NRI and overseas · Residence and returns
When must an NRI file an income-tax return in India, and how is double taxation relief claimed?
Short answer
An NRI must file a return if Indian income exceeds the basic exemption limit, or to claim a refund of excess TDS or carry forward a loss. NRIs use ITR-2 or ITR-3, not ITR-1 or ITR-4, and cannot claim the section 87A (now section 156) rebate. To use a lower tax-treaty rate, the NRI needs a tax residency certificate from the country of residence and Form 10F (now Form 41). A resident claims credit for foreign tax in Form 67 (now Form 44) before filing.
When an NRI should file
- Indian income (rent, interest on NRO deposits, capital gains, business income) above the basic exemption limit;
- to claim a refund: TDS on NRIs is often deducted at the highest rate, and the actual tax may be lower;
- to carry forward capital or business losses; or
- where a notice asks for a return.
Which form
| Income | Form |
|---|---|
| Salary, house property, capital gains, other sources | ITR-2 |
| Business or profession | ITR-3 |
ITR-1 and ITR-4 are for residents only. The due date is 31 July, or later for audit cases.
Points specific to NRIs
- No rebate under section 87A (now section 156): the "₹12 lakh tax-free" rule does not apply to NRIs.
- Special rates under the old Chapter XII-A (section 115E onwards, now section 214 onwards) for investment income and long-term gains from assets bought in foreign exchange. If this is the only income and tax was deducted, filing may not be needed.
- Refunds go to an Indian bank account, usually NRO, that is pre-validated on the portal.
Tax treaty relief for an NRI
India has a Double Taxation Avoidance Agreement (DTAA) with most countries. Under section 90 (now 159), you can use the treaty or the Act, whichever is more beneficial. To claim a treaty rate, for example a lower rate on interest or dividends:
- Get a tax residency certificate (TRC) from the tax authority of your country of residence.
- File Form 10F (now Form 41) electronically on the e-filing portal.
- Give both to the payer before payment, and claim the treaty rate in the return.
Relief for residents with foreign income
A resident taxed on worldwide income claims foreign tax credit for tax paid abroad, by filing Form 67 (now Form 44) with proof of foreign tax, before filing the return. Where there is no treaty, relief is under section 91 (now 160).
Legal basis
- Sections 90 and 91, Income-tax Act, 1961, now sections 159 and 160, Income-tax Act, 2025
- Sections 115E to 115H, now from section 214
- Forms 10F and 67, now Forms 41 and 44
Official sources
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