ITR Filing for Non-Resident Individuals (NRIs): Forms, Tax Slabs & Compliance Guide for AY 2026-27

Filing an Income Tax Return as a Non-Resident Individual (NRI) involves a distinct set of rules compared to resident taxpayers — from determining residential status itself, to selecting the correct ITR form, to applying the right tax slabs and surcharge structure. This guide covers everything NRIs need to know for FY 2025-26 (Assessment Year 2026-27).

Step 1: Determining Your Residential Status

Before anything else, an NRI must confirm their residential status under Section 6 of the Income Tax Act, 1961, since tax obligations in India differ significantly between residents and non-residents.

When Are You Treated as a Resident?

An individual is treated as a Resident in India for a previous year if either of the following conditions is satisfied:

1. They are in India for 182 days or more during the previous year, or
2. They are in India for 60 days or more during the previous year and for 365 days or more during the four years immediately preceding that previous year

If neither condition is met, the individual is treated as a Non-Resident for that year.

Special Concessions for Indian Citizens and PIOs

For an Indian citizen or a Person of Indian Origin (PIO) who visits India during the year, the 60-day threshold in condition (2) is relaxed to 182 days. The same concession applies to an Indian citizen who leaves India during the previous year as a crew member or for employment outside India.

The 120-Day Rule for High-Income Individuals

The Finance Act, 2020 (effective from AY 2021-22) tightened this concession for high-income individuals. For an Indian citizen or PIO whose total income — excluding income from foreign sources — exceeds ₹15 lakh during the previous year, the 60-day threshold in condition (2) is reduced to 120 days instead of 182 days. This makes it easier for such high-income individuals to be classified as residents.

Deemed Residency under Section 6(1A)

The Finance Act, 2020 also introduced Section 6(1A), applicable from AY 2021-22. Under this provision, an Indian citizen earning total income exceeding ₹15 lakh (excluding income from foreign sources) is deemed to be a Resident in India if they are not liable to pay tax in any other country. This anti-abuse provision was designed to prevent individuals from structuring their affairs to avoid tax residency anywhere in the world.

Getting this determination right is the foundation of correct ITR filing, it decides which form you can use, what income is taxable in India, and whether Schedule FA-type disclosures even apply to you (NRIs are exempt from Schedule FA).

Step 2: Selecting the Right ITR Form

Once residential status is settled, NRIs (where applicable) must choose between two main forms.

ITR-2 — Applicable for Non-Resident Individuals

ITR-2 applies to Individuals (whether resident or non-resident) and Hindu Undivided Families (HUFs) who have income under any head other than Profits and Gains of Business or Profession. This is the form most NRIs with salary, house property, capital gains, or other income (but no business income) will use.

ITR-3 — Applicable for Non-Resident Individuals

ITR-3 applies to Individuals (whether resident or non-resident) and HUFs who have income under the heads Salary/Pension, House Property, Profits or Gains of Business or Profession, Capital Gains, or Income from Other Sources, and who are not eligible to file ITR-1, ITR-2, or ITR-4.

In short: if you have any business or professional income as an NRI, ITR-3 is mandatory. If you don’t, ITR-2 is the appropriate form.

Tax Slabs for AY 2026-27: Old vs New Regime

The new tax regime under Section 115BAC continues as the default regime for individuals, HUFs, AOPs (other than co-operative societies), BOIs, and Artificial Juridical Persons, as amended by the Finance Act 2023 effective AY 2024-25. Eligible taxpayers can still opt out and be taxed under the old regime, which permits various deductions and exemptions not available under the new regime.

For non-business cases, the choice between regimes can be made every year directly in the ITR, filed on or before the due date under Section 139(1).

For taxpayers with business or professional income, opting out of the default new regime requires furnishing Form 10-IEA on or before the Section 139(1) due date. Withdrawing from the old regime back to the default regime also requires Form 10-IEA, but this switch-back is available only once in a lifetime for such taxpayers, and only in a subsequent assessment year.

Tax Rates for Non-Resident Individuals

Important note: Under the old tax regime, slab rates for non-resident individuals are the same irrespective of age, the age-based higher exemption available to resident senior and super senior citizens does not apply to NRIs.

Applicable Surcharge Rates

The enhanced surcharge of 25% and 37% does not apply to income chargeable under Sections 111A, 112, 112A, and to dividend income, to the extent applicable to non-residents. For such income, the maximum surcharge is capped at 15%, except where income is taxable under Sections 115A, 115AB, 115AC, 115ACA, and 115E.

Rebate under Section 87A

NRIs are eligible for rebate under Section 87A, subject to regime-specific limits:

Health and Education Cess at 4% applies on the income tax plus surcharge (if any) under both regimes.

Marginal Relief from Surcharge

Marginal relief ensures that the surcharge burden does not disproportionately increase tax liability for income marginally crossing a surcharge threshold.

Deductions Available to NRIs

Under the New Tax Regime (Section 115BAC)

Deductions under the new regime are minimal.

Under the Old Tax Regime

The old regime permits a much wider set of deductions, several of which remain relevant for NRIs with Indian-sourced income or investments.

Section 24(b) for self-occupied property: Interest on a housing loan is capped at ₹2,00,000 where the loan was taken on or after 1 April 1999 for construction or purchase. Loans taken for repairs (regardless of date) or loans taken before 1 April 1999 for construction/purchase are capped at ₹30,000. For let-out property, there is no upper limit on interest deduction regardless of when the loan was taken.

