Important ITR Sections for NRI: Declarations and Reporting (FY 2025–26)
Non-Resident Indians (NRIs) have specific Income Tax Return (ITR) requirements to declare Indian income, foreign assets, and capital gains. Proper reporting ensures compliance, avoids penalties, and optimizes tax planning. This guide covers: Key ITR...
Non-Resident Indians (NRIs) have specific Income Tax Return (ITR) requirements to declare Indian income, foreign assets, and capital gains. Proper reporting ensures compliance, avoids penalties, and optimizes tax planning.
This guide covers:
Key ITR sections for NRIs
Schedule FA (foreign assets) reporting
Income from property, capital gains, and investments
Tax-saving strategies and documentation
Key ITR Sections for NRIs
| Section | Purpose | Notes FY 2025–26 |
| ITR-2 | Income from salary, house property, capital gains, other sources | NRIs must use ITR-2 (cannot use ITR-1) |
| Schedule FA | Declaration of foreign assets & income | Includes bank accounts, shares, mutual funds, property outside India |
| Schedule CG | Reporting capital gains | Includes Indian property, mutual funds, equity, and crypto |
| Schedule TDS | TDS on interest, rent, or professional income | Verify TDS credits before filing |
| Schedule OS | Income from other sources | Dividend, interest, pension received in India |
| Schedule DI | Dividend income exemptions | Apply Section 10(34) & 115BBDA rules if applicable |
Tip: NRIs must report all foreign assets and income even if already taxed abroad.
Income Types & Reporting
1. Indian Source Income
Salary received in India
Rental income from Indian property
Capital gains from Indian property or securities
2. Foreign Source Income
Not taxable in India if NRI status is valid
Must be declared in Schedule FA
3. Capital Gains
Short-term & long-term gains on Indian property & securities
Exemptions under Sections 54, 54F, 54EC available for property gains
4. Investments
Indian bank interest, FDs, mutual funds, equity
Ensure correct reporting of TDS and exemptions
Step-by-Step Filing Tips for NRIs
Select Correct ITR Form (ITR-2)
Fill Personal Details & NRI Status
Report Indian Income Accurately
Declare Foreign Assets in Schedule FA
Claim Eligible Deductions (Chapter VI-A)
Check TDS Credits & Payments
Verify and Submit Online via Digital Signature or Aadhaar OTP
Example: Reporting Rental Income
Scenario: NRI owns property in Mumbai, rents ₹1,50,000/year, TDS 10% deducted
Rental Income: ₹1,50,000
TDS Deducted: ₹15,000
Deduct 30% standard deduction for property
Taxable Rental Income: ₹1,50,000 – ₹45,000 = ₹1,05,000
Claim TDS ₹15,000 in ITR
Report in Schedule HP
Common Mistakes NRIs Make
Using ITR-1 instead of ITR-2
Not reporting foreign assets in Schedule FA
Incorrectly claiming deductions not allowed for NRIs
Ignoring capital gains exemptions
Missing TDS credits reconciliation
FAQs
Q1: Are NRIs required to report foreign bank accounts?
Yes, under Schedule FA even if no Indian tax liability arises.
Q2: Can NRIs claim 80C deductions?
Yes, investments in Indian tax-saving instruments are eligible.
Q3: How is rental income taxed for NRIs?
At 30% plus applicable cess, with standard deduction of 30% under Section 24.
Q4: Is TDS on Indian income sufficient?
TDS is provisional; final tax liability is determined in ITR.
Internal Links
ITR Filing Online for NRIs
Schedule FA Explained
NRI Capital Gains Tax Planning
Conclusion
Accurate reporting of income, assets, and deductions is crucial for NRI compliance. Filing ITR on time with correct schedules ensures:
Avoidance of penalties
Smooth repatriation of funds
Optimized tax planning in India
WonderTax experts assist NRIs with full ITR filing, Schedule FA reporting, and capital gains planning, ensuring 100% compliance for FY 2025–26.
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Schedule FA reporting guidance
Capital gains & rental income reporting
Tax optimization strategies for NRIs
