The Income Tax Department has announced the Income Tax Return (ITR) forms for the financial year 2024–25 (assessment year 2025–26), officially kicking off the annual tax filing season in India. While software utilities for ITR-1 and ITR-4 have already been made available, the utility for ITR-2 — crucial for Non-Resident Indians (NRIs) — is still awaited. This delay has left many NRIs and Overseas Citizens of India (OCIs) uncertain about how to proceed, especially since ITR-2 is the primary form for those who do not have business or professional income in India.
Tax experts, including platforms like TaxBuddy, have cautioned NRIs to be careful when calculating their liabilities. In a recent case, an NRI named Rahul believed he had no tax liability as his post-deduction income was below ₹12 lakh. However, due to misinterpretation of tax rules, he ended up with a demand notice for ₹59,904. This highlights the importance of understanding India’s NRI-specific tax regulations.
There are over 4.5 crore NRIs and OCIs across the globe, and incorrect tax assumptions or delays in filing could have significant consequences. The due date for NRI tax filing for FY 2024–25 has been extended to September 15, 2025. Late filing can lead to interest under Sections 234A, 234B, and 234C, and penalties ranging from ₹1,000 to ₹5,000 under Section 234F, depending on income levels.
Determining residency status is a key factor in understanding tax obligations. An individual qualifies as an NRI if they stay less than 182 days in India during FY 2024–25, and less than 60 days in the current financial year, along with a total of fewer than 365 days in India over the past four financial years. Even one additional day in India beyond these limits can change a person’s tax residency and alter the tax rules applicable to them.
For filing, NRIs are required to use either ITR-2 or ITR-3, depending on their income source. ITR-1 and ITR-4 are not applicable. ITR-2 is suitable for those without business or professional income, while ITR-3 is for those who do. Essential documents for filing include a passport to confirm travel history, NRO/NRE/FCNR bank account statements, Form 26AS, the Annual Information Statement (AIS), Taxpayer Information Summary (TIS), Form 10F, and a Tax Residency Certificate (TRC).
Only income that is earned or accrued in India is taxable for NRIs. Foreign income is not taxed unless it is received directly in India. While interest from NRE and FCNR accounts is exempt, it still must be reported in the return. Foreign assets generally don’t require disclosure, unless special rules apply.
Several new tax provisions come into effect from FY 2024–25. NRIs filing ITR-2 must report Indian assets and liabilities only if their gross taxable income exceeds ₹1 crore. Foreign assets continue to be exempt from disclosure in ITR-2. A new capital gains reporting rule starting July 23, 2024, requires gains to be split and reported separately for periods before and after that date, improving accuracy in tax calculations.
For those claiming relief under Double Taxation Avoidance Agreements (DTAA), Form 10F and a TRC from the foreign tax authority are mandatory. These must be submitted in advance, and Form 67 must also be filed before submitting the ITR to claim foreign tax credit. Failing to file Form 67 can result in denial of such credit, even under valid DTAA terms.
Experts strongly recommend that NRIs begin preparing early—verifying their residency status, collecting required documents, and avoiding last-minute assumptions. As India’s tax filing system becomes more digitized and stringent, early preparation remains the most effective way to ensure compliance and avoid unexpected tax demands or penalties.
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