Filing Income Tax Returns in India: How NRIs Can Benefit Even Without Local Income

Mandatory or not, filing income tax returns helps NRIs save taxes, avoid penalties, and invest fearlessly.

When is filing ITR mandatory?

Managing your income tax responsibilities can be formidable, especially as an NRI. You may wonder about the mandatory requirements for filing income tax returns in India, including scenarios where you have no income in India. Don't worry; we are here to provide clarity and guidance. Let's dive in!


  • Reimbursement of TDS can be availed only by filing an income tax return.

  • The cash withdrawal limit is Rs. 1 crore for those who have filed an ITR.

  • Securing loans, credit cards, and term insurance policies is more effortless with ITR records.

What are the benefits of filing an ITR with no taxable income in India?

Indians living abroad received a reassessment notice in April 2023 from the Income tax department for their investments in India. Filing an ITR provides a record that justifies these investments and your income. It can also help save taxes deducted at the source (TDS). Withdrawals exceeding Rs. 20 lakhs entice a TDS of 2%, whereas this withdrawal limit is Rs. 1 crore for those who have filed ITR for the previous three years (Section 194 (N) of the Income Tax Act).

Reimbursement of TDS when the income from India doesn't exceed the basic exemption limit of Rs. 2.5 lakhs can be availed by filing an ITR. Consistency in ITR filing can improve creditworthiness, making securing loans and credit cards easy.

India has Double Taxation Avoidance Agreements (DTAA) with 85 countries. Filing an ITR in India can ensure that you're not taxed twice on the same income.

Also Read: Rules for TDS and share issuance have changed for NRIs - here's what's new

When is filing ITR mandatory?

According to the Income Tax Act of 1961, filing an ITR is mandatory if your income in India exceeds the basic exemption limit of Rs. 2.5 lakhs during a financial year. 

Income generated in India through salary, business, dividends, capital gains, interests, etc., is liable for tax as long as it doesn't exceed the income tax exemption limit. 

Incurred losses in India during a financial year can be carried forward to subsequent years by filing an ITR.

Also Read: Are you an NRI? Here's what you need to know about tax residency rules:

The bottom line

Filing income tax returns can be cumbersome, but its benefits outweigh the hassle as it keeps notices and penalties at bay. The last date for filing an ITR is the 31st of July every year. Missing the due date for filing an ITR attracts a fine of Rs. 5000. Condonation can be requested through the Income Tax portal if you fail to file an ITR before the due date for a genuine reason.

Find the latest articles on tax planning here.


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