Aarti's been in Dubai for 5 years. UAE salary, UAE bank, UAE life. But the Pune flat earns ₹35,000/month rent — and the tenant has been deducting TDS. "Do I file ITR in India?"
Yes. Indian-source income = Indian ITR. Even if you're NRI. Let's untangle this.
- NRI for tax: in India < 182 days in the FY (and other conditions). Passport doesn't decide.
- NRIs taxed on Indian-source income only — Indian salary, rent, capital gains, FD interest, etc.
- DTAA with most countries prevents double tax. Claim foreign tax credit (Form 67) or treaty rate.
- NRO interest fully taxable; NRE interest exempt (when NRI).
The 182-day test (Sec 6 of Income Tax Act)
→ Resident
→ Resident (with some carve-outs for going-abroad-for-employment)
→ NRI for tax
Indian citizen with Indian income > ₹15L who isn't taxed in any other country → deemed resident even if outside India 365+ days. Designed to catch stateless tax-arbitrageurs.
What India taxes for NRIs
Indian rent / property
Always taxable
Rent on Indian property = Indian income. Tenant deducts 30% TDS for NRI landlords (Sec 195). Standard deduction 30% available.
Indian capital gains
STT / property
Sold Indian shares / MF / property → capital gains tax under Indian law. Buyer deducts 1% TDS on property > ₹50L.
NRO interest
Fully taxable
Bank deducts 30% TDS. NRE / FCNR interest is exempt (when you're NRI).
DTAA — avoid double tax
India has Double Taxation Avoidance Agreements with 90+ countries. They specify:
👉 Which country has primary right to tax (often residence country)
👉 Cap on rate the source country can deduct (often 10-15% on royalties, interest)
👉 Credit / exemption method for the other country
To claim treaty benefit:
👉 Get Tax Residency Certificate (TRC) from your country of residence
👉 File Form 10F with the IT portal
👉 Mention DTAA article in ITR
👉 If foreign tax credit applies, file Form 67 before ITR filing
Which ITR form to use
- ITR-2 — most NRIs. Salary (Indian), house property, capital gains, other sources.
- ITR-3 — if you have business / profession income in India.
- ITR-1 (Sahaj) is NOT for NRIs.
Aarti's actual filing
Status: NRI (in India ~30 days/year). Indian income: rent ₹4.2L gross.
Tenant deducted ₹1.26L (30% of ₹4.2L) but Aarti's actual liability after standard deduction ≈ ₹40k. She'll get a refund of ~₹86k. Worth filing ITR for that alone.
What NRIs commonly miss
👉 Schedule FA — if you become resident later, you must report foreign assets. Penalty for missing = ₹10L per asset.
👉 Form 67 — must be filed before ITR to claim foreign tax credit. Many file ITR first and lose credit.
👉 NRO vs NRE — NRO interest is taxable + TDS @ 30%. NRE interest is exempt. Make sure salary lands in right account.
👉 Returning Indian (RNOR status) — if you return after long stay abroad, you get 2-3 years as "Resident but Not Ordinarily Resident" — foreign income still exempt during that window.
Most NRIs over-pay TDS and never file ITR to claim the refund. ₹50k-₹2L sits with the IT department forever. File the return — the money is yours.
Quick answers
India-UAE DTAA exists for residency clarity, treaty rates, and TRC purposes. Even if your residence country has no income tax, treaty residency rules still apply for India's perspective. Get a TRC.
If TDS was deducted and you want refund — yes (under threshold income, full TDS comes back). If no TDS and income under basic exemption — technically no, but recommended for paper trail.
Yes — NRIs can claim 80C, 80D, etc. under old regime. New regime applies to NRIs too (default if you don't opt out).
Same as residents — STCG vs LTCG by holding period. Buyer deducts 1% TDS if value > ₹50L. Indexation benefit applies for LTCG. Section 54 / 54EC exemptions also available.
No, if you're NRI. Foreign-source income of NRIs isn't taxed in India. If you become resident, all foreign income becomes taxable (with DTAA credit available).
When you might want help
Single-rental NRI ITR is DIY-able. Where it pays off: DTAA + Form 67 for foreign tax credit, RNOR planning for returning NRIs, Schedule FA disclosures (penalty ₹10L per missed asset), and property sale TDS reconciliation.
Filing NRI ITR?
We handle residency, DTAA, foreign tax credit, Schedule FA. Most refunds in 30-60 days.