NRIs having income in India must check three things before filing the income tax return for AY 2026-27: residential status, correct ITR form and tax regime. A mistake in any one of these areas triggers tax demand, refund delay, defective return notice or mismatch with AIS and Form 26AS.
This NRI income tax return filing guide for AY 2026-27 explains the rules on residential status, ITR-2, ITR-3, tax slabs, deductions and common filing mistakes.
Who is an NRI for Income Tax Purposes?
An individual is treated as a non-resident if he or she does not satisfy the residential status tests under Section 6 of the Income Tax Act, 1961.
An individual becomes resident in India if he or she stays in India for 182 days or more during the previous year. A person also becomes resident if he or she stays in India for 60 days or more during the previous year and 365 days or more during the four years before that year. If both tests fail, the person is treated as non-resident for that previous year.
For Indian citizens and persons of Indian origin visiting India, the 60-day condition is replaced with 182 days. The same relaxation applies to an Indian citizen leaving India for employment outside India or as a crew member.
A special rule applies where an Indian citizen or person of Indian origin has Indian income, excluding foreign-source income, above Rs. 15 lakh. In such cases, the 60-day condition is replaced with 120 days. Section 6(1A) also treats an Indian citizen as deemed resident where Indian income exceeds Rs. 15 lakh and the person is not liable to tax in any country.
Which ITR Form Should An NRI Use For AY 2026-27?
For AY 2026-27, NRIs must use ITR-2 or ITR-3 depending on the type of income.
| ITR Form | When It Applies |
| ITR-2 | NRI has income from salary or pension, house property, capital gains or other sources, but no business or professional income |
| ITR-3 | NRI has income from business or profession in India |
ITR-1 does not apply to NRIs. ITR-4 is also not the return form for non-resident individuals under the NRI filing category for AY 2026-27.
Old Tax Regime Vs New Tax Regime For NRIs
The new tax regime under Section 115BAC is the default tax regime for AY 2026-27. Eligible taxpayers still have the option to choose the old tax regime.
For non-business cases, the option is selected in the income tax return. For NRIs having business or professional income, Form 10-IEA is required to opt out of the default new regime and choose the old regime. The form must be filed on or before the due date under Section 139(1).
NRI Tax Slabs For AY 2026-27
Old Tax Regime
Under the old tax regime, the tax slabs for non-resident individuals remain the same irrespective of age. Senior citizen slab benefit does not apply to NRIs.
| Income Slab | Tax Rate |
| Up to Rs. 2,50,000 | Nil |
| Rs. 2,50,001 to Rs. 5,00,000 | 5% above Rs. 2,50,000 |
| Rs. 5,00,001 to Rs. 10,00,000 | Rs. 12,500 plus 20% above Rs. 5,00,000 |
| Above Rs. 10,00,000 | Rs. 1,12,500 plus 30% above Rs. 10,00,000 |
New Tax Regime Under Section 115BAC
| Income Slab | Tax Rate |
| Up to Rs. 4,00,000 | Nil |
| Rs. 4,00,001 to Rs. 8,00,000 | 5% above Rs. 4,00,000 |
| Rs. 8,00,001 to Rs. 12,00,000 | Rs. 20,000 plus 10% above Rs. 8,00,000 |
| Rs. 12,00,001 to Rs. 16,00,000 | Rs. 60,000 plus 15% above Rs. 12,00,000 |
| Rs. 16,00,001 to Rs. 20,00,000 | Rs. 1,20,000 plus 20% above Rs. 16,00,000 |
| Rs. 20,00,001 to Rs. 24,00,000 | Rs. 2,00,000 plus 25% above Rs. 20,00,000 |
| Above Rs. 24,00,000 | Rs. 3,00,000 plus 30% above Rs. 24,00,000 |
Health and Education Cess at 4% applies on income tax plus surcharge, if any. Surcharge applies where total income crosses the prescribed limits.
Section 87A Rebate: Important Caution For NRIs
Section 87A rebate is available to resident individuals. Non-resident individuals should not claim rebate under Section 87A.
This point matters because a wrong rebate claim leads to tax demand or return processing adjustment. NRIs should compute tax without Section 87A rebate unless their status for that year is resident.
Deductions Available To NRIs Under New Tax Regime
The new tax regime gives lower slab rates, but deductions are restricted.
For NRIs, Section 24(b) deduction for interest on housing loan is available for let-out house property. Actual interest on loan for construction or purchase is allowed. But loss under the head “Income from house property” is not set off against other income and is not carried forward under the new regime.
This rule affects NRIs with home loans on let-out Indian property. If rental income is lower than interest cost, the loss treatment becomes restricted under the new regime.
Deductions Available To NRIs Under Old Tax Regime
The old tax regime gives wider deductions. NRIs should compare both regimes before filing the return.
Section 24(b): Housing Loan Interest
For a self-occupied house property, interest on housing loan is allowed up to Rs. 2 lakh where the loan was taken on or after 1 April 1999 for construction or purchase. A limit of Rs. 30,000 applies for repair loans and older loans. For let-out property, actual interest is allowed without limit.
Section 80C, 80CCC And 80CCD(1)
The combined deduction limit is Rs. 1,50,000. Eligible payments include life insurance premium, provident fund, National Savings Certificate, tuition fees, housing loan principal and pension scheme contribution.
Section 80CCD(1B)
An extra deduction of Rs. 50,000 is available for contribution to the pension scheme of the Central Government, excluding deduction claimed under Section 80CCD(1). The return requires contribution details and PRAN.
Section 80D
NRIs claim deduction for health insurance premium and preventive health check-up. The limit is Rs. 25,000 for self, spouse and dependent children, and Rs. 25,000 for parents. If the insured person is a senior citizen, the limit is Rs. 50,000. Preventive health check-up is included within the limit up to Rs. 5,000.
Section 80E, 80EE, 80EEA And 80EEB
Section 80E covers interest on education loan for self or relative. Section 80EE and Section 80EEA cover specified housing loan interest subject to conditions. Section 80EEB covers interest on loan for purchase of electric vehicle where the loan was sanctioned between 1 April 2019 and 31 March 2023.
Donations And Rent
Section 80G applies to eligible donations. Cash donation above Rs. 2,000 does not qualify. Section 80GG applies to rent paid where HRA is not part of salary, subject to Form 10BA and prescribed limits. Section 80GGC applies to contribution to a political party or electoral trust, but cash contribution does not qualify.
Forms NRIs Should Check Before Filing ITR
NRIs should check Form 26AS and AIS before filing. These reflect TDS, TCS, tax payments, refund, demand, SFT data and other reported information.
Form 16 applies where salary is paid by an employer. Form 16A applies for TDS on income other than salary. Form 10E applies where relief under Section 89(1) is claimed for salary arrears, gratuity, compensation on termination or commutation of pension.
Form 3CB-3CD applies where audit under Section 44AB is required. Form 3CEB applies where report under Section 92E is required for international transactions or specified domestic transactions. Form 3CE applies for report under Section 44DA in respect of royalty or fees for technical services from the Government or an Indian concern.
Conclusion
NRI income tax return filing for AY 2026-27 requires a clean step-by-step approach. Residential status decides the tax base. The ITR form decides valid filing. The tax regime decides slab rate. Deductions decide the final tax outgo.
NRIs should check Section 6 status, Indian income, Form 26AS, AIS, ITR form, deductions and Form 10-IEA requirement before submitting the return.
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