Filing in India as an NRI

Most Indian households in the US with money in India end up filing an Indian income tax return, not because the law always demands it, but because the system is built so that tax is taken first and corrected later. Banks, tenants and buyers deduct tax at source from payments to a non-resident, often at a higher rate than you finally owe, and the only way to get the difference back, or to use the India-US treaty rate, is a return. This chapter explains who must file, which form an NRI uses, how to claim back tax deducted at source (TDS), how to read the annual information statement, and the deadlines. It follows the money in chapter 1: that chapter was the US return, this one is the Indian one.

A change of law you will see in the forms

The Income-tax Act, 2025 replaced the Income-tax Act, 1961 for tax years starting on or after 1 April 2026. Two consequences matter for a return you file now.

• The year from 1 April 2025 to 31 March 2026 is still governed by the 1961 Act and is called assessment year 2026-27. Its due date has passed for most people, but a late return is still possible: the Finance Act 2026 (section 5) lets a revised return for that year be filed until the end of assessment year 2026-27. Confirm the belated-return date for that year with a Chartered Accountant.
• The year from 1 April 2026 to 31 March 2027 is the first "tax year" under the 2025 Act. Section numbers and some form names have changed. Where a section matters, this chapter gives the 2025 number and, in brackets, the 1961 number that banks, forums and older advice still use.

Who has to file

Under section 263(1)(a)(iii) of the 2025 Act (formerly section 139(1)), a person other than a company or firm must file if their total income, before the Chapter VIII deductions and certain exemptions, is above the maximum amount not chargeable to income tax. That limit is set by the Finance Act and by the tax regime you are under. The default regime in section 202 charges no tax up to 4 lakh rupees, with higher slabs above that, and the Finance Act 2026 (section 3(2)) keeps that figure for the tax year 2026-27. The old regime has a lower exempt limit, and the figure can change each year, so look up the current one.

Four situations are worth knowing:

• Income above the limit. NRO interest, rent and gains from Indian assets count. They are all income "received or accruing in India", which is what India taxes a non-resident on.
• A loss you want to carry forward. Section 263(1)(a)(viii) requires a return for a loss under capital gains or business, if you want to carry it forward.
• A narrow exception. Section 216 (formerly section 115G) says an NRI need not file if the only income is investment income or long-term capital gains from specified assets, and tax was deducted at source. The specified assets in section 212 are shares in an Indian company, debentures and deposits of Indian public companies, and Central Government securities. A bank deposit is not on that list, so the exception does not usually cover NRO interest.
• Becoming a resident. A resident other than a not-ordinarily-resident person who holds any asset outside India, or has signing authority over a foreign account, must file whatever the income (section 263(1)(a)(ix)). It matters in the year you come back, and the RNOR window in volume 3 of this shelf shapes it.

Even when you are not required to file, there are reasons to. A return is how you claim a refund of excess TDS, how you apply a treaty rate that the bank did not apply, and how you build a record of Indian income that a buyer, a bank or a later assessment can rely on.

Which form

India's return forms are numbered ITR-1 to ITR-7. The Income Tax Department's page for assessment year 2026-27 says ITR-1 (Sahaj) is for a resident other than not ordinarily resident, and bars anyone with assets or signing authority outside India. An NRI therefore cannot use ITR-1. ITR-2 is for an individual with no business or professional income who cannot use ITR-1, and ITR-3 for one who does. The forms for the first 2025-Act tax year were not published when this was read, so confirm the form name and the schedule for foreign tax credit with your Chartered Accountant.

Deadlines

Section 263(1)(c) of the 2025 Act (formerly section 139(1)) sets 31 July of the following financial year for most individuals. Audit cases have later dates. If you miss it:

• a belated return can be filed within nine months of the end of the tax year, which for a year ending 31 March means 31 December (section 263(4), formerly section 139(4));
• a revised return, to correct an error, can be filed within twelve months of the end of the tax year (section 263(5) as substituted by the Finance Act 2026, formerly section 139(5));
• an updated return is allowed within 48 months of the end of the financial year that follows the tax year, with conditions: it cannot reduce the tax or increase a refund (section 263(6), formerly section 139(8A)).

The refund rule in the last point matters. A late return that claims a refund of excess TDS is a belated return, so file it inside the nine months.

Tax deducted at source, and how to claim it back

Section 393(2) of the 2025 Act (formerly section 195) is the rule behind most NRI TDS. Payers of interest and other sums to a non-resident deduct tax at "rates in force" when the payment is credited or made. In practice banks apply a single flat rate to NRO interest, since they see only their own payment to you. That deduction is a prepayment, not the final tax.

The final tax is computed on the return, and the TDS is credited against it. If the tax computed is lower than the TDS, the difference is refunded. The treaty is one way it ends up lower. Under section 159(4) the Act applies to you "to the extent they are more beneficial", so the India-US treaty rate of 15% on interest can replace the higher rate. To claim any treaty relief a non-resident must obtain a certificate of residency from the other country's government and give the documents the rules prescribe (section 159(8), formerly section 90(4)).

For a US resident the certificate is IRS Form 6166, requested on Form 8802 (IRS, "Form 6166"). The Indian rules also ask for a statement of particulars known as Form 10F under the 1962 rules. Secondary reports (KPMG Flash News, 2 April 2026) say the Income-tax Rules, 2026 replace it with Form 41 under rule 75, to be filed in every case; the rules text was not read, so confirm the form with a Chartered Accountant. Banks often ask for their own declaration as well. Give the bank these before the interest is credited and it deducts at the lower rate from the start, which saves a year of waiting for a refund.

Two limits on this are worth keeping in mind. A treaty rate is a cap, not a floor: if the Indian rate that applies to you is already lower, it applies. And the US credit for Indian tax is limited to the treaty rate in any case (chapter 1), so a refund claimed in India does not reduce the amount you can credit in the US.

Reading the annual information statement

The Income Tax Department gives every taxpayer two views of what it knows about you. Form 26AS lists tax deducted or collected at source, taxes paid and refunds. The Annual Information Statement (AIS), on the e-filing portal under "AIS" (section 510 of the 2025 Act), adds information it receives from other sources, including specified financial transactions reported by banks and registrars, demands and refunds. For tax years from 1 April 2026, secondary sources report the annual statement as Form 168; confirm on the portal.

Before filing, check three things:

1. Every TDS entry matches a certificate from the bank, tenant or buyer, and sits under your PAN.
2. Interest, dividends and any sale reported in the AIS match your own records. A mismatch is the usual cause of a later notice.
3. The foreign-assets information received from other governments under CRS and FATCA. A CBDT memorandum of 17 July 2026 says it is now viewable under the "Reports" tab of the AIS and is not a complete record, so do not assume that income held in the US is invisible to the Indian system.

If the AIS shows something wrong, respond to it on the portal before filing rather than ignoring it.

Two returns, one set of facts

The Indian return is in rupees for April to March; the US return is in dollars for January to December. Do the Indian return first, then take the final Indian tax actually paid, after any refund, as the figure for the US credit. If a refund arrives after you filed the US return, tell your preparer, because the credit may need to be adjusted.