The Income Tax Department has notified the income tax return (ITR) forms for FY 2024-25 (AY 2025-26). But, although software utilities for ITR-1 and ITR-4 have been released by the tax department, it still hasn't rolled out the software utilities for ITR-2 and the other ITR forms. Non-Resident Individuals (NRIs) mainly use ITR-2 to file their tax returns.
For FY 2024-25 (AY 2025-26), there have been quite a few updates in the Income Tax Act, 1961, such as new capital gains regulations and changes in the income tax slabs. This might leave NRIs wondering how these changes will affect their ITR filing.
ET Wealth Online explains the four updates that will affect ITR filing by NRIs in FY 2024-25 (AY 2025-26)
1) Threshold for reporting assets and liabilities increased: The government has increased the threshold for reporting assets and liabilities for individuals who would be filing ITR-2. Tarun Garg, Director, Deloitte India, says, "According to the new rule, an NRI filing ITR-2 is required to report his/her assets and liabilities only if his/her gross taxable income exceeds Rs 1 crore in FY 2024-25. It is important to note that NRIs are required to report their Indian assets and liabilities in ITR 2. Foreign assets and liabilities are not required to be reported by an NRI in the ITR-2 form."
2) Segregation of capital gains by date of sale: The new capital gains tax regime took effect on July 23, 2024. For capital gains (short-term or long-term) transactions that occurred before July 23, 2024, the old capital gains tax rate will apply. Hence, it is essential to know the actual date of sale or transfer to calculate the correct income tax liability. Garg says, "The ITR-2 form has simplified the compliance process for reporting capital gains for taxpayers, including NRIs. There is a segregation in the ITR-2 form to allow NRI taxpayers to report their capital gains (short-term or long-term) before and/or after July 23, 2024. This segregation will help taxpayers to report their (capital gains) incomes to the tax department accurately."
3) Enhanced disclosures in ITR forms: The ITR-1 and ITR-4 forms released by the Income Tax Department have enhanced the disclosure requirements. Garg says, "The ITR-1 and ITR-4 utilities released by the Income Tax Department have enhanced the disclosure requirements. A taxpayer is required to provide additional details with respect to deductions and exemptions claimed. For instance, if Section 80C deduction is claimed for a life insurance policy, then the taxpayer will be required to report the policy number. Similarly, NPS investments will require reporting of PRAN account number in the ITR form while claiming Section 80CCD deduction."
4) ITR filing deadline extended: The ITR filing deadline has been extended from July 31, 2025, to September 15, 2025, for FY 2024-25 (AY 2025-26). The extended deadline applies to salaried, pensioners, NRIs and other taxpayers whose accounts are not required to be audited.
Garg says, "The extended deadline allows NRIs and other taxpayers more time to file their tax return. While filing ITR, NRIs should remember that they can claim tax benefits under the Double Tax Avoidance Agreement (DTAA), provided they have filed the Form 10F. There is no specific deadline to file Form 10F, and it is valid for one year from the date of filing. Form 10F filed between April 1, 2024, and March 31, 2025, would help NRI taxpayers to have lower TDS deducted from their income during FY 2024-25 and help them claim treaty benefits while filing ITR as well."
The government tweaked the income tax slabs under the new tax regime for the financial year 2024-25. There were no changes in the income tax slabs under the old tax regime.
Also Read: Income tax slabs for FY 2024-25 (AY 2025-26) under new and old tax regime
Which ITR form is used for NRIs to file their tax return?
NRIs typically use the ITR-2 form to file their income tax return in India. However, it is advisable to check the sources of income to identify the correct form for ITR filing.
Is it mandatory for an NRI to file ITR?
NRIs are mandatorily required to file their income tax return if their taxable income exceeds the specified threshold or if they have to claim an income tax refund.
What is the difference between ITR 1 and ITR 2 for NRI?
NRIs cannot file an income tax return using ITR-1 form. However, they can file their tax return using ITR-2 form.
How can an NRI e-verify ITR?
