Do I Need to File an Income Tax Return in India as an NRI?

One situation people often overlook is selling an Indian asset.

I became an NRI and later sold an apartment in India. I had no rental income that year, but I still had a capital gains transaction. That made my tax return situation different from someone who only has a small amount of bank interest.

For AY 2026-27, the Income Tax Department says ITR-2 applies to individuals, including non-residents, who have income such as salary/pension, house property, capital gains, or income from other sources, provided they don't have business/professional income that requires ITR-3.

I also wouldn't assume that “income below ₹50 lakh” means an NRI can use ITR-1. The ₹50 lakh threshold is only one of the eligibility conditions for ITR-1, and the department explicitly excludes NRIs from that form.

If you have an NRO account, rental income, capital gains, or other Indian income, it's worth checking the filing requirement for the particular assessment year.

My situation was simpler. I live in Canada and only had interest from an NRO account in India for one year.

I initially thought that because the bank deducted TDS, filing a return was unnecessary. But I found that TDS and the obligation to file a return aren't the same thing.

You have to look at your total taxable income and the applicable return-filing conditions. Also, if excess TDS has been deducted, filing may be necessary to claim a refund.

Another thing I learned is that you shouldn't automatically report your foreign salary in India just because you're an Indian citizen living abroad. Residential status matters. The Income Tax Department's guidance says an individual must first determine whether they are Resident, RNOR or Non-Resident under the applicable rules.

For an actual NRI, the scope of Indian taxation is generally different from that of a resident. So I wouldn't assume your U.S. salary is automatically taxable in India simply because you still have an Indian passport.

My advice from experience would be to separate your Indian-source income from your foreign income and determine your Indian tax residency first.

I’ve been filing an Indian ITR even though I’m an NRI because I have rental income and interest from my NRO account.

The biggest thing I learned is that being an NRI doesn't automatically mean you don't have to file an Indian return. Your Indian tax liability depends on your residential status and the income that is taxable in India.

For example, income from property situated in India is generally relevant for Indian taxation even if you're living abroad. The same applies to certain interest and capital gains from Indian investments.

In my case, TDS was already deducted from my rental income, but I still filed the return because I needed to report the income and claim the appropriate tax treatment/refund.

I also initially tried to understand whether I could use ITR-1. An NRI cannot use ITR-1 for AY 2026-27. The Income Tax Department specifically states that ITR-1 is not available to a Non-Resident Indian.

For an NRI with income from house property, interest, and/or capital gains but no business or professional income, ITR-2 is generally the relevant form. The department confirms that ITR-2 applies to resident and non-resident individuals who do not have income under “Profits and Gains of Business or Profession.”

I’d still check the current year's filing requirements rather than copying another person's situation because the mandatory filing rules can depend on the particular facts.

My experience was similar after moving to Australia.

I had capital gains from selling mutual funds along with rental income. Although tax had already been deducted in some cases, I still filed an ITR because I wanted to report all my Indian income correctly and claim treaty benefits where applicable.

Requirements depend on your residential status, total taxable income, and the nature of your earnings. Since tax laws are updated from time to time, I review the latest rules every year before filing.

I live in the UK and only earn interest from my NRO account in India.

For a couple of years, the TDS deducted matched my tax liability, so I assumed filing wasn't necessary. Later, my accountant reviewed everything and recommended filing because my total taxable income and deductions changed.

If you have multiple sources of Indian income like rent and bank interest, it's probably worth checking your overall tax position instead of looking at each income source separately.