Filing Indian Income Tax Return (ITR) is mandatory for most NRI property owners — if they receive rental income, sold property, want to claim TDS refund, or want to carry forward losses.
ITR-2 is the relevant form, and the schedules covering Income from House Property, Capital Gains, and Foreign Assets are critical for NRIs. This guide explains the complete filing process, common errors to avoid, and how to optimise the return.
When must an NRI file an Income Tax Return in India?
ITR filing is mandatory for an NRI if any of the following apply:
(1) Total Indian income exceeds Rs 2.5 lakh in the financial year (basic exemption limit).
(2) NRI sold property in India — regardless of gain or loss, ITR filing required.
(3) NRI wants to claim TDS refund (TDS deducted exceeds tax liability).
(4) NRI has long-term capital loss to carry forward — only filed losses are eligible for carry forward.
(5) NRI claims DTAA benefit (e.g., reduced tax rate on interest, royalties).
(6) NRI is resident under Income Tax Act despite holding foreign passport (rare).
(7) NRI has signing authority on any foreign account or financial interest exceeds prescribed threshold (this is for residents, but applies if NRI returns to India).
(8) Even if not mandatory, voluntary filing recommended for NRIs with Indian property — establishes compliance trail, useful for future scrutiny defense.
Which ITR form should an NRI use?
Form selection:
(1) ITR-1 (Sahaj) — NOT available for NRIs; for residents only.
(2) ITR-2 — for individuals (resident or NRI) without business income; covers salary, house property, capital gains, other sources, foreign income/assets. Most NRIs use ITR-2.
(3) ITR-3 — for individuals with business or professional income. NRIs with Indian business income use ITR-3.
(4) ITR-4 (Sugam) — NOT typically used for NRIs; for residents with presumptive business income.
(5) ITR-5/6/7 — for entities (firms, companies, trusts), not individual NRIs.
(6) For most NRI property owners (rental income + occasional capital gains + interest), ITR-2 is the correct form.
(7) E-filing portal (incometax.gov.in) auto-suggests the correct form based on income types declared.
What schedules of ITR-2 are most relevant for NRI property owners?
Key schedules in ITR-2:
(1) Schedule HP (House Property) — for rental income from Indian property; gross rent, municipal tax, 30% standard deduction, home loan interest, net taxable income. Multiple properties listed separately.
(2) Schedule CG (Capital Gains) — for property sale; long-term and short-term separately; with cost of acquisition, indexation (if pre-July 2024 acquisition opting for old method), exemptions under Sections 54/54EC/54F.
(3) Schedule OS (Other Sources) — for bank interest, dividends, etc.
(4) Schedule FA (Foreign Assets) — for residents, not for NRIs in respect of their country of residence assets; relevant if NRI has foreign assets that need disclosure (typically only if they were resident in earlier years).
(5) Schedule SI (Special Income) — capital gains taxed at special rates (12.5% LTCG, 20% indexed LTCG, etc.).
(6) Schedule CYLA / BFLA — current year and brought-forward loss adjustment.
(7) Schedule TDS / TCS — TDS deducted, against PAN; reconciles with Form 26AS.
What is the deadline for NRI ITR filing?
ITR filing deadlines:
(1) Standard deadline — July 31 of the assessment year (for FY 2024-25, deadline July 31, 2025).
(2) If audit applies — October 31. NRI individuals typically don't trigger audit unless turnover from business exceeds threshold.
(3) Belated return — can file by December 31 of assessment year, with late filing fee Rs 5,000 (income up to Rs 5 lakh) or Rs 10,000 (above) under Section 234F.
(4) Updated return — can be filed up to 24 months from end of assessment year (extended to 4 years in 2025) with additional tax. (5) For taxpayers with refund claims — file as early as possible after FY end; refunds processed faster for early returns.
(6) For NRIs with Section 54/54EC/54F exemption claims — file in time to support the exemption; deposits in Capital Gains Account Scheme must be made before filing deadline.
(7) Time zone consideration — Indian portal works on IST; NRIs should file 1-2 days before deadline accounting for time differences and processing delays.
How does an NRI verify and submit ITR online?
E-filing process:
(1) Login to incometax.gov.in with PAN, password, Aadhaar OTP (if linked), or net banking.
