Confuse About Filing ITR As An NRI? Here Is A Step By Step Guide To Help You
Which ITR form do NRIs use?
NRIs usually file their tax return using the ITR-2 form. This is because ITR-1 cannot be used by NRIs. ITR-2 is for people who have income from things like salary, more than one house property, capital gains, and other sources, but not from business or profession.
Is it mandatory for an NRI to file ITR?
Yes, NRIs must file a tax return if their taxable income in India is above the basic exemption limit, or if they want to claim a refund.
What's the difference between ITR-1 and ITR-2 for NRIs?
NRIs cannot use ITR-1. ITR-2 is the correct form for them if they don't have income from business or profession.
How can an NRI e-verify their ITR?
NRIs can e-verify their return using Net Banking, or by generating an Electronic Verification Code (EVC) through a pre-validated bank account or demat account. They can't use Aadhaar for e-verification if they don't have it.
Key changes for this year:
Asset and liability reporting: Now, NRIs only need to report their Indian assets and liabilities in ITR-2 if their gross taxable income is more than Rs 1 crore. They do not need to report foreign assets or liabilities in ITR-2.
Capital gains reporting: If you have capital gains, you must report them separately for sales made before and after July 23, 2024, because the tax rules changed on that date. This helps you pay the correct tax based on when you sold the asset.
More details needed: The forms now ask for extra details when you claim deductions. For example, if you claim a deduction for life insurance under Section 80C, you need to give the policy number. For NPS deductions, you must provide your PRAN number.
Deadline extended: The last date to file your ITR is now September 15, 2025 (instead of July 31), giving you more time to file your return.
Other points:
If you want to claim benefits under a Double Tax Avoidance Agreement (DTAA), make sure you file Form 10F. There's no fixed deadline for Form 10F, and it's valid for one year from the date you file it.
Why are ITR-2 and ITR-3 forms delayed?
The government made big changes to how capital gains are taxed and what details need to be reported. That's why the software for ITR-2 and ITR-3 is not ready yet, but the deadline has been extended to give everyone more time.
What should you do now?
Get your documents ready and wait for the ITR-2 form utility to be released. You can check the Income Tax website for updates.
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