NRI ITR filing AY 2026-27 in India ! NRI Taxation and Residency Rule in India

Filing your Income Tax Return (ITR) for Assessment Year (AY) 2026-27 (Financial Year 2025-26) is mandatory if your total Indian income exceeds ₹2,50,000 under the Old Regime or ₹4,00,000 under the New Regime.

Even though India is transitioning to a new tax framework for the subsequent periods, your filings for AY 2026-27 remain governed by the provisions of the Income Tax Act, 1961.

Under Section 6 of the Income Tax Act, 1961, your residential status is determined solely by the number of days you physically stay in India during a specific Financial Year (FY) from 1st April to 31st March. Your purpose of stay, nationality, or visa type does not change this core physical counting rule.

You are classified as a Non-Resident Indian (NRI) for a financial year if you FAIL to meet both of the basic residency conditions.

An individual becomes a Resident of India if they meet any one of these two conditions:

1. Condition A: Stay in India is 182 days or more during the current FY.
2. Condition B: Stay in India is 60 days or more during the current FY AND a total of 365 days or more during the preceding 4 FYs.

The Income Tax Department modifies Condition B (replacing the 60-day threshold) for specific categories of individuals:

If you are an Indian citizen leaving India in an FY for foreign employment or as a member of the crew of an Indian ship, the 60-day limit in Condition B is extended to 182 days.

• Result: You become an NRI if your physical stay in India during that specific FY is less than 182 days.

If you are an Indian citizen or a Person of Indian Origin (PIO) living abroad and you come to visit India, and your total income from Indian sources is up to ₹15,00,000, the 60-day limit in Condition B is extended to 182 days.

• Result: You maintain your NRI status as long as your visit to India does not exceed 181 days in that fiscal year.

If you are an Indian citizen or PIO visiting India and your total income from Indian sources exceeds ₹15,00,000, the 60-day limit in Condition B is replaced with 120 days.

• Result: You become a Resident (specifically Resident but Not Ordinarily Resident – RNOR) if you stay in India for 120 days or more (but less than 182 days) AND have been in India for 365 days or more in the past 4 years. You remain an NRI only if your stay is under 120 days.

Introduced under Section 6(1A), an Indian citizen will be deemed a tax resident of India (and lose strict NRI status privileges) regardless of physical stay if:

• Their total income from Indian sources exceeds ₹15,00,000 during the financial year.
• They are not liable to pay tax in any other country by reason of domicile, residence, or any other similar criteria (e.g., individuals living in tax-free countries like the UAE or Qatar while maintaining high Indian revenues).

• 31st July 2026: Deadline for salaried NRIs and individuals not requiring a tax audit (ITR-2).
• 31st August 2026: Deadline for non-audit business or professional returns (ITR-3).
• 31st December 2026: Last date to file a Belated Return (accompanied by a late fee up to ₹5,000 under Section 234F).
• 31st March 2027: Deadline to file a Revised Return to correct previously filed errors. ]

NRIs are taxed strictly on income earned, accrued, or received within India (e.g., NRO account interest, property rent, capital gains, or capital assets). Foreign-sourced income is entirely exempt. Unlike resident individuals, NRIs do not get a higher basic exemption limit for being senior or super senior citizens.

The New Tax Regime operates as the default option unless you explicitly opt out to file under the Old Regime.

 

Surcharge Rates:

 

Income Limit	Surcharge Rate on the amount of Income Tax           (New Tax Regime)	Surcharge Rate on the amount of Income Tax            (Old Tax Regime)
Up to Rs. 50 lakhs	Nil	Nil
Rs. 50 lakhs to Rs. 1 Crore	10%	10%
Rs. 1 Crore to Rs. 2 Crores	15%	15%
Rs. 2 Crores to Rs. 5 Crores	25%	25%
Above Rs. 5 Crores	25%	37%

 

Note: The enhanced surcharge of 25% & 37% is not levied, from income chargeable to tax under sections 111A, 112, 112A and Dividend Income to the extent applicable to non-residents. Hence, the maximum rate of surcharge on tax payable on such incomes shall be 15%, except when the income is taxable under section 115A, 115AB, 115AC, 115ACA and 115E.

NRIs cannot file ITR-1 (Sahaj) under any circumstances. You must choose from the following based on your Indian revenue stream:

• ITR-2: For NRIs with income from salary, pension, house property, capital gains (stocks, mutual funds, or real estate), or income from other sources (such as interest).
• ITR-3: For NRIs earning income from a business or a profession in India.

Non-Resident Indians (NRIs) are strictly NOT eligible to claim the tax rebate under Section 87A of the Income Tax Act, 1961.

According to the statutory framework of the Act, Section 87A explicitly states that the rebate is only available to an individual who is a Resident in India. Even if an NRI’s total Indian taxable income falls below the zero-tax thresholds, they must pay tax as per the standard slab rates.

• Under the New Tax Regime:
  • First ₹4,00,000: Nil Tax
  • Remaining ₹2,00,000 (taxed at 5%): ₹10,000
  • Section 87A Rebate: ₹0 (Not Allowed)
  • Add 4% Health & Education Cess: ₹400
  • Total Tax Payable by NRI: ₹10,400
  • (Note: A resident Indian with this exact income pays ₹0 tax because their ₹10,000 liability is fully wiped out by the Section 87A rebate).

Certain deductions are allowed to residents under old regime but not allowed to NRI’s if they opt old regime.

Since you cannot claim the Section 87A rebate, you should utilize alternative provisions under the Income Tax Act to reduce your net taxable income:

1. Chapter VI-A Deductions (Old Regime Only): You can reduce taxable income by investing up to ₹1,50,000 under Section 80C (ELSS, Life Insurance premiums, Principal repayment of home loans).
2. Health Insurance (Section 80D): Deductions are allowed for premiums paid for health insurance policies covering your parents or family in India.
3. NRE Account Exemption: Keep your foreign earnings in an NRE account, as the interest earned on NRE accounts is 100% tax-free for NRIs under Section 10(4C).
4. DTAA Relief: Use the Double Taxation Avoidance Agreement (DTAA) via Section 90 to claim lower Tax Deducted at Source (TDS) rates on NRO interest or property sales.

1. Access the Portal: Log in to the Income Tax Department e-Filing Website using your PAN.
2. Verify Information Statements: Download and verify your Annual Information Statement (AIS) and Form 26AS to reconcile Indian TDS deducted on NRO/NRE deposits or asset sales.
3. Initiate Return: Navigate to e-File > Income Tax Returns > File Income Tax Return. Select AY 2026-27 and opt for the online filing path.
4. Confirm Status: Choose your residential status explicitly as Non-Resident (NRI).
5. Declare Bank Accounts: Provide details of your active NRO and NRE bank accounts in India. You must flag at least one account to safely receive any computed tax refunds.
6. Claim DTAA Benefits: If your income faces dual taxation, fill out Schedule FSI and Schedule TR to claim foreign tax credits or lower tax rates under the Double Taxation Avoidance Agreement (DTAA).
7. E-Verify: Authenticate your submitted return within 30 days via Net Banking, an Indian bank account EVM, or via an Aadhaar-linked OTP.