Income tax returns in India are an annual activity for most, including Non-Resident Indians (NRIs) who have income from Indian sources. The Income Tax Department has issued seven ITR (Income Tax Return) forms for the financial year 2024–25, but just two of them are applicable to NRIs.
The form you must employ primarily depends on the nature of the income you receive. Residents with uncomplicated income sources can avail themselves of filing using ITR-1 (Sahaj), but NRIs cannot file through ITR-1, though their income can be uncomplicated and straightforward.
Which ITR Forms Can Be Used by NRIs?
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Most NRIs will have to opt between ITR-2 and ITR-3.
Fill ITR-2 if you are an NRI with income from salary, house property (such as rent), capital gains (such as from selling property or shares), or income from other sources such as interest or dividends. The form is acceptable, provided that you do not have income from a business or profession in India.
Use ITR-3 if you are receiving income through a business or profession conducted in India whether you are self-employed or a freelancer providing services from outside India but billing customers in India.
Step-by-Step Guide to File ITR as an NRI
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There are a few things you have to do before you can file your return.
Decide Your Residential Status
This is the most crucial first step. According to Section 6 of the Income Tax Act, you will be deemed a non-resident if you have stayed for less than 182 days in India in the financial year or if you have stayed for less than 60 days in India in the financial year and less than 365 days in the last four years. There are exceptions depending on citizenship status and source of income, but this is the general principle.
Collect All Documents Required
NRIs must have crucial documents at hand before submitting them. These are their PAN card and passport, visa and any foreign residential evidence if necessary, and information of their NRE and NRO bank accounts. They must also download Form 26AS, the Annual Information Statement (AIS), and the Tax Information Statement (TIS), which reflect information regarding tax withheld throughout the year. Also, bank or tenant TDS certificates must be obtained. Rent receipts, interest certificates, or dividend statements should be handy for proper reporting of income. Finally, if deductions are to be claimed, documents like LIC premium receipts or tuition fees paid have to be ready.
Choose the Right ITR Form
Depending on your income category, select ITR-2 or ITR-3. Filing with an incorrect form may result in rejection or processing delay of your return.
Login to the Income Tax Portal
Visit (http://www.incometax.gov.in) and log in with your PAN as the user ID. If you are filing for the first time or have forgotten your password, you can reset the password.
Complete and Submit Your Return
Enter your personal details, income figures, deductions, and bank details. Double-check all the figures with the documents in hand. If you're eligible for a refund, ensure your bank account is pre-validated on the portal.
E-Verify Your Return
After filing, e-verification is mandatory. You can do so through Aadhaar OTP, net banking, or by posting a signed ITR-V form. Do this within 30 days of filing. Your return will not be processed without verification.
Tax filing as an NRI might appear complex, but it's easy if you read the steps diligently. Being aware of your sources of income and choosing the correct form is the key to achieving hassle-free filing.
