ITR filing for NRI AY 2026-27 ! New Income Tax Rules in India
For Assessment Year (AY) 2026-27 (Financial Year 2025-26), Non-Resident Indians (NRIs) must file an Income Tax Return (ITR) if their total income in India exceeds the basic exemption limit.
1. Key Deadlines for ITR filing for NRI AY 2026-27
For Assessment Year (AY) 2026-27, there is a staggered deadline system introduced to ease the rush during peak filing season.
The 31 August 2026 deadline specifically applies to non-audit business and professional cases (typically those filing ITR-3 or ITR-4).
Final Deadline Breakdown (AY 2026-27)
| Category of Taxpayer | Applicable ITR Forms | Original Due Date |
|---|---|---|
| Salaried Individuals & Pensioners (Non-business cases) | ITR-1 & ITR-2 | 31 July 2026 |
| Non-Audit Business/Profession (Small businesses, freelancers, non-audit firm partners) | ITR-3 & ITR-4 | 31 August 2026 |
| Tax Audit Cases | ITR-3, ITR-5, ITR-6 | 31 October 2026 |
| Transfer Pricing Cases | ITR-3, ITR-6 | 30 November 2026 |
Key Considerations for NRIs
- Form Choice Matters: If you are an NRI with only salary, property income, or capital gains (using ITR-2), your deadline remains 31 July 2026.
- Business Extension: You only get until 31 August if you have income from profits and gains of business or profession in India and are not subject to a tax audit.
- Belated Return: Can be filed until 31 December 2026 (belated) with late fees of ₹1,000–₹5,000 depending on Income.
- Revised Returns: Budget 2026 permanently extended the deadline to revise your return to 31 March 2027, though a fee of ₹1,000–₹5,000 may apply if filed after 31 December 2026.
2. Applicable ITR Forms for NRIs
- ITR-2: Generally used by NRIs with income from salary, multiple house properties, or capital gains from sale of assets like shares or real estate.
- ITR-3: Used if you have income from a business or profession in India.
- ITR-1 (Sahaj): Cannot be used by NRIs; it is strictly for residents.
- ITR-4 (Sugam): Available for NRIs opting for presumptive taxation (e.g., sections 44B, 44BB, 44BBA) for specific Indian businesses, now requiring separate disclosure of turnover and net profit.
3. Basic Exemption Limit (AY 2026-27) for NRIs
The New Tax Regime is the default for this assessment year.
- Basic Exemption Limits for NRIs:
- New Tax Regime: Income up to ₹4 lakh is exempt.
- Old Tax Regime: Income up to ₹2.5 lakh is exempt.
- Surcharge: Remains capped at 25% for income exceeding ₹2 crore.
4. Income Tax Slabs for NRIs
Income Tax Slabs for NRIs (New Regime – AY 2026-27)
Since NRI cannot claim the rebate, your tax will be calculated as follows once NRI cross the ₹4 lakh limit:
| Taxable Income (₹) | Tax Rate |
|---|---|
| Up to 4,00,000 | Nil |
| 4,00,001 – 8,00,000 | 5% |
| 8,00,001 – 12,00,000 | 10% |
| 12,00,001 – 16,00,000 | 15% |
| 16,00,001 – 20,00,000 | 20% |
| 20,00,001 – 24,00,000 | 25% |
| Above 24,00,000 | 30% |
Income Tax Slabs for NRIs (old Regime – AY 2026-27)
For Assessment Year (AY) 2026-27, the Old Tax Regime slabs for Non-Resident Indians (NRIs) remain the same as the previous year. Unlike residents, NRIs do not get a higher basic exemption limit based on age; the threshold remains ₹2.5 lakh even for senior and super senior citizens.
NRI Income Tax Slabs: Old Regime (AY 2026-27)
| Net Taxable Income | Tax Rate |
|---|---|
| Up to ₹2,50,000 | Nil |
| ₹2,50,001 – ₹5,00,000 | 5% of income exceeding ₹2,50,000 |
| ₹5,00,001 – ₹10,00,000 | ₹12,500 + 20% of income exceeding ₹5,00,000 |
| Above ₹10,00,000 | ₹1,12,500 + 30% of income exceeding ₹10,00,000 |
Key Rules & Benefits (Old Regime)
- No Section 87A Rebate:This rebate (up to ₹12,500 in the old regime) is available only to resident individuals. NRIs must pay tax as per the slabs once income crosses ₹2.5 lakh.
- Standard Deduction: If NRI have income from salary or pension in India, you are eligible for a flat standard deduction of ₹50,000 under the Old Regime.
- Deductions Allowed: NRI can claim popular deductions like Section 80C (up to ₹1.5 lakh for LIC, PPF, etc.), Section 80D (health insurance premiums), and Section 80TTA (interest on savings accounts up to ₹10,000).
