Filing Income Tax Return, a smart move for NRIs

Here we look at why NRIs should take a closer look at the 2024–25 ITR filing requirements and deadlines.

We begin by pointing out that you are not legally obligated to file an ITR if your only income is your salary abroad, and you do not earn anything in India. Nevertheless,, you may be required, or even benefit financially, by filing an ITR if any of the following conditions are applicable to you::

• You earn rent from property in India
• You receive interest on an Non-Resident Ordinary (NRO) account in an Indian bank
• You made capital gains from selling property, stocks, or mutual funds
• You are due a refund for Tax Deducted at Source (TDS)
• You want to carry forward investment losses
• You own unlisted shares or are a director in an Indian company
• You have spent enough days in India to be classified as a tax resident
  
  Mandatory ITR filing rule: If your total Indian income annually exceeds ₹2.5 lakh, filing an ITR is mandatory Even below that threshold, any capital gains— regardless of amount— can trigger filing requirements.

What is not, and what is, taxable in India:

• The following are not taxable in India:
• Salary earned abroad
• Interest from Non Resident External (NRE) account or Foreign Currency Non-Resident (FCNR) bank accounts
• Funds remitted to India from abroad
• However, the following are taxable in India:
• Rental income from property in India
• Interest on NRO accounts
• Capital gains from selling Indian assets (property, gold, shares)
• Income from freelance work or business in India.
• Progressive tax slab system by which NRIs are taxed in India: system:
• Indian income between ₹2.5 lakh–₹5 lakh— 5 percent
• Between ₹5 lakh and ₹10 lakh—20 percent
• Above ₹10 lakh—30 percent

Capital Gains Tax: Long-term gains (property/shares held for over 2–3 years): are taxable at the rate of 10–20 percent. On the other hand, short-term gains from resources held less than two years are taxable at 15–30 percent. It is important to note that NRIs are not eligible for the ₹2.5 lakh exemption on capital gains. Even minor gains can attract tax.

Benefits of filing an ITR: Filing an ITR, even if you have no income or earn nothing in India is beneficial as filing a ‘nil return’:

• Maintains a clean tax history
• Supports future home loan applications in India
• Helps with remittances or investments
• Enables carrying forward of past losses
• Ensures smooth re-entry into the Indian financial system when you return
• Think of filing an ITR as a financial safeguard. It is like renewing your passport; it may not be urgent every time but it is important in the long term
• The deadline for NRIs to file ITR for financial year 2024-2025—for most NRIs whose income does not require an audit—is 15 September 2025
• For cases involving audits or transfer pricing, later deadlines apply, but do not count on extensions.

A quick guide on how to file an ITR from abroad: To file your ITR you do not have to visit India or hire a tax consultant. Just follow the steps outlined below online at the Income Tax portal:

• Visit incometax.gov.in
• Log in using your PAN
• Click on ‘File Income Tax Return’
• Use the tool to choose the correct ITR form
• Verify and review pre-filled data
• Pay any tax due
• Submit and e-verify using Aadhaar OTP, NetBanking, or Indian bank account
• If e-verification is not possible, print and post the ITR-V form to CPC Bengaluru.

Also, do not overlook TDS deductions If taxes have been deducted at source on rent, mutual fund income, or dividends, you could be owed a refund. Filing is the only way to claim it back.

Checklist for NRIs abroad on their tax status:

• Do you earn over ₹2.5 lakh in India?
• Did you sell property, stocks, or mutual funds?
• Are you due a tax refund?
• Do you want to carry forward losses?
• Planning a loan on return to India?

If you answered ‘yes’ to any of the above questions, filing an ITR is strongly advised.

For NRIs, filing an Indian tax return is not just about compliance, it is about making a smart financial move. Whether you are investing in India, managing property, or simply preparing for the future, an ITR filing keeps your financial house in order.

Remember the tax adage: ‘Better to file and forget, than skip and regret’.