With the government notifying all the seven ITR Forms for the Assessment Year 2025-26, the tax filing season has finally begun. Individuals and businesses declare their income, deductions and tax liabilities to the government through filing of income tax return (ITR). Every year, the Central Board of Direct Taxes (CBDT) notifies ITR forms and update online and offline utilities, accommodating changes in tax guidelines and provisions to facilitate smooth and hassle-free return filing by individuals and entities.
The filing of ITR is mandatory for all citizens and entities who fall under the income tax jurisdiction of India.
According to income tax laws, all individuals who are earning an income in India must pay tax as per their applicable tax rate. What about NRIs (non-resident Indians) – do they also need to pay income tax? Let’s understand this in detail.
Yes, NRIs too have to file ITR in certain situations. In this write-up, we will discuss under what conditions NRIs need to pay tax and file ITR in India. But before moving further, let’s understand who is an NRI as per Income Tax Department.
Also read: Govt to extend ITR filing deadline this year beyond July 31? Here’s what experts feel
Who is an NRI?
An individual is treated as an NRI in any previous year if he/she satisfies any of the following conditions:
-If resides abroad for a period of 182 days, or more during the previous year or
-If the individual lives outside of India for a period of 60 days or more during the previous year and 365 days or more during 4 years immediately preceding the previous year.
NRIs are allowed to invest in various financial instruments and real estate in the country. The only exception is they cannot invest in agricultural or plantation property or a farmhouse. Since they are allowed to purchase property and invest in other financial instruments, they are also liable to pay taxes like those living in the country. But if they do not have any earning or an income within the basic exemption limit from India, they are not liable to file an ITR. The basic exemption limit under the Old Tax Regime is Rs 2.5 lakh for those below 60 years of age and Rs 3 lakh for senior citizens. While under the New Tax Regime, the basic exemption limit for FY 2024-25 is Rs 3 lakh. In the latest Budget, however, this limit has been enhanced to Rs 4 lakh.
Voluntary filing is permitted even with income within basic exemption limit
While NRIs with no income generated or earning within the basic exemption limit in India are generally exempt from mandatory ITR filing, they can still file tax returns if they want. ITR filing helps NRIs in certain situations like it is helpful when they apply for visas or take loans from banks as they can show ITR as a proof.
The income-tax filing obligations for NRIs for the Assessment Year 2025–26 are governed by the provisions of the Income Tax Act, 1961, (hereinafter referred to as ‘the IT Act’). NRIs are taxed only on income that is received or deemed to be received in India, or that accrues or arises or is deemed to accrue or arise in India. Income accruing or arising outside India by an NRI is not taxable in India unless it is derived from a business controlled in or a profession set up in India.
Also read: Income Tax Return 2025: How to file ITR without Form 16? Check out THESE easy alternative documents
Income Tax Slabs and Tax Rates under Old Tax Regime for NRIs for AY 2025-26
Up to Rs 2.5 lakh – Nil
Rs 2.5 lakh to Rs 5 lakh – 5%
Rs 5 lakh to Rs 10 lakh – 20%
Above Rs 10 lakh – 30%
Income Tax Slabs and Tax Rates under New Tax Regime for NRIs for AY 2025-26
Up to Rs 3 lakh – Nil
Rs 3 lakh to Rs 7 lakh – 5%
Rs 7 lakh to Rs 10 lakh – 10%
Rs 10 lakh to Rs 12 lakh – 15%
Rs 12 lakh to Rs 15 lakh – 20%
Above Rs 15 lakh – 30%
Special Optional Tax Regime for NRIs under Chapter XII-A of the IT Act
Chapter XII-A of the IT Act provides for an optional tax regime wherein the income derived from certain specified foreign exchange (‘FOREX’) assets would be taxed at special rates subject to certain restrictions on availing certain deductions and tax benefits.
“In accordance with the provisions of the said Chapter, every NRI could elect to be taxed as per the said optional tax regime wherein any long term capital gain would be taxed @ 10% (enhanced to 12,5% w.e.f. 23rd July 2024) whereas investment income would be taxed @ 20% provided the same is derived from any of the specified foreign exchange assets such as shares of Indian company, debentures and deposits with Indian public company, securities of Central Government, etc. However, any NRI availing the special tax regime under this Chapter would be subject to restrictions on availing certain deductions and exemptions against income taxed under such special tax regime. Any other income derived by such non-resident would be subject to normal rate of tax,” according to CA (Dr.) Suresh Surana.
Exemption from filing income tax return
In accordance with section 115A of the IT Act, a non-resident whose total income includes income in the nature of dividend, interest, royalty or Fees for Technical Services (FTS) is not required to furnish income tax return in India provided taxes have been withheld on such income at the rates prescribed under section 115A of the IT Act, Surana explains.
“Such exemption would also be available to NRIs opting for the special tax regime as aforementioned. However, such exemption does not apply if the NRI wishes to claim a refund or has any income arising from capital gains, rental income, or any other taxable source,” says Surana.
Also read: ITR Filing 2025: Key changes in capital gains reporting and disclosure norms you must know
Applicable ITR forms
The choice of return form is based on the nature of income as mentioned below:
ITR-2: This return is applicable for Individual (whether Resident or Non-Resident) and Hindu Undivided Family (HUF) not having income under the head Profits and Gains of Business or Profession.
ITR-3: This return is applicable for Individual (whether Resident or Non-Resident) and Hindu Undivided Family (HUF) having Income under the head Profits and Gains of Business or Profession.
Thus, NRIs having income from salary, rental property, capital gains, or other sources (excluding business or professional income) are required to file ITR-2. Where the NRI earns income from business or profession in India, ITR-3 shall be applicable. It is important to note that ITR-1 (Sahaj) is not available for NRIs, even if their income falls within the eligible heads.
All returns must be filed electronically on the Income Tax e-filing portal. Verification must be completed through an Electronic Verification Code (EVC) or by using a valid Digital Signature Certificate (DSC), depending on the nature of the return and the taxpayer’s profile. For NRIs not subject to tax audit, the due date for filing the return for AY 2025–26 is 31st July 2025.
Procedure for filing ITR by NRIs for AY2025–26
Determine Residential Status: The initial step is to ascertain the residential status under section 6 of their Act. An individual is generally treated as a non-resident if they were present in India for less than 182 days during the relevant financial year or less than 60 days (along with cumulative stay of less than 365 days in the preceding 4 years), subject to exceptions.
Gather Relevant Documentation: Ensure the availability of the following key documents and information such as PAN and passport, Visa and overseas residential status proof (if applicable), details of NRO, NRE bank accounts, Form 26AS/ Annual Information Statement (AIS)/ Tax Information Statement (TIS) reflecting tax deducted at source (TDS), TDS certificates and proofs of income (interest, rent, dividends, etc.), supporting documentation for any eligible deductions or exemptions etc.
Select the Appropriate ITR Form: Based on the nature of income, select the applicable return form as aforementioned.
Access and Login to the e-Filing Portal: Visit the Income Tax department’s e-filing portal and log in using your PAN (as User ID) and password.
Complete the Return Filing Process: Enter accurate details under various heads such as personal particulars and address, residential status, income details (rental income, capital gains, interest, etc.), deductions claimed, Bank account details for refund credit (if any) etc.
Verify and Submit the Return: After reviewing the draft return for accuracy, submit the return electronically and e-verify the return within 30 days of submission as failure to e-verify may render the return as invalid.