The tax filing process for Non-Resident Indians in India follows essential steps to maintain compliance with Indian tax legislation. The guide provides essential information for the financial year regarding 🏠 rental income, 🏗️ capital gains from property sales, and 🏦 interest from your account earnings.
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The Indian Income Tax Act uses physical residence in India to determine tax residency of its citizens.
You are a Resident if you:
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Stay in India for 182 days or more during the financial year, or
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Spend 365 days over the past 4 years and at least 60 days in the current year.
🧑⚖️ Exceptions for citizens and Persons of Indian Origin:
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The tax law for Indian citizens and Persons of Indian Origin now uses a period of 182 days rather than a period of 60 days.
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A resident must pay Indian taxes if their income exceeds the established threshold while the tax period changes to 120 days.
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❌ Non-resident status applies to individuals who fail to fulfill these requirements.
📌 When and Why to File a Return
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📝 Non-residents must submit tax returns because their total taxable Indian-sourced income exceeds the government-established financial year threshold of ₹2.5 lakh.
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💰 Even when returns are not mandatory, you must file because you can obtain tax refunds for rent, interest, and property sales.
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🧾 You need to file your return for tax refund purposes regarding rent and interest and property sales.
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🛡️ You should declare your status to prevent future examination by authorities.
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📉 You can carry over capital losses to reduce your future tax burden.
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📂 The documentation for loans and visa applications and financial documents needed for repatriation purposes.
💼 Taxation on Different Income Types
💸 Interest Income
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All interest from specific bank accounts becomes fully taxable at 30% plus surcharge and cess.
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🏦 Banks perform tax withholding before distributing interest payments.
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✅ Interest from NRE and FCNR accounts remains exempt from Indian taxation.
🏘️ Rental Income
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Rental income falls under the category of 'Income from House Property'.
You can deduct:
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🏛️ Municipal taxes paid
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📉 A standard deduction of 30%
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🔻 Tax is deducted by the tenant at 31.2%
📊 Capital Gains
🏡 Property:
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Short-term (< 24 months): Taxed at applicable slab rate
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Long-term (> 24 months):
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Taxed at 20% with indexation, or
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12.5% without indexation (from July 2024)
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📈 Shares and Mutual Funds:
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STCG (≤ 12 months): 15%
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LTCG (> 12 months): 10% above ₹1 lakh
📦 Other Assets:
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LTCG: 20% with indexation
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STCG: Taxed as per slab
💵 Dividends: 20%
🎰 Royalties, technical fees, lottery: 20%–30%
💰 TDS and Refund Claim
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Most non-resident TDS payments exceed their actual tax responsibility.
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🔁 You need to file a return to receive any potential refund.
📑 Required Documents:
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🧾 Form 16A – TDS certificate from bank or tenant
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🏦 Bank statements
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📜 Rent agreements
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🏠 Property sale deeds
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🆔 PAN and passport
🔄 Steps to Claim Refund:
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✅ Verify that your tax records contain correct income and tax information (use Form 26AS and AIS)
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🧾 File the appropriate income tax return form (ITR-2)
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💡 Enter correct income and claim deductions
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📤 Submit and e-verify your return
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💳 Refund will be credited to your pre-validated bank account
🌍 Double Taxation Relief
Non-resident Indians face dual taxation because they must pay taxes in both India and their home country. 🌐 India has Double Taxation Avoidance Agreements (DTAA) with 90+ countries to prevent this.
📘 How to Claim Relief:
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📄 Obtain a Tax Residency Certificate (TRC) from the country where you live
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📥 Submit Form 10F (if required)
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🧾 Include treaty rate information in your ITR
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⏳ File Form 67 before submitting your ITR to claim foreign tax credits
🧭 Step-by-Step Guide
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📌 Provide PAN, passport, bank account info, rent/property documents, and TDS certificates
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🌐 Log in to www.incometax.gov.in
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📆 Select AY 2025–26 and ITR-2 form
📋 Report Your Income:
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🏠 House Property: Gross rent – municipal taxes – 30% standard deduction
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🏗️ Capital Gains: Report sale value, cost, and holding period
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💰 Other Sources: Interest, dividends
🎯 Claim Deductions:
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Section 80C (ELSS, LIC)
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Section 80D (health insurance)
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Capital gain exemptions (Section 54, 54EC)
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🧾 Compare TDS in Form 26AS and pay shortfall via Challan 280
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📲 Submit and e-verify (Aadhaar OTP, net banking, etc.)
🧮 Example
A non-resident earns:
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₹8 lakh from rent
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₹2 lakh NRO interest
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₹15 lakh LTCG from property
📊 Tax Calculation:
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Rent: ₹5.6 lakh taxable → tax ≈ ₹24,500 | TDS = ₹2.49 lakh
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Interest: Tax = ₹60,000 | TDS = ₹60,000
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LTCG: Tax = ₹3 lakh | TDS = ₹15 lakh
Total Tax Liability: ₹3.99 lakh
Total TDS Deducted: ₹18.09 lakh
Refund Eligible: ₹14.1 lakh
📝 A return submission is necessary to claim the refund.
⚠️ Common Mistakes Non-Residents Should Avoid
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❌ Wrong residential status
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❌ Using incorrect ITR form
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❌ Ignoring Form 26AS or AIS mismatches
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❌ Not submitting Form 67 for foreign tax credit
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❌ Late filing causing penalties or disqualification from loss carry-forward
🗓️ Important Deadlines
📅 Due date: 15 September 2025
⛔ If filed late:
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📈 Interest at 1% per month on unpaid tax
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💸 Late fee:
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₹1,000 (if filed by 31 Dec)
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₹5,000 (after 31 Dec)
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🚫 Loss of deductions and carry-forward rights
✅ Conclusion: File Early, File Right
Excess tax and compliance mistakes should not reduce your returns since you are a non-resident. Your correct on-time filing with complete documents will maximize your refunds while bringing you peace of mind.
📞 Need Help with Non-Resident Tax Filing?
Let a professional handle it for you.
📱 Contact: +91 8171582583 – We will assist you with your return filing while obtaining refunds and maintaining tax compliance.