Chapter VIA deductions commonly relevant to NRIs include:

Section 80C, 80CCC, and 80CCD(1) together offer a combined deduction of up to ₹1,50,000 for payments such as life insurance premiums, provident fund contributions, subscription to specified equity shares, tuition fees, National Savings Certificates, and housing loan principal repayment.

Section 80CCD(1B) allows an additional deduction of up to ₹50,000 for contributions to the National Pension Scheme (NPS), over and above the 80C limit — including contributions made to a minor’s NPS account by a parent or guardian.

Section 80D allows deduction for health insurance premiums and preventive health check-ups: up to ₹25,000 for self/spouse/dependent children (₹50,000 if a senior citizen is covered), and a separate equivalent limit for parents. Where no premium is paid but medical expenditure is incurred on a senior citizen, a deduction of up to ₹50,000 is available in lieu.

Section 80E allows deduction for the entire interest paid on a loan taken for higher education of self or a relative, with no upper monetary cap, subject to furnishing loan and lender details.

Sections 80EE, 80EEA, and 80EEB provide additional interest deductions on housing loans (₹50,000 and ₹1,50,000 respectively, depending on sanction dates and conditions) and on loans for electric vehicle purchase (₹1,50,000), each subject to specific eligibility windows and documentation requirements.

Section 80G covers donations to specified funds and charitable institutions, with deduction tiers of 100% or 50%, with or without a qualifying limit. Cash donations exceeding ₹2,000 are not eligible.

Section 80GG allows deduction for rent paid where HRA is not part of salary, subject to specific limits and mandatory filing of Form 10BA, whose acknowledgement number must be entered in the ITR.

Section 80TTA allows a deduction of up to ₹10,000 on interest earned from savings bank accounts, for individuals other than senior citizens, and HUFs.

Other deductions such as 80GGA (donations for scientific research or rural development), 80GGC (contributions to political parties), and the business-linked deductions under 80IA, 80IB, 80IE, 80JJA, and 80JJAA apply in more specific circumstances and are generally less relevant for individual NRI taxpayers without business income in India.

Key Compliance Takeaways for NRIs

Confirm residential status first. This single determination under Section 6 governs which provisions, forms, and disclosures apply to you for the year, including whether the stricter 120-day rule or the Section 6(1A) deemed residency provision could pull you into resident status despite spending limited time in India.

Match the ITR form to your income profile. Use ITR-2 if you have no business income; use ITR-3 if you do, or if you’re otherwise ineligible for ITR-1, 2, or 4.

Reconcile TDS using Form 26AS and AIS. Since NRIs commonly face TDS on Indian income (rent, interest, capital gains, professional fees), cross-checking Form 26AS and the AIS before filing helps avoid mismatches and notices.

Watch for cross-border transaction reporting. If you have international or specified domestic transactions, Form 3CEB compliance is mandatory and time-bound — due one month before the ITR filing deadline.

Choose your tax regime deliberately. While the new regime is the default, NRIs with significant deduction claims (housing loan interest, 80C, 80D, etc.) should evaluate whether the old regime yields a lower tax outcome before the due date under Section 139(1).

Frequently Asked Questions (FAQs)

Q1. I am an NRI who visited India for 150 days this year. Am I still a non-resident?Generally yes, since the relaxed 182-day threshold applies to Indian citizens/PIOs visiting India, unless your non-foreign-source income exceeds ₹15 lakh, in which case the 120-day threshold under the amended rule would apply instead.

Q2. Can NRIs use ITR-1? No. ITR-1 is restricted to resident individuals meeting specific simplified criteria. NRIs must use ITR-2 or ITR-3 depending on their income sources.

Q3. Do NRIs get the higher tax exemption available to resident senior citizens? No. Under the old tax regime, slab rates for non-resident individuals remain the same regardless of age.

Q4. Is Schedule FA applicable to me as an NRI? No. Schedule FA is not applicable to Non-Resident Indians; it applies only to Resident and Ordinarily Resident taxpayers.

Q5. Which form do I need if I have rental income and capital gains but no business income? ITR-2 is appropriate, since income under heads other than business/profession is covered there.

Q6. What happens if I don’t reconcile my AIS before filing? Discrepancies between your reported income/TDS and the AIS data commonly trigger reconciliation notices or processing delays. Always cross-verify before filing.

Final Words

ITR filing for Non-Resident Individuals hinges on getting the foundational determination right residential status under Section 6, before moving to form selection, supporting documentation, and regime choice. With the new tax regime now the default and surcharge/marginal relief rules adding complexity at higher income levels, NRIs with Indian-sourced income should plan their FY 2025-26 filing well ahead of the due date.

Given the cross-border nature of NRI tax positions, covering TDS reconciliation, international transaction reporting, and regime selection, professional guidance from a Chartered Accountant familiar with NRI taxation can help ensure accurate, compliant, and optimised filing for AY 2026-27.

Disclaimer: This article is intended for general informational purposes relating to ITR filing for Non-Resident Individuals for FY 2025-26 (AY 2026-27). It should not be considered professional tax advice. Readers should consult a qualified Chartered Accountant for advice based on their specific circumstances. While reasonable care has been taken to ensure accuracy, if you notice any incorrect or outdated information, please inform us and we will review and update the content accordingly.