ITR Filing for NRIs: Complete checklist to avoid mistakes in 2025
NRIs must collect their Permanent Account Number (PAN), valid visa or proof of overseas residency, and bank statements for all NRE, NRO, and Indian savings accounts covering April 2024 to March 2025.
Checklist for NRIs
With the income tax filing deadline for FY 2024–25 nearing, Non-Resident Indians (NRIs) need to take extra care in preparing their documents and complying with Indian tax regulations. Here are seven key aspects to consider while filing returns in India:
Gathering Essential Documents
NRIs must collect their Permanent Account Number (PAN), valid visa or proof of overseas residency, and bank statements for all NRE, NRO, and Indian savings accounts covering April 2024 to March 2025. Additional documents include interest certificates, Form 16 (for salaried NRIs), capital gains reports, dividend statements, and investment proofs for any claimed deductions.
Use of ITR-2 Only
ITR-1 is not applicable for NRIs. NRIs are required to use ITR-2 to file their income tax return, even if their income sources are limited. This form accommodates details such as foreign residency, capital gains, and exempt income, which are not covered in simpler ITR forms.
Understanding Taxable and Exempt Income
While interest from NRE and FCNR accounts is tax-exempt, it must still be reported in the return. Dividend income is taxable at a flat rate of 20 per cent under Section 115A unless reduced under a Double Taxation Avoidance Agreement (DTAA). NRIs are not eligible for the Section 87A rebate.
Mandatory Documentation for DTAA Claims
To claim benefits under a DTAA, NRIs must submit a Tax Residency Certificate (TRC) from the country of residence and Form 10F. These documents establish tax residency status and help in availing reduced tax rates or exemptions on specific incomes.
Ensuring PAN-Aadhaar Linkage and Portal Validation
PAN must be linked with Aadhaar, and at least one Indian bank account must be validated on the Income Tax portal for processing refunds. Additionally, contact details on the portal—email ID and mobile number—must be current to receive official communication.
Avoiding Common Filing Errors
NRIs often make errors such as not reporting Indian income already subjected to TDS, overlooking discrepancies in the Annual Information Statement (AIS) or Taxpayer Information Summary (TIS), and failing to disclose Indian assets when income exceeds ₹1 crore. Such mistakes can invite scrutiny or delay refunds.
Determining Residential and Deemed Residency Status
Accurate determination of residential status is crucial. NRIs are those who spend less than 182 days in India in a financial year, and less than 365 days in total over the preceding four years. If an Indian citizen earns over Rs 15 lakh from Indian sources and is not taxed in any other country, they may be classified as a Resident but Not Ordinarily Resident (RNOR), which impacts tax obligations. NRIs must approach income tax filing with careful preparation and understanding of applicable rules. Ensuring documentation is in order and income is accurately disclosed helps maintain compliance and avoid penalties.
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