An NRI can e-verify their ITR using the Net Banking facility if they are unable to use the Aadhaar facility for ITR verification. NRIs can also use the EVC generated through a pre-validated bank account or demat account to verify the bank account.
For FY 2024-25 (AY 2025-26), there have been quite a few updates in the Income Tax Act, 1961, such as new capital gains regulations and changes in the income tax slabs. This might leave NRIs wondering how these changes will affect their ITR filing.
ET Wealth Online explains the four updates that will affect ITR filing by NRIs in FY 2024-25 (AY 2025-26)
1) Threshold for reporting assets and liabilities increased: The government has increased the threshold for reporting assets and liabilities for individuals who would be filing ITR-2. Tarun Garg, Director, Deloitte India, says, "According to the new rule, an NRI filing ITR-2 is required to report his/her assets and liabilities only if his/her gross taxable income exceeds Rs 1 crore in FY 2024-25. It is important to note that NRIs are required to report their Indian assets and liabilities in ITR 2. Foreign assets and liabilities are not required to be reported by an NRI in the ITR-2 form."
2) Segregation of capital gains by date of sale: The new capital gains tax regime took effect on July 23, 2024. For capital gains (short-term or long-term) transactions that occurred before July 23, 2024, the old capital gains tax rate will apply. Hence, it is essential to know the actual date of sale or transfer to calculate the correct income tax liability. Garg says, "The ITR-2 form has simplified the compliance process for reporting capital gains for taxpayers, including NRIs. There is a segregation in the ITR-2 form to allow NRI taxpayers to report their capital gains (short-term or long-term) before and/or after July 23, 2024. This segregation will help taxpayers to report their (capital gains) incomes to the tax department accurately."
3) Enhanced disclosures in ITR forms: The ITR-1 and ITR-4 forms released by the Income Tax Department have enhanced the disclosure requirements. Garg says, "The ITR-1 and ITR-4 utilities released by the Income Tax Department have enhanced the disclosure requirements. A taxpayer is required to provide additional details with respect to deductions and exemptions claimed. For instance, if Section 80C deduction is claimed for a life insurance policy, then the taxpayer will be required to report the policy number. Similarly, NPS investments will require reporting of PRAN account number in the ITR form while claiming Section 80CCD deduction."
4) ITR filing deadline extended: The ITR filing deadline has been extended from July 31, 2025, to September 15, 2025, for FY 2024-25 (AY 2025-26). The extended deadline applies to salaried, pensioners, NRIs and other taxpayers whose accounts are not required to be audited.
Garg says, "The extended deadline allows NRIs and other taxpayers more time to file their tax return. While filing ITR, NRIs should remember that they can claim tax benefits under the Double Tax Avoidance Agreement (DTAA), provided they have filed the Form 10F. There is no specific deadline to file Form 10F, and it is valid for one year from the date of filing. Form 10F filed between April 1, 2024, and March 31, 2025, would help NRI taxpayers to have lower TDS deducted from their income during FY 2024-25 and help them claim treaty benefits while filing ITR as well."
The government tweaked the income tax slabs under the new tax regime for the financial year 2024-25. There were no changes in the income tax slabs under the old tax regime.
Also Read: Income tax slabs for FY 2024-25 (AY 2025-26) under new and old tax regime
Which ITR form is used for NRIs to file their tax return?
NRIs typically use the ITR-2 form to file their income tax return in India. However, it is advisable to check the sources of income to identify the correct form for ITR filing.
Is it mandatory for an NRI to file ITR?
NRIs are mandatorily required to file their income tax return if their taxable income exceeds the specified threshold or if they have to claim an income tax refund.
What is the difference between ITR 1 and ITR 2 for NRI?
NRIs cannot file an income tax return using ITR-1 form. However, they can file their tax return using ITR-2 form.
How can an NRI e-verify ITR?
An NRI can e-verify their ITR using the Net Banking facility if they are unable to use the Aadhaar facility for ITR verification. NRIs can also use the EVC generated through a pre-validated bank account or demat account to verify the bank account.
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