Filing ITR from Abroad? Here’s What Resident Taxpayers and NRIs Should Know About Accessing the Income Tax Website
Income tax in India serves as one of the most integral pillars of national revenue. Income tax is used to fund essential services such as infrastructure, education, healthcare, defence and welfare schemes aimed at reducing inequality between the masses.
Historically, even Non-Resident Indians (NRIs) were not exempt from their income tax obligations under the Income Tax Act of 1961. During earlier times, NRIs often had to rely on representatives or agents in India to file returns on their behalf. Physical submission of forms, reliance on postal correspondence, and coordination with chartered accountants through lengthy email or phone exchanges was the norm, and there was no work around to it.
However, with the advent of technology, governments have created dedicated websites to ease citizen services; filing an income tax return (ITR) from any part of the world has become more accessible and streamlined, both for residents temporarily abroad and for NRIs with income sourced from India.
But, clarity on procedures, documents, and eligibility remains essential, particularly in determining one’s residential status and accessing DTAA benefits.
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The first step towards filing is to determine the residential status of the concerned individual under the Income Tax Act, 1961.
For Indian residents who happen to be abroad during the tax filing season, say on vacation, business, or temporary relocation, their tax obligations remain unchanged. As long as they satisfy the criteria of being in India for at least 182 days during the financial year, they are considered “residents” for tax purposes.
This means they are liable to pay tax on their global income and must file their returns by the due date, just as they would if they were physically present in India.
Alternatively, individuals who had stayed in India for less than 182 days during the financial year, are categorised as a Non-Resident Indian (NRI). Additionally, a third classification is also present- Resident but Not Ordinarily Resident (RNOR) which is applicable to individuals who have not been a resident in nine out of the preceding ten financial years or have spent less than 729 days in India in the past seven financial years.
Both NRIs and RNORs are liable to pay tax only on the income earned or accrued in India.
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Understanding the nature of taxable income is equally important. The following are income types typically encountered by NRIs and residents alike:
Income from House Property: Rent received from property situated in India is taxable, regardless of the taxpayer’s place of domicile.
Capital Gains: Profits gained from the sale of immovable property such as equity shares or mutual funds in India are subject to capital gains tax in India.
Interest Income: Interest earned on fixed deposits, savings accounts, or bonds held with Indian banks is taxable, although it may be noted that interest accrued from Non-Resident External (NRE) and Foreign Currency Non-Resident (FCNR) accounts in India is exempt from Income tax for NRIs.
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Business Income: Any income generated from a business operation that is based in India is subject to income tax, regardless of whether the person is residing abroad.
Each category requires appropriate reporting in the Income Tax Return (ITR) and must be supported by requisite documentation.
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Both residents filing from abroad and NRIs must begin with collecting all necessary documents:
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Filing an ITR while abroad involves a few systematic steps on the e-filing portal maintained by the Indian Income Tax Department at www.incometax.gov.in:
Begin by logging into the portal using your PAN (or Aadhaar, if applicable) and password. New users shall be required to register first. After verification of personal details on the dashboard, users shall be able to select the relevant assessment year and choose to proceed with online filing.
Form ITR-2 may be selected by salaried individuals and capital gains, while Form ITR-3 may be chosen by those with business income. Note that ITR-1 is no longer available for NRIs.
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Fill in the required sections: income from various sources, applicable deductions under sections such as 80C (investments), 80D (health insurance), and 80G (donations), and mention exempt income like interest on FCNR and NRE accounts.
Proceed to cross-verify your entered details with Form 26AS to ensure that TDS amounts and income information match with each other. Any inconsistencies in the information can delay processing and refunds, if any.
Another point of contention is to properly assess and apply provisions of any applicable Double Taxation Avoidance Agreement (DTAA) that may have been entered into between India and the country of residence of the non-resident taxpayer. For NRIs eligible for benefits under a DTAA, these should be appropriately claimed with the relevant disclosures.
After computing the final tax liability, online payment can be made through Internet banking, UPI, credit or debit card. A challan will be generated which you can retain for your records.
The last step in the process is verification which may be done using an Aadhaar OTP or Electronic Verification Code (EVC). In the instance that online verification is not possible. If online verification is not possible, taxpayers may send a signed hard copy of the ITR-V to the Central Processing Centre (CPC) in Bengaluru which shall undertake the necessary steps for verification.
The deadline for filing income tax returns for both residents and NRIs is July 31st of the assessment year. Failure to file within this deadline can attract penalties under Section 234F, which start from ₹1,000 and scale up to ₹5,000, depending upon the taxpayer’s level of income.
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In addition to financial penalties, late filing may result in delayed refunds and loss of certain exemptions or deductions.
For cases involving gross underreporting or significant concealment of income, penalties may escalate to 50-200% of the tax amount. In certain instances, the Income Tax Department may even initiate criminal prosecution and related legal proceedings against the arraigned taxpayer.
The Income Tax Bill, 2025 was tabled in the Lok Sabha and seeks to bring forth a modernised tax framework by replacing the decades-old Income Tax Act, 1961. It maintains the current tax rates and regimes but proposes simplification in language and removal of outdated provisions.
Some of the key new inclusions proposed through the Income Tax Bill, 2025
Expanded Scope of Undisclosed Income: Now includes virtual digital assets such as cryptocurrency, Non-fungible Tokens (NFTs), or any cryptographically generated tokens. Taxpayers, including NRIs who may hold or trade in such assets shall need to ascertain the taxability of such assets..
Virtual Digital Space Access: Tax authorities may now access digital assets and accounts during search and seizure operations.
Empowered Central Government: The bill enables the government to introduce new schemes focused on transparency, efficiency, and reduced human interaction through technology.
Dispute Resolution Panel Reforms: The scope and authority of the panel have been broadened, paving way for a more structured and reasoned approach in assessment disputes.
Interpretation of Tax Treaties: Where definitions are not found in tax treaties or the Act, the meaning may be interpreted through other central laws, providing a foundation to ensure consistency and clarity in cross-border taxation matters.
Given the evolving tax landscape, especially with the Income Tax Bill, 2025 expected to come into force from early 2026, both residents and NRIs would do well to remain vigilant and proactive.
Most importantly, it is highly recommended to consult a tax professional or chartered accountant well-versed in international taxation and DTAAs for NRIs to navigate tax liabilities without any pitfalls, secure due exemptions while ensuring compliance in a regional and global financial environment that is evolving rapidly.
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