An NRI’s obligation to file an Indian income tax return doesn’t depend on citizenship or where they live; it depends on whether they have income that is taxable in India, and the threshold for that is lower than many NRIs assume.

Under the Income Tax Act, an NRI is required to file a return in India if their total income earned or received in India exceeds the basic exemption limit, before considering any deductions or exemptions under Chapter VI-A. That income can include rent from Indian property, interest on NRO accounts, capital gains from selling Indian shares, mutual funds or property, and any business or professional income sourced in India. NRE account interest and certain other specifically exempt income don’t count toward this threshold, but nearly everything else earned in India does.

The applicable ITR form matters too. NRIs with straightforward salary and interest income typically use ITR-2, while those with business income use ITR-3, and choosing the wrong form is a common and avoidable filing error. Filing also matters even when tax has already been deducted at source, since TDS on NRI income is often deducted at a flat rate that doesn’t account for exemptions, deductions, or the actual applicable slab rate, meaning a return is frequently the only way to claim back excess TDS as a refund.

There’s a further reason to file even when not strictly required: a filed return is often necessary to access certain banking and investment facilities, and it establishes a documented tax history that becomes relevant if Indian assets are sold or repatriated in future years.

Deadlines and requirements shift from year to year through Finance Act amendments, so relying on last year’s understanding of the rules is a common source of errors.

Ashutosh Financial Services works with NRIs across time zones to keep their Indian filings accurate and on schedule. Ashutosh Financial Services runs periodic sessions specifically addressing NRI return filing obligations.