NRI Income Tax Return Filing Guide for AY 2026-27: Residential Status, DTAA, Deductions & ITR Forms
NRI Income Tax Return Filing Guide for AY 2026-27: Residential Status, DTAA, Deductions & ITR Forms
If you are a NRI & having any income generating in India & don’t know about the tax consequences then this article is for you.
Non-Resident Indians (NRIs) are liable to pay income tax in India on income that accrues or arises in India, or is received in India & its mandatory to file the ITR if it exceeds the basic exemption limit or taxpayer wants refund of TDS deducted on such income
For this understanding the residential status is more important
Determining Residential Status (Section 6, IT Act 1961)
Residential status is determined for each financial year separately based on physical presence in India as below
|
Category |
Stay in India (Current Year) | Additional Condition |
| Resident (Ordinary) | ≥ 182 days OR ≥ 60 days + 365 days in last 4 years |
Resident for ≥ 2 of last 10 years AND present ≥ 730 days in last 7 years |
|
Resident but Not Ordinarily Resident (RNOR) |
Qualifies as Resident above | Does NOT meet both additional conditions of Ordinary Resident |
| Non-Resident (NRI) | < 182 days (general rule) |
Does not satisfy Resident conditions |
Note: An NRI is taxed only on India-sourced income i.e., Income accrued or received in India. (Foreign income will not be taxable even if business controlled from India)
Which ITR Form should be used?
NRIs cannot file ITR-1 (Sahaj) or ITR-4 (Sugam) these forms are restricted to residents. The applicable forms are:
- ITR 2: Salary/pension, house property, capital gains, foreign assets/income, more than one house property
- ITR 3: All sources including business/profession, partnership firm income, foreign assets
Most of the NRIs with salary, capital gain or property income files ITR 2 & whose are earning any Business income or any partnership income files ITR 3
Key Schedules in ITR-2/ITR-3 Relevant for NRIs
- Schedule FSI: Foreign Source Income
Details of income from outside India (relevant for RNOR taxpayers and for claiming DTAA relief). Non-disclosure can trigger scrutiny.
- Schedule TR: Tax Relief
Used to claim relief under Section 90/90A (DTAA) or Section 91 (unilateral relief) having separate rows for each country.
NRE, NRO, and FCNR Accounts Tax Treatment
|
Account |
Nature | Treatment |
| NRE | Freely repatriable held in INR |
Exempt (Section 10(4)) |
|
FCNR |
Foreign currency deposits | Exempt (Section 10(4)) |
| NRO | Earnings accruing in India |
Taxable @ 30% + surcharge + cess (TDS u/s 194A) |
Double Tax Avoidance Agreement (DTAA): How to Claim Relief
India has DTAAs with 90+ countries. An NRI may opt for the more beneficial provisions either the Income Tax Act or the DTAA.
To avail the benefits of DTAA assessee should possess:
- Tax Residency Certificate (TRC) from the country of residence mandatory
- Form 10F self-declaration (can be filed on the income tax portal)
- No Permanent Establishment declaration (for business income)
DTAA helps to reduce the TDS on interest by reducing the rates typically to 10 to 15% instead of 30%
Can NRI claim deductions?
Yes, if an NRI assessee want to claim any deduction under chapter VI-A then he can take it by opting old regime.
The major deductions are available to NRI are:
- 24b: interest against Let out property
- 80C/80CCC/80CCD (1): LIC, ELSS, home loan principal, tuition fees, PPF (if applicable)
- 80D: Medical insurance premium
- 80E: Interest on education loan
Pre-Filing Checklist for NRIs
|
Sr. No |
Document / Information |
Purpose |
| 1 | PAN card |
Mandatory for filing |
|
2 |
Passport & visa details | To determine residential status |
| 3 | Form 16 / salary slips (India income) |
Salary computation |
|
4 |
Form 26AS / AIS / TIS | TDS reconciliation |
| 5 | Bank statements (NRO, NRE, FCNR) |
Interest income reporting |
|
6 |
Capital gains statement (broker/MF) | Capital gains schedules |
| 7 | Rental income details & property address |
House property schedule |
|
8 |
TRC (Tax Residency Certificate) | To claim DTAA benefit |
| 9 | Form 10F (self-declaration) |
Required along with TRC for DTAA |
|
10 |
Foreign income proof/foreign tax paid details |
DTAA / Section 91 relief |
Filing Due Dates: AY 2026-27
|
Category |
Original Due Date | Belated / Revised Return |
| NRI: no audit | 31st July 2026/31st August 2026 if ITR 3 |
31st December 2026 |
|
NRI accounts subject to audit |
31st October 2026 |
31st December 2026 |
Common Mistakes to Avoid
- Filing ITR-1 instead of ITR-2 as NRIs are ineligible for Sahaj
- Ignoring NRO account interest as it is taxable and often under-reported
- Not reconciling AIS/TIS before filing as mismatches invite scrutiny notice
- Skipping Schedule FSI/TR when DTAA relief is claimed
- Mixing up residential status as NRI status ends the moment stay exceeds the threshold hence one has to check residential status each financial year.