NRI tax filing in India: what you need to know

NRIs are taxed in India only on income that arises in India or is received there. Common India-sourced income includes NRO FD interest, rental income from Indian property, capital gains from Indian shares or mutual funds, and dividends from Indian companies. NRE FD interest is generally exempt from Indian income tax for eligible non-residents.

TDS is deducted automatically before income reaches NRIs. Banks deduct TDS on NRO FD interest at up to 30% plus surcharge. If your actual Indian tax liability is lower — because your income is below the exemption limit or because a DTAA treaty reduces your rate — you can claim the excess TDS as a refund by filing an income tax return.

A Double Taxation Avoidance Agreement (DTAA) between India and your country of residence can reduce the applicable Indian tax rate on specific income types. To use DTAA relief, you typically need a Tax Residency Certificate (TRC) from your country of residence and a self-declaration to the bank or payer before the financial year ends.

Advance tax applies to NRIs with Indian income above ₹10,000 in a year. It is paid in four instalments: 15 June, 15 September, 15 December and 15 March. Failing to pay advance tax on time attracts interest under Sections 234B and 234C.

Worked example: NRI in the UK with NRO interest

Suppose you are an Indian citizen living in the UK. During the Indian financial year 2024–25, your NRO fixed deposit earned ₹1,20,000 in interest. The bank deducted TDS at 30%, withholding ₹36,000. Your NRE FD earned ₹80,000 in interest, which is exempt and carries no TDS.

Under the India-UK DTAA, the rate on interest paid to a UK resident is capped at 15% instead of 30%. If you had provided a UK Tax Residency Certificate and Form 10F to the bank before the interest was credited, the bank would have deducted only ₹18,000 — saving ₹18,000 immediately. Since TDS was already deducted at 30%, you need to file an ITR-2 to claim back the ₹18,000 difference as a refund.

Your total India income is ₹1,20,000 (NRO interest only — NRE is exempt). This is below the basic exemption limit of ₹2,50,000 for FY 2024–25. Filing an ITR-2 claiming the full ₹36,000 TDS as a refund is therefore valid, subject to verification. In the UK, the same ₹1,20,000 must also be declared on your HMRC Self Assessment return, but you can claim the Indian TDS paid as a foreign tax credit.

Common mistakes NRIs make with Indian taxes

Not filing at all because TDS was deducted: TDS is withholding, not final tax. Filing an ITR is still required if total India income exceeds the basic exemption limit — and it is the only way to claim a TDS refund.

Missing the 31 July deadline: a belated return can be filed up to 31 December of the assessment year, but carries late-filing fees under Section 234F and forfeits certain loss carry-forward rights.

Ignoring advance tax: if total Indian tax liability exceeds ₹10,000, advance tax instalments are due across the year. Missing them triggers interest under Sections 234B and 234C, even if you pay all tax by filing time.

Not submitting a Tax Residency Certificate before interest is paid: to claim a reduced DTAA rate on NRO interest, the TRC and Form 10F must reach the bank before the interest is credited. Submitting them after means claiming a refund via ITR.

Using the wrong ITR form: NRIs typically use ITR-2 (no business income) or ITR-3 (business income). Using ITR-1, which is for residents with simpler income, is not permitted for non-residents.

When to get professional help

Consult a Chartered Accountant with NRI experience when you own Indian property being sold, have received an inheritance, have total India income above ₹50 lakh, are returning to India and need RNOR planning, need to claim DTAA relief across two countries, or have not filed for two or more years.

Official sources

• Income Tax Department: Non-Resident FAQ
• Income Tax Department: Tax Payments and Advance Tax
• Income Tax Department: TDS Compliance

Frequently asked questions

Do NRIs have to file an income tax return in India?

NRIs must file an Indian income tax return if their India-sourced income exceeds the basic exemption limit. Common India-sourced income includes rent, NRO FD interest, capital gains from property or mutual funds, and dividends. NRE FD interest is generally exempt for eligible non-residents.

What is the ITR filing deadline for NRIs?

The standard ITR filing deadline is 31 July of the assessment year for most individuals including NRIs, unless extended by the government. Always confirm the current year deadline on the Income Tax India portal or with a CA.

What is TDS and can NRIs claim a refund?

Tax Deducted at Source is tax deducted by banks or payers before crediting income to an NRI. If your total India income is below the taxable threshold, or if DTAA reduces your liability, you can claim a TDS refund by filing an ITR.