If you’re a Non-Resident Indian (NRI) filing your taxes in India this year, you may be wondering about the intricacies of the process. The Indian taxation system for NRIs can seem complicated, but understanding the key documents, taxation rules, and common mistakes to avoid will ensure you file correctly and avoid any penalties.

In this guide, we will walk you through the essential steps for NRI tax filing in India, including important details you need to know, such as DTAA claims, interest tax exemptions, and how your residency status affects your taxes.

Understanding NRI Tax Filing in India

When filing taxes as an NRI, it’s important to know that India taxes its residents differently from non-residents. NRIs are subject to Indian tax laws on income earned within India. However, income earned outside India is generally not taxable unless brought into India.

Here’s what you need to know when filing taxes in India as an NRI:

Essential Documents for NRI Tax Filing

Before you start your NRI tax filing in India, you need to gather the following essential documents:

• PAN Card: Your Permanent Account Number is a must for filing taxes in India.
• Visa or Residency Proof: This helps establish your NRI status.
• Bank Statements: From April 2024 to March 2025, to track your Indian income and expenses.
• Interest Certificates: If you have any interest income from NRE or FCNR accounts, ensure you have the relevant documents.
• Capital Gains Reports: If you’ve made any investments in stocks, mutual funds, or property, these are necessary.
• Investment Proofs: These could be under Sections 80C, 80D, or any other deductions.
• Tax Residency Certificate and Form 10F: If you’re claiming benefits under the Double Taxation Avoidance Agreement (DTAA), these documents are necessary.
• Form 16: If you’re salaried and receiving a salary from an Indian employer.

Key Tax Considerations for NRIs in India

As an NRI, here are a few tax considerations you must keep in mind:

NRE and FCNR Interest

Interest earned on NRE (Non-Resident External) and FCNR (Foreign Currency Non-Resident) accounts is tax-free in India. However, you must still report this income on your ITR (Income Tax Return).

Tax Filing Form

NRIs should use ITR-2 to file their returns. This form is used for individuals who have income from sources other than business or profession, including capital gains, interest, and rental income.

Make sure your PAN is linked to your Aadhaar, and ensure that your refund bank account is updated on the portal for smooth processing.

Tax on Dividends

Any dividends you receive from Indian companies are taxed at 20%. If you are eligible for DTAA, the rate may differ, so ensure that you check your agreement with India to avoid unnecessary taxes.

Section 87A Rebate

Unfortunately, Section 87A rebate, which is available for resident taxpayers, does not apply to NRIs.

Deemed Rent and Its Tax Implications for NRIs

If you, as an NRI, own more than two properties in India, and one or more of these properties are not rented out, deemed rent becomes applicable. Deemed rent refers to the notional rent that is considered taxable on a property, even if it is not actually rented out.

Here’s how deemed rent works:

• Deemed rent applies when you own more than two residential properties and one of those properties is left vacant.
• This rent is calculated based on the fair market value of the property, and is considered taxable income.
• You can designate two properties with the highest rental value as self-occupied for tax purposes, and the property with the lower rental value will be considered as deemed let-out.
• Deemed rent must be declared as rental income for properties not occupied, even if they are not being rented out.

For example, if you own three properties and live in two, you must declare the third property as deemed rent in your ITR while filing your taxes.

How to Avoid Common Mistakes in NRI Tax Filing

While NRI tax filing in India doesn’t have to be complicated, many NRIs make mistakes that can lead to penalties or delays in processing. Here are the most common mistakes to avoid:

Not Reporting Indian Income

Even if TDS (Tax Deducted at Source) has already been deducted, you must report all income earned in India on your ITR. Failing to do so can lead to unnecessary tax scrutiny.

Mismatches in AIS/TIS

AIS (Annual Information Statement) and TIS (Taxpayer Information Summary) are records maintained by the Income Tax Department. Always cross-check these statements for any errors before filing your tax returns. Ensure that all income from Indian sources is reported accurately.

Failure to Update Contact Details

Keep your email and mobile number updated on the Income Tax portal to receive timely notifications and updates.

Residency Status and Its Impact on NRI Tax Filing

Your residency status plays a crucial role in determining your tax liabilities in India. The Income Tax Department considers you an NRI if:

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

NRI Tax Filing Made Easy

Filing taxes as an NRI may seem complex, but with the right understanding and documentation, the process can be straightforward. By following the steps outlined above, you can ensure that your NRI tax filing in India is accurate and compliant with the latest tax laws.

Make sure you have all the necessary documents ready, pay attention to your residency status, and avoid common filing mistakes. If you’re unsure about any part of the filing process, seeking expert guidance can help simplify things and ensure timely compliance.

Need Help with NRI Tax Filing? Contact Enrichwise Today!

At Enrichwise, we understand that filing taxes as an NRI can be daunting. Our team of experts can help you navigate the complexities of NRI tax filing in India and ensure that you meet all the requirements, avoid penalties, and maximize any eligible benefits.

If you need help with tax filing, tax exemptions, or any other concerns, contact Enrichwise today. We’re here to simplify the process for you!