(2) Select Income Tax Return; choose AY 2025-26 (for FY 2024-25 income); choose ITR-2.
(3) Auto-populate from Form 26AS, AIS (Annual Information Statement), and TIS (Taxpayer Information Summary) where available — verify accuracy.
(4) Fill schedules manually for items not auto-populated — house property, capital gains, exemptions.
(5) Compute tax liability — system calculates; verify all auto-calculations.
(6) Pay self-assessment tax (if any) — online via net banking or NRO debit; receive challan; enter challan details.
(7) Preview and verify return — printable PDF available.
(8) Submit — return uploaded; acknowledgement number issued. (9) E-verify within 30 days — through Aadhaar OTP, net banking, DSC, or sending physical ITR-V to CPC Bengaluru.
(10) Without e-verification, return is treated as not filed.
What deductions can an NRI claim in their Indian ITR?
NRI eligible deductions in ITR:
(1) Section 80C — investments in PPF (NRIs cannot open new PPF but existing accounts continue till maturity), ELSS, life insurance premium, home loan principal repayment, children's tuition fees in India, NSC, NPS — up to Rs 1.5 lakh combined.
(2) Section 80D — health insurance premium for self/family/parents; up to Rs 25,000 (Rs 50,000 if senior citizens). NRIs CAN claim 80D for premiums paid for Indian health policies.
(3) Section 80G — donations to specified charities; varying limits. (4) Section 80E — interest on education loan for higher education in India or abroad.
(5) Section 80TTA — interest on savings account up to Rs 10,000 per year (but NRIs typically don't have savings accounts; only NRO/NRE; check applicability).
(6) Section 24(b) — home loan interest up to Rs 2 lakh on self-occupied; full interest on let-out (subject to Rs 2 lakh house property loss cap).
(7) NEW tax regime (Section 115BAC) does NOT allow most of these deductions — NRIs should evaluate old vs new regime each year.
What is Form 26AS and AIS, and how should NRIs use them?
Critical reconciliation documents:
(1) Form 26AS — consolidated tax statement showing TDS deducted on NRI's PAN, advance tax/self-assessment tax paid, refund history, and high-value transactions. Available on incometax.gov.in.
(2) AIS (Annual Information Statement) — comprehensive report of NRI's financial transactions reported by various entities (banks, mutual funds, registrars, etc.) — interest income, dividends, property transactions, foreign remittances.
(3) TIS (Taxpayer Information Summary) — concise version of AIS with categorised information.
(4) Pre-filing reconciliation — verify all TDS in Form 26AS matches what was deducted; chase TDS deductors for missing entries.
(5) AIS verification — verify all transactions; raise feedback for incorrect entries.
(6) Common issues — TDS shown against wrong PAN (incorrect Aadhaar linkage); old transactions of returnees not removed; foreign remittances reported but corresponding income not in AIS. (7) For NRI sellers — buyer's TDS should appear in Form 26AS within 30-60 days of deduction; if not, follow up with buyer to file revised Form 27Q.
What are the most common errors in NRI ITR filing?
Top mistakes to avoid:
(1) Using ITR-1 instead of ITR-2 — ITR-1 is invalid for NRIs; system rejects but some try unsuccessfully.
(2) Missing rental income — NRIs sometimes skip declaring small rental amounts; AIS reports it; mismatch triggers notice.
(3) Wrong choice of tax regime — old vs new not evaluated; can cost Rs 50,000-2,00,000 per year for high-income NRIs.
(4) Not claiming TDS in correct year — TDS for FY 2024-25 (Apr-Mar) goes against AY 2025-26 ITR.
(5) Capital gains computation errors — wrong indexation method, wrong year of acquisition, missed transfer expenses.
(6) Section 54/54EC/54F claims without proper documentation or before completion of reinvestment.
(7) Foreign income/asset disclosure — required for residents; not for NRIs (NRI's country of residence assets need not be disclosed in Indian ITR).
(8) Bank account for refund — must be NRO or NRE in NRI's name with correct IFSC; refund failures common when foreign accounts mistakenly listed.
(9) E-verification missed — return not processed without e-verification within 30 days.
(10) Not responding to ITR notices — even routine intimation notices need response; failure escalates.
For complete details on selling property in India as an NRI and understanding the complete legal, tax, and repatriation process, visit our Selling Property in India page.