deduction under Section 80E. This benefit applies to both self-education and education for children, covering courses pursued in India or abroad, as long as the loan is from an approved financial institution. Notably, there is no upper limit on the interest deduction, and it can be claimed for up to eight years or until the loan is fully repaid, whichever is earlier.
Deductions Related to House Property NRIs owning property in India can claim deductions under two key categories:
Standard Deduction: NRIs earning rental income from property in India can claim a standard deduction of 30% of the annual rental income for maintenance and repairs.
Home Loan Interest: Interest paid on home loans for properties in India is deductible up to ₹2,00,000 per year for self-occupied properties under Section 24(b). For let-out or rented properties, there is no limit on interest deduction, but the overall loss that can be set off against other income is capped at ₹2,00,000 for self-occupied properties.
Efficient Tax Planning for NRIs Applying these deductions accurately allows NRIs to minimize their taxable income in India and claim refunds efficiently. Combining 80C, 80D, 80E, and housing-related deductions can lead to substantial tax savings. Additionally, using proper documentation and filing returns timely ensures compliance with Indian tax laws while maximizing benefits.
Is Income from Abroad Taxable in India?
For NRIs, income earned outside India is generally not taxable in India. This includes foreign salary, dividends from overseas companies, and interest on foreign bank accounts. However, if income is received or deemed to accrue in India, or if the NRI opts for the residential status differently in special cases, it may become taxable. Proper classification of income sources is essential to avoid unnecessary tax payments and ensure compliance with Indian tax laws.
Reporting Capital Gains and Investments as an NRI
NRIs must report capital gains from the sale of Indian assets, such as property, mutual funds, or stocks. Short-term and long-term capital gains are taxed differently, and TDS may apply at the time of sale. Investments in shares or mutual funds under the NRI account are also subject to disclosure in the ITR. TaxBuddy provides automated calculations, ensuring correct categorization of gains, deduction of applicable taxes, and proper reflection in the return.
Claiming Refunds and TDS Adjustments for NRIs
If TDS on Indian income exceeds actual tax liability, NRIs can claim refunds during ITR filing. Platforms like TaxBuddy automatically match TDS details from Form 26AS, calculate eligible refunds, and help submit corrected returns if discrepancies occur. This simplifies the refund process, minimizes delays, and ensures accurate reconciliation with the Income Tax Department.
How to E-Verify NRI Tax Returns
E-verification is an essential step in the online filing process of Income Tax Returns (ITR) for Non-Resident Indians (NRIs). Submitting the ITR alone does not complete the filing process; it must be verified to make it legally valid. E-verification acts as a digital signature, confirming the authenticity of the filed return and authorizing the Income Tax Department to process it. For NRIs, completing e-verification is particularly important, as physical submission of documents from abroad can be cumbersome and time-consuming.
NRIs have several convenient options to complete e-verification:
Aadhaar OTP: If the NRI’s Aadhaar is linked to their PAN, they can generate a One-Time Password (OTP) to verify the return instantly. The OTP is sent to the mobile number registered with Aadhaar.
Net Banking: Most banks provide the facility to e-verify ITR directly through net banking. The taxpayer can log in to their bank account and complete e-verification in a few simple clicks.
Demat Account or Bank Account OTP: OTP-based verification can also be done using a Demat account or a registered bank account. The system sends an OTP to the registered mobile number linked to the account for secure verification.
Through TaxBuddy: NRIs can simplify the entire process by using the TaxBuddy platform. TaxBuddy allows instant online e-verification without the need to send a signed ITR-V physically to the Income Tax Department. This ensures faster processing of the return, legal acceptance of the ITR, and quicker initiation of refunds where applicable.
E-verification is a critical step to ensure that the submitted return is recognized legally. Without verification, the ITR is considered incomplete, and refunds or adjustments may be delayed. Using digital methods such as OTPs, net banking, or platforms like TaxBuddy streamlines the process, making it secure, quick, and accessible from anywhere in the world.
Tips for Accurate Filing and Avoiding Errors
Filing Income Tax Returns (ITR) accurately is critical for NRIs to avoid penalties, interest, or notices from the Income Tax Department. Ensuring all details are correct helps in smooth processing of refunds and prevents unnecessary scrutiny. Here are some essential practices NRIs can follow to ensure error-free filing:
Verify PAN Details and Bank Account Numbers Carefully Before starting the filing process, make sure that your PAN, name, and bank account details are correct and consistent with official documents. Any mismatch can delay refund processing or trigger verification notices from the Income Tax Department.
Cross-Check TDS Entries in Form 26AS Form 26AS provides a consolidated record of tax deducted at source (TDS), advance tax, and self-assessment tax paid. NRIs must carefully verify that all TDS entries reported by employers, banks, and other deductors match their records. Discrepancies in TDS entries are one of the most common reasons for delays or notices.
Report Only Indian-Sourced Income NRIs are required to report income earned or received in India. This includes salary, rental income, interest, and capital gains from Indian assets. Foreign-sourced income should not be included in the Indian ITR unless it is taxable under a double taxation avoidance agreement.
