Step-by-Step Guide for NRIs to File Income Tax Return in India and Claim TDS Refund (FY 2025-26)

For Non-Resident Indians (NRIs), filing an Income Tax Return (ITR) in India might not feel urgent—especially if tax has already been cut from the income. But in many cases, tax is still deducted at source (TDS) even when the income is below the taxable limit or qualifies for exemptions. This article explains how NRIs can file their ITR and get a refund for the extra tax deducted.

Why NRIs Should File ITR in India (Guide for NRIs to File Income Tax Return)

Even if you’re living and earning abroad, it’s often important to file your Income Tax Return (ITR) in India, especially if:

You earn income in India like rent, capital gains, or interest
You want to claim a refund for extra TDS (tax) deducted
You have capital losses that you want to carry forward
You’re applying for a lower TDS certificate or taking a home loan in India

TDS for NRIs is usually cut at fixed high rates, which can mean you end up paying more tax than needed. Filing ITR helps correct that.

Who is Treated as an NRI Under Income Tax Rules?

According to Section 6 of the Income Tax Act:
You are considered a Non-Resident Indian (NRI) if you stay in India for less than 182 days in a financial year and for less than 365 days in total over the last four years.

Your residential status decides how your income will be taxed and what deductions you can claim.

Income on Which NRIs Must Pay Tax in India (Guide for NRIs to File Income Tax Return)

As an NRI, you only need to pay tax on income that is earned or received in India. This includes:

Rent from property located in India
Capital gains from selling property or shares in India
Interest earned on NRO (Non-Resident Ordinary) account
Dividend income from Indian companies

When is TDS Deducted for NRIs?

TDS (Tax Deducted at Source) is taken at fixed rates for NRIs:

20% on long-term capital gains (plus extra charges and cess)
30% on short-term capital gains, rent, or interest
10% on dividend income (if applicable)

Even if your total income is below the basic exemption limit, TDS is still deducted. That’s why filing an income tax return becomes important—to claim any extra tax back.

TDS Refund for NRIs: When and Why?

TDS is usually cut without checking if you qualify for deductions or lower tax slabs. You can get a refund if:

The TDS cut is more than your actual tax amount
You’ve reinvested capital gains under Sections 54, 54EC, etc.
You had no taxable income, but tax was still deducted

To get this extra money back, you must file your tax return.

Step-by-Step Guide to File ITR for NRIs in India

Apply for a PAN Card

You need a PAN (Permanent Account Number) to file your return. If you don’t have one, apply online.

Link PAN with Aadhaar or Share Passport Details

Link your PAN with Aadhaar if you have it. If you don’t, you may need to provide your passport details instead.

Pick the Right ITR Form

Use ITR-2 if you don’t have any business income in India.
Use ITR-3 if you earn from a business or profession in India.

Gather All Income and Tax Documents

Form 16A (for TDS details)
Form 26AS (summary of taxes deducted)
Property sale deeds, rent agreements, and bank interest certificates

Declare Foreign Assets (If Required)

If you qualify as a Resident but Not Ordinarily Resident (RNOR) or a Resident, you must declare overseas assets and accounts.

File Your Return on the Income Tax Website

Go to https://incometax.gov.in, fill in your details, and submit your return online.

Verify Your Return
You can confirm your return using Aadhaar OTP, NetBanking, or by sending a signed copy of ITR-V to CPC Bengaluru.

How to Claim TDS Refund While Filing ITR

Check your Form 26AS to make sure all TDS (tax deducted) entries are correct.
Enter the TDS details under the ‘Tax Details’ section while filing your return.
After your return is processed, the refund will be credited to your NRO bank account.

Simple Tips to Reduce Tax and Avoid TDS Problems (Guide for NRIs to File Income Tax Return)

Apply for Form 13 to request lower or no TDS on your income.
Make use of tax treaties between India and your country by submitting a Tax Residency Certificate (TRC) along with Form 10F.
Prefer NRE accounts, as interest earned on them is tax-free.
Always file your return before the due date to avoid penalties and delays in getting refunds.

Important ITR Deadlines for NRIs

Last date to file: 31st July 2025 (for Financial Year 2024–25)
Late fee: ₹1,000 to ₹5,000 if filed after the deadline
TDS refund: Usually takes 2 to 6 months after filing your return

Documents Needed for NRI Income Tax Return Filing

PAN card
Passport (to prove your residential status)
Form 16A / Form 26AS (for TDS details)
Property documents like sale deeds, rent agreements, or interest certificates
Bank account details (preferably an NRO account for receiving refunds)

Final Thoughts

Filing your income tax return in India as an NRI is not just a rule—it helps you recover any extra tax deducted and stay on the right side of the law. With proper documents and the correct steps, you can:

File your return without hassle
Avoid paying tax twice on the same income
Get back the refund that’s rightfully yours

Tip: It’s always wise to speak to a tax professional who understands NRI tax rules for the best results.

Disclaimer: The content on this website is for informational purposes only and does not constitute legal, financial, or professional advice. Please consult qualified experts before acting on any information. K M GATECHA & CO LLP accepts no liability for errors, omissions, or outcomes from the use of this content. This site is not an advertisement or solicitation.