An NRI is an Indian citizen or a person of Indian origin who:

• Stays outside India for more than 182 days during the preceding financial year, or
• Has stayed outside India for more than 60 days in the relevant financial year and more than 365 days during the preceding four years.

Who Needs to File a Tax Return in India?

Even though NRIs typically do not have to pay taxes in India on their foreign income, they need to file a tax return in the following cases:

• Income earned or received in India
• Income from a business or profession in India.
• Capital gains from the sale of property, stocks, mutual funds, etc., in India.
• Interest on deposits in Indian banks or any other Indian financial institutions.
• If you are liable to pay taxes in India due to any income received in India.

Types of Income for NRIs

An NRI is taxed only on income received or earned in India. Foreign income (income earned outside India) is generally not taxable in India unless it is brought into India during the financial year.

• Salary
• Income from property
• Interest income
• Dividends
• Capital Gains

Tax Filing for NRIs

NRIs are required to file Income Tax Returns (ITR) in India under the following ITR forms:

• ITR-1 (Sahaj) - For NRIs with income from salary
• ITR-2 - For NRIs who have income from capital gains, more than one house property, or foreign income
• ITR-3 - For NRIs who are earning income from business or profession.
• ITR-4 (Sugam) - This is for NRIs opting for the presumptive taxation scheme under section 44AD/44ADA for small businesses or professionals

Taxation of NRIs in India

NRIs are taxed differently on their income depending on whether the income is earned in India or abroad.

• Income earned in India
• Income earned abroad
• Tax Treaties
• Rebates and deductions

TDS and NRIs

NRIs are subject to Tax Deducted at Source (TDS) on various types of income in India.

• Interest Income
• Rental Income
• Capital Gains

Deductions and Exemptions for NRIs

• Section 80C : Deductions for investments in PPF, life insurance premiums, tax-saving fixed deposits, etc.
• Section 80D :Health insurance premium deductions.
• Section 80G : Deductions for donations to charitable institutions.
• Section 10(38) : Exemption for long-term capital gains (LTCG) on the sale of listed equity shares and mutual funds.

NRIs can also claim foreign tax credits under DTAA to avoid being taxed twice on the same income.

Due Dates for NRI Income Tax Return Filing

• For NRIs: The due date for filing the return is 31st July of the assessment year, unless an audit is required.
• Belated Return: If an NRI misses the deadline, they can file a belated return before 31st December of the assessment year, but they may face penalties.

File NRI Income Tax Returns

• Online Filing
• Document Verification: NRIs must verify their return. This can be done using Aadhaar OTP, Electronic Verification Code (EVC), or by sending a signed ITR-V to the Income Tax Department.

Penalties for Non-Filing or Delayed Filing

• If you fail to file your tax return by the due date, you may face a penalty of ₹5,000 if filed after 31st July but before 31st December.
• If filed after 31st December, the penalty could be ₹10,000.
• Interest under Sections 234A, 234B, and 234C may also be levied on overdue taxes.