Correctly Claim Eligible Deductions and Exemptions NRIs can claim deductions such as those under Section 80C, 80D, or 80TTA, and exemptions like income from NRE accounts, as per the Income Tax Act. Careful attention should be paid to claiming deductions accurately, as errors here may lead to reduced refunds or notices.
Use Reliable Platforms Like TaxBuddy Automated platforms like TaxBuddy help reduce manual errors by accurately calculating taxable income, deductions, and TDS. TaxBuddy also assists in filing returns online and verifying all entries before submission, ensuring a seamless and error-free filing experience.
By following these practices, NRIs can significantly reduce mistakes, speed up refund processing, and ensure compliance with Indian tax regulations.
Conclusion
Filing income tax returns as an NRI can be complex due to foreign income considerations, TDS adjustments, and capital gains reporting. Using digital solutions like TaxBuddy simplifies the process, ensures compliance, and minimises errors. For anyone looking for assistance in tax filing, it is highly recommended todownload the TaxBuddy mobile app for a simplified, secure, and hassle-free experience.
FAQs
Q1. Does TaxBuddy offer both self-filing and expert-assisted plans for ITR filing, or only expert-assisted options?
TaxBuddy provides flexible options for taxpayers. Users can choose between self-filing plans, where the platform guides them step by step, or expert-assisted plans, where professional tax experts handle the filing. Both options ensure accuracy, compliance, and timely submission, with the expert-assisted plan ideal for complex cases like foreign income, capital gains, or high-value investments.
Q2. Which is the best site to file ITR?
For NRIs and other taxpayers, TaxBuddy is a reliable platform offering a seamless, secure, and AI-driven filing experience. It simplifies uploading Form 16, pre-fills relevant details, checks for errors, and supports both self-filing and expert-assisted filing. Its mobile app ensures convenient access anytime, unlike traditional government portals which may require manual navigation.
Q3. Where to file an income tax return?
Income tax returns can be filed online through official platforms like the Income Tax Department’s e-filing portal or via professional platforms such as TaxBuddy, which offer guided, error-free filing. Filing online ensures faster processing, immediate acknowledgement, and the ability to e-verify returns without visiting the tax office.
Q4. Can NRIs report foreign income in India?
Yes, NRIs must report global income if it is taxable in India. Income from foreign sources, like salaries, interest, dividends, or rental income, must be declared in the appropriate ITR form. Using JSON utilities or platforms like TaxBuddy ensures that foreign income is correctly reported and taxed according to applicable laws.
Q5. How are capital gains from property in India taxed for NRIs?
Capital gains from the sale of property in India are taxable for NRIs. Short-term gains are added to the total income and taxed at the applicable slab rate, while long-term gains (on property held for more than 24 months) are taxed at 20% with indexation benefits. Proper reporting in ITR using JSON files or online platforms ensures accurate TDS adjustment and compliance.
Q6. Are deductions under Section 80C available for NRIs?
Yes, NRIs can claim deductions under Section 80C for eligible investments like Life Insurance premiums, ELSS, PPF (if eligible), and principal repayment on housing loans in India. Filing through utilities or platforms like TaxBuddy ensures these deductions are captured correctly and reduce taxable income.
Q7. How can NRIs track TDS and claim refunds?
NRIs can track TDS credits using Form 26AS available on the Income Tax Department portal. Any excess TDS can be claimed as a refund by filing ITR online using JSON files or platforms like TaxBuddy. Accurate matching of TDS entries ensures refunds are processed quickly without discrepancies.
Q8. What are the ITR forms applicable for NRIs?
NRIs generally use ITR-2 if they have income from salary, property, or capital gains. ITR-3 may be required for business or professional income. Choosing the correct ITR form is critical, and using utilities or TaxBuddy simplifies form selection and ensures compliance with reporting requirements.
Q9. Can NRIs e-verify their returns without visiting India?
Yes, NRIs can e-verify returns using Aadhaar OTP (if linked), net banking, or electronic verification through authorised channels. Platforms like TaxBuddy support complete remote filing and e-verification, making it easier for NRIs to submit returns without visiting India.
Q10. Is income from NRE/NRO accounts taxable in India?
Interest from NRE accounts is tax-free in India, while interest earned in NRO accounts is taxable. Proper reporting in the ITR is necessary to avoid penalties. JSON utilities and professional platforms like TaxBuddy help correctly declare such incomes and calculate taxes.
Q11. How to report investments in Indian mutual funds as an NRI?
NRIs must report income from dividends and capital gains from Indian mutual funds in their ITR. The gains are taxed according to holding period and fund type. Using JSON files or TaxBuddy ensures precise reporting of mutual fund investments, including TDS adjustments and foreign remittance details if applicable.
Q12. What happens if an NRI misses the ITR filing deadline?
If an NRI misses the deadline, a belated return can be filed up to December 31, 2025, for FY 2024-25. Late filing attracts penalties and interest on unpaid taxes and delays refunds. Platforms like TaxBuddy simplify belated return filing while ensuring compliance and minimising additional charges.
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