- Cess & Surcharge: A health and education cess of 4% is applicable on the total tax liability. Surcharges apply if NRI’s Indian income exceeds ₹50 lakh.
- Age-Based Limits: Resident senior citizens enjoy a ₹3 lakh limit, and super senior residents get ₹5 lakh. However, for NRIs, the limit is strictly ₹2.5 lakh regardless of age.
5. Tax Rebate not allowed to NRI
For Assessment Year (AY) 2026-27, the Section 87A rebate is not allowed for NRIs.
Key Rules for NRIs (AY 2026-27)
- Eligibility Restricted: Only resident individuals can claim the Section 87A rebate.
- Zero-Tax Threshold Difference:
- Residents: Pay zero tax on income up to ₹12 lakh (New Regime) or ₹5 lakh (Old Regime) due to the rebate.
- NRIs: Must pay tax on any income exceeding the Basic Exemption Limit, as the rebate cannot be used to reduce their liability to zero.
6. Deductions allowed to NRI (AY 2026-27)
While NRI cannot claim the rebate, you are still eligible for standard deductions and exemptions under Section 80C (up to ₹1.5 lakh), Section 80D (health insurance), and Section 80TTA (savings interest) if NRI’s opt for the Old Tax Regime.
Surcharge for Non-Resident Indians (NRIs) in AY 2026-27 is calculated as a percentage of your total income tax liability when your taxable income in India crosses specified limits. The rates are generally identical for both resident and non-resident individuals. [1, 2, 3]
7. Surcharge Rates for NRIs (AY 2026-27)
| Total Income in India | New Tax Regime | Old Tax Regime |
|---|---|---|
| Up to ₹50 Lakh | Nil | Nil |
| ₹50 Lakh – ₹1 Crore | 10% | 10% |
| ₹1 Crore – ₹2 Crore | 15% | 15% |
| ₹2 Crore – ₹5 Crore | 25% | 25% |
| Above ₹5 Crore | 25% (Capped) | 37% |
Key Highlights
- Reduced Maximum Rate: Under the New Tax Regime, the highest surcharge rate is capped at 25% for income exceeding ₹5 crore, providing significant relief compared to the 37% rate under the Old Regime.
- Special Income Capping: The surcharge is capped at 15% for specific types of income, regardless of your total income level:
- Dividend income from Indian companies.
- Short-term capital gains on listed equity shares (Section 111A).
- Long-term capital gains on listed equity (Section 112A) or other capital assets (Section 112).
- Marginal Relief: If your income only slightly exceeds a threshold (e.g., ₹51 lakh or ₹1.01 crore), you can claim marginal relief to ensure that the additional tax and surcharge paid do not exceed the additional income earned above that threshold.
8. Health & Education Cess Rates for NRIs (AY 2026-27)
Health & Education Cess: A flat 4% cess is added to the total amount of income tax plus any applicable surcharge.
9. Key Rules for Schedule AL (AY 2026-27)
For Assessment Year (AY) 2026-27, the threshold for mandatory disclosure of assets and liabilities has been increased. Individuals and HUFs are now required to fill Schedule AL only if their total net income exceeds ₹1 crore. Previously, this requirement applied to those earning more than ₹50 lakh.
Assets to be Disclosed
If your Indian income crosses the ₹1 crore mark, you must report the following categories in ITR-2 or ITR-3:
- Immovable Property: Land and buildings, including their full address and cost.
- Movable Property:
- Financial Assets: Bank deposits, shares, securities, insurance policies, and loans/advances given.
- Luxury & High-Value Items: Jewellery, bullion, vehicles, yachts, boats, and aircraft.
- Cash in Hand: Closing balance as of 31 March.
- Business Interests: Any interest held as a partner or member in the assets of a firm or Association of Persons (AOP).
- Notes :-
- For NRIs & RNORs: You are only required to disclose assets located in India. Foreign assets and liabilities remain excluded from this schedule for non-residents.
- Cost Basis: All assets must be reported at cost price (purchase price plus improvement costs) rather than current market value.
- Liabilities: You must disclose all outstanding liabilities (such as housing or personal loans) that were specifically incurred in relation to the reported assets.
Critical Exception for Residents
If your status changes to Resident and Ordinarily Resident (ROR), you must also report all foreign assets (bank accounts, properties, etc.) regardless of your income level, but these are typically reported in a separate Schedule FA rather than Schedule AL.
10. Major Reporting Changes for NRI
- Presumptive Income: NRIs using presumptive schemes must now separately disclose total receipts/turnover and the corresponding net profit in their ITR.
- Capital Gains: The requirement to report gains specifically before or after 23 July 2024 has been removed in the new forms.