NRI ITR Filing: The Six Things Different From Residents

NRI status saves most Indian-sourced income from global taxation. But changes what must be disclosed and how. Indian house rental? Yes, taxable. Foreign salary? Not in India (exempt). Capital gain on Indian shares? Yes, with specific NRI-slab rules. Missing the residential-status determination on day one of filing is the most common NRI tax error. And the consequences compound when wrong status declarations trigger reassessment years later.

By the end, you will know the NRI definition under Section 6 (Income Tax) vs FEMA, taxable-in-India income heads, the DTAA claim process via Form 10F and TRC, and the RNOR intermediate status for returning Indians.

NRI determination under Section 6

Section 6 of IT Act: RESIDENT if (a) physically in India for 182+ days in the financial year, OR (b) 60+ days in FY AND 365+ days in the preceding 4 FYs combined. NRI = NOT resident (fails both tests). A separate RNOR (Resident Not Ordinarily Resident) intermediate status exists for returning Indians. Specifically, residents who were NRI in 9 of the past 10 FYs, OR physically in India <= 729 days in past 7 FYs.

Day-counting precision: every day in India during the FY counts (transit days included). For frequent travellers, keep a date log with passport stamps. The 182-day threshold is strict. 181 days qualifies as NRI; 182 days becomes resident. This 1-day delta changes global-income taxation.

What NRIs must file in India

Indian house rental income. Taxable under Schedule HP.
Interest on NRO account. Fully taxable with 30% TDS under section 195. NRE and FCNR interest are exempt under section 10(4)(ii).
Capital gains on Indian shares, mutual funds, property. Taxable with NRI-specific rules (some higher TDS rates than resident rates).
Any other India-sourced income (consulting fees, royalties, etc.).

What NRIs do NOT file: Schedule FA (foreign assets disclosure is resident-only), foreign income (non-India-source income is outside Indian tax scope for NRIs), Schedule AL (resident-only for income > Rs. 1 cr). Common error: new NRIs continuing to file Schedule FA with their US investments. Unnecessary once status is NRI.

DTAA claim via Form 10F + TRC

NRIs claiming lower withholding tax under a Double Taxation Avoidance Agreement (DTAA) with their country of residence must file Form 10F online. Supporting document: Tax Residency Certificate (TRC) from the country's tax authority. Without Form 10F, default Indian TDS rates apply (typically higher than DTAA rates). With Form 10F + TRC, DTAA rates kick in at source. India-UK, India-US, India-UAE all have favourable DTAA rates for specific income types.

Practical impact: US-resident NRI earning Indian dividend: default 20% TDS; DTAA rate 15% (Article 11 of India-US DTAA). Saving: 5% directly, adjustable against US tax. File Form 10F once per financial year via e-filing portal. TRC from US IRS is the supporting document.

DTAA claim via Form 10F

NRIs must file Form 10F online to claim DTAA lower rates. Required documents: TRC from country of residence, PAN, India address (can be tax agent's address). Without Form 10F, default rates apply. Many NRIs pay higher TDS because they skip this formality.

DTAA claim via Form 10F

Form 10F mandatory for DTAA lower rates. Without it, default Indian TDS applies. TRC from country of residence is the supporting document.

RNOR intermediate status for returning Indians

Returning NRI who becomes resident in FY 2024-25 after 10 years abroad: gets RNOR status for 2 years. Foreign income remains exempt during RNOR years (unless related to business in India). RNOR is a transition buffer; after that, global taxation kicks in.

Section 90 vs 91 DTAA relief

Section 90: India has DTAA with the country to use DTAA mechanism (Form 10F, TRC). Section 91: India has no DTAA to general credit for foreign tax paid, limited to Indian rate. Most major-economy countries have DTAA; a few (very small jurisdictions) do not.

Key Takeaways

NRI = < 182 days in India; RNOR is the returning-NRI 2-year intermediate.
NRE / FCNR interest exempt; NRO interest fully taxable with 30% TDS.
Indian rental + Indian capital gains reportable with NRI-specific rules.
DTAA via Form 10F + TRC from country of residence. Saves 5-10 percentage points TDS.
Foreign salary and assets: OUT of Indian scope if truly non-resident.