Income Tax Filing Checklist for NRIs: What You Must Know Before Filing in India

Filing income tax returns in India can feel complicated for Non-Resident Indians, especially with the changing tax rules and reporting requirements. However, with proper planning, you can file accurately while avoiding unnecessary notices and penalties. Here is a clear and practical guide on what NRIs must know before filing their income tax returns in India for the financial year 2024 to 2025.

Who is considered an NRI for tax purposes?

Before you begin your tax filing, you must confirm your residential status. Your taxability in India depends on whether you qualify as a Non-Resident Indian under Indian tax laws.

You will be considered an NRI if:

• You stayed in India for less than 182 days during the financial year and
• You stayed in India for less than 60 days in that financial year and less than 365 days during the four preceding financial years.

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There are exceptions for Indian citizens and Persons of Indian Origin visiting India. If you earn more than 15 lakh rupees from Indian sources and are not liable to tax in any other country, you may be treated as a Resident but Not Ordinarily Resident (RNOR).

Checking your residency status before filing will help you determine what income needs to be reported and taxed in India.

Documents required for NRI tax filing

Having your documents ready will make your filing process easier. Here is a list of documents NRIs should keep ready:

• PAN card and a valid visa or overseas residency proof.
• Bank statements for your NRE, NRO, and savings accounts from April 2024 to March 2025.
• Interest certificates, capital gains statements, and dividend statements.
• Investment proofs under Sections 80C, 80D, 80G, and others if you plan to claim deductions.
• Tax Residency Certificate (TRC) from your country of residence and Form 10F if you want to claim benefits under the Double Taxation Avoidance Agreement.
• Form 16 if you have salary income in India.

Having these documents ready will help you report your income accurately and avoid delays during filing.

Things NRIs need to keep in mind while filing

1. Reporting of NRE and FCNR interest: Interest earned on NRE and FCNR deposits is tax-free in India for NRIs, but you still need to report this income in your tax return.
2. Correct ITR Form: NRIs should use the ITR-2 form for filing returns. The ITR-1 form cannot be used by NRIs.
3. Aadhaar-PAN linking and bank account validation: Link your Aadhaar with your PAN if you are required to under Indian laws. Validate your bank account on the income tax portal to ensure the timely processing of refunds.
4. Dividend income reporting: Dividend income is taxable at a flat rate of 20 percent under Section 115A unless a lower rate is available under the applicable DTAA.
5. Section 87A rebate is not allowed for NRIs: NRIs are not eligible for the rebate under Section 87A, even if their income is below the taxable threshold.

Common mistakes NRIs should avoid

Not reporting income with TDS

Many NRIs assume that if tax has already been deducted at source on their income in India, they do not need to report it in their tax returns. This is incorrect. You must report all Indian income, even if TDS has been deducted.

Ignoring errors in AIS or TIS

The Annual Information Statement and Taxpayer Information Summary on the income tax portal show details of your income, TDS, and transactions. If there are errors, you must raise a disagreement and get them corrected before filing.

Non-disclosure of foreign assets

If your income in India exceeds 50 lakh rupees, you must disclose your foreign assets and liabilities in your tax return. Missing this disclosure can lead to penalties.

Incorrect email or mobile number

Always provide your correct email address and mobile number linked with your PAN on the income tax portal for receiving updates and notices.

Deemed residency rule for NRIs

As per Indian tax laws, if you are an Indian citizen and earn more than 15 lakh rupees from Indian sources and are not liable to pay tax in any other country, you will be treated as a resident in India under the deemed residency rule. This means your global income may become taxable in India, so you need to carefully assess your tax liability.

Tips to make your NRI tax filing smoother

• Review your Form 26AS, AIS, and TIS before filing to ensure all your income and tax credits are correctly reflected.
• If you have a refund due, ensure your bank account is pre-validated on the income tax portal to avoid delays.
• If you have investments in India, keep your investment proofs ready for claiming deductions.
• If you plan to claim DTAA benefits, ensure you have your TRC and Form 10F ready.
• File your returns before the due date to avoid late fees and interest on unpaid taxes.

Conclusion

Filing your income tax returns as an NRI requires careful attention to detail, correct reporting of all taxable and exempt income, and maintaining proper documentation. By using this checklist, you can simplify your tax filing process, stay compliant with Indian tax laws, and avoid unnecessary scrutiny.

If you are unsure about your taxability, consider consulting a tax professional with NRI tax filing experience to ensure your filings are accurate and complete. This filing season, be prepared, stay compliant, and ensure peace of mind while meeting your income tax obligations in India.

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