For many Non-Resident Indians (NRIs), the income tax filing season in India can be a confusing and time-sensitive task, especially when the Income Tax Return (ITR) utilities are not yet issued by the Income Tax Department. If you are an NRI looking to file your ITR this year, it is important to stay updated on the applicable ITR forms, plan ahead, and start collecting the right documents for a smooth and hassle-free filing process.
In this article, we explain the current situation regarding ITR utilities, which ITR forms are applicable for NRIs, what advance planning you should do before filing, and which documents you should keep ready, especially if you earn income from savings bank interest, fixed deposits (FDs), shares, or mutual funds.
Current Situation: ITR Utilities Not Yet Released
The Income Tax Department typically issues JSON and Excel utilities for each ITR form for e-filing through their official portal. These utilities make it easier to file returns either online or offline (via upload).
As of now, several NRIs are facing this issue, while they are ready to file their ITR, the utilities for their applicable form (usually ITR-2) are not yet available. In such cases, rather than waiting until the last minute, NRIs are advised to prepare all necessary documents and plan their tax reporting in advance so that the process is seamless once utilities are made available.
Applicable ITR Forms for NRIs
If you are an NRI, your income tax return form will depend on the sources of income you have in India. Here’s a breakdown:
- ITR-1 (Sahaj): Not applicable to NRIs. This form is only for residents with total income up to ₹50 lakh.
- ITR-2: This is the most common form used by NRIs. It is applicable if:
- You are an individual or HUF (Hindu Undivided Family)
- You have income from more than one house property
- You have income from capital gains (sale of shares, mutual funds, property, etc.)
- You have income from other sources (interest income, etc.)
- You do not have income from business or profession
- ITR-3: Applicable if you are an NRI earning income from a business or profession in India.
For most NRIs who earn income from savings interest, fixed deposits, capital gains, and mutual funds, ITR-2 is the correct form.
Tax Planning Tips for NRIs Before Filing ITR
Even if the ITR utility is not released yet, here are essential planning tips to help you get started:
- Verify Residential Status:
- Determine your residential status under the Income Tax Act.
- Even if you hold an NRI status under FEMA, tax laws may treat you differently based on your number of days in India.
- Calculate Total Indian Income:
- Sum up all income earned or received in India, such as savings interest, FD interest, dividends, and capital gains from stocks or mutual funds.
- Review TDS and Tax Credits:
- Check Form 26AS and AIS (Annual Information Statement) on the income tax portal to ensure that all TDS deducted is correctly reflected.
- Match this with your income documents to avoid discrepancies.
- Reconcile Bank Accounts:
- Reconcile your Indian bank statements to identify taxable income.
- Don’t forget to report income even if TDS has been deducted.
- Capital Gains Calculation:
- For shares and mutual funds, compute capital gains (short-term or long-term) along with applicable exemptions or indexation benefits.
- Claim Deductions if Eligible:
- You may claim deductions under sections like 80C, 80D, etc., subject to specific conditions applicable to NRIs.
Sample Documents NRIs Should Collect for ITR Filing
To ensure accurate tax filing, collect the following documents in advance:
1. Savings Bank Interest:
- Annual bank statement or interest certificate from the NRO account.
- Note: Interest earned on NRO accounts is taxable in India, while NRE account interest is tax-free.
2. Fixed Deposit Interest:
- FD interest certificates from banks.
- TDS certificate (Form 16A) from the bank if tax is deducted.
3. Shares (Listed Indian Stocks):
- Capital gains statement from your broker (e.g., Zerodha, ICICI Direct, etc.)
- Contract notes of sale/purchase
- Dividend income details
4. Mutual Funds:
- Capital gains report from mutual fund platforms (e.g., CAMS, KFintech, or Groww)
- Dividend statements
- TDS certificates (if dividend exceeds threshold)
5. Form 26AS and AIS:
- Download both from the income tax portal. They provide comprehensive details of TDS, high-value transactions, and income reported by third parties.
6. Passport Pages / Travel Summary:
- Useful to confirm your stay in India to validate NRI status.
Final Words
While the delay in the release of ITR utilities can be frustrating, proactive planning can save time and reduce the chances of errors. If you’re an NRI with income from Indian sources such as savings accounts, FDs, shares, or mutual funds, start gathering your documents and calculating your taxable income now. Once the ITR-2 utility is available, filing your return will become a simple process.
Have questions about your ITR as an NRI? Get in touch with our experts today.
