9 Things Every NRI Should Check Before Filing Their Income Tax Return

Filing an Income Tax Return (ITR) is often treated as the final step of the financial year. Most NRIs collect their bank statements, investment reports, and tax documents, send them to their chartered accountant (CA), and assume everything else will be handled correctly.

While a CA plays an important role, filing an accurate tax return is a shared responsibility.

Your CA can only file your return based on the information you provide. If an NRO fixed deposit is forgotten, rental income isn’t mentioned, or a mutual fund redemption is left out, the return may not match the information already available with the Income Tax Department. Later, this can result in tax notices, delayed refunds, or requests for additional clarification.

The good news is that most of these issues can be avoided by asking the right questions before your return is filed.

This guide covers the 9 important questions every NRI should discuss with their CA before submitting an Income Tax Return.

1. What Is My Correct Residential Status This Year?

This is the first question you should ask because your entire tax return depends on the answer.

Many people assume that living abroad automatically makes them an NRI for Indian tax purposes. However, Indian income tax law doesn’t decide your residential status based on your passport, visa, OCI card, or overseas address.

Instead, it mainly depends on the number of days you spend in India during the financial year.

This becomes especially important if you:

• Recently moved abroad.
• Frequently travel to India for work or family.
• Plan to return permanently.
• Spend time in multiple countries throughout the year.

Depending on your stay in India, you could be classified as:

• Resident
• Non-Resident (NRI)
• Resident but Not Ordinarily Resident (RNOR)

Each category has different tax implications.

For example, an NRI is generally taxed only on income earned or received in India. A Resident, on the other hand, may have to report global income. The RNOR category falls somewhere in between and is often misunderstood.

Imagine someone moving back to India in December after working in Singapore for several years. They may still believe they are an NRI because they spent most of their career overseas. However, based on the number of days spent in India, their residential status for that financial year could be different.

Getting this wrong can affect every section of your tax return, including exemptions, taxable income, and reporting requirements.

2. Are We Using the Correct ITR Form?

Once your residential status is confirmed, the next step is selecting the correct Income Tax Return form.

Many NRIs continue using the same ITR form they filed when they were working in India. Others choose the simplest form available because they believe their income is straightforward.

Unfortunately, choosing the wrong form can make your return defective, even if every income figure is correct.

The correct ITR form depends on several factors, including:

• Residential status
• Salary income
• House property income
• Capital gains
• Business or professional income
• Foreign assets and disclosures

For instance, an NRI who sold mutual funds during the year cannot simply use the same return as someone earning only salary income. Likewise, someone owning multiple properties may require a different form from someone with a single house.

The problem is that many taxpayers focus only on whether the tax amount is correct.

The better question is:

“Is this the right ITR form for my financial situation?”

Even if your CA is handling the filing, it is worth discussing this point, especially if there have been changes in your investments, property ownership, or residential status during the year.

3. Have We Checked AIS, TIS and Form 26AS Before Filing?

One of the biggest mistakes NRIs make is relying on memory.

Before filing your return, compare your financial records with the information already available to the Income Tax Department.

The three most important documents are:

These documents help you identify any differences before your return is submitted.

Why This Matters

Suppose your bank has reported ₹72,000 as NRO fixed deposit interest in AIS.

However, while preparing your documents, you accidentally shared only one FD statement showing ₹45,000 in interest.

Your CA files the return using the information available.

From your perspective, the return looks complete.

From the Income Tax Department’s perspective, your return does not match the reported financial information.

That mismatch may trigger a verification request or tax notice.

This is why checking AIS, TIS, and Form 26AS before filing is so important.

4. Have We Reported All Bank Interest Correctly?

Interest income is one of the most commonly missed items in an NRI tax return.

Many NRIs have multiple bank accounts opened over different stages of their career.

These may include:

• NRO Savings Accounts
• NRO Fixed Deposits
• NRE Savings Accounts
• FCNR Deposits

Each account has different tax treatment.

For example, interest earned on an NRO account is generally taxable in India. Since banks deduct TDS on this interest, many people believe they don’t need to mention it again while filing their return.

That assumption is incorrect.

TDS is only tax deducted at source. The income itself still needs to be reported correctly in your Income Tax Return.

Another common situation occurs when an old resident account or fixed deposit continues earning interest after moving abroad. Since the account was opened years ago, many taxpayers simply forget to include it.

Before filing your return, prepare a complete list of every bank account you hold in India and verify whether interest has been earned during the financial year.

Even a small amount left out can create a mismatch with your tax records.

5. Are We Treating TDS as the Final Tax?

This is one of the biggest misconceptions among NRIs.

Many people believe that once Tax Deducted at Source (TDS) has been deducted, their tax responsibility is complete. This assumption is common for income such as NRO interest, rental income, dividends, capital gains, and even property sales.

However, TDS is not your final tax liability. It is simply a mechanism through which tax is collected in advance. Your Income Tax Return is where your actual tax liability is calculated.

Let’s understand this with an example.

Suppose you sold a property in India for ₹1.2 crore. As per the applicable rules, the buyer deducted TDS while making the payment. At first glance, it may seem that the tax has already been paid and nothing else needs to be done.

In reality, your actual tax depends on several factors, including:

• The original purchase price
• Cost of improvements made over the years
• Holding period
• Eligible exemptions
• Indexation benefits, where applicable

After considering these factors, your actual tax liability may be much lower than the TDS already deducted. This could make you eligible for a refund. On the other hand, if the tax payable is higher than the TDS deducted, you may have to pay the balance amount while filing your return.

The key takeaway is simple.

TDS tells the Income Tax Department that a transaction has taken place. Your Income Tax Return explains what that transaction actually means for your tax liability.

Before filing your return, ask your CA whether every TDS entry has been correctly matched with the corresponding income.

6. Have We Reported Rental Income Correctly?

Owning property in India while living abroad is common for many NRIs. Some properties are self-occupied, while others generate regular rental income.

If the property is located in India, the rental income is generally taxable in India, regardless of where the owner lives.

This is another area where many taxpayers unintentionally make mistakes.

Some assume that because they live overseas, Indian rental income doesn’t need to be reported. Others disclose only the amount received in their bank account without considering how income from house property is calculated under Indian tax laws.

There are also situations where the tenant deducts TDS correctly, but the rental income itself is missing from the Income Tax Return. Since the tax department can already see the TDS entry, the missing rental income may create a mismatch.

If you own one or more rented properties in India, discuss the following with your CA before filing:

Rental income is not a one-time transaction. It is received throughout the year, making it one of the easier income sources for the tax department to verify. Reporting it correctly from the beginning can help avoid unnecessary follow-ups later.

7. Have We Calculated Capital Gains Correctly?

Capital gains can arise from several types of investments, not just property sales.

During a financial year, you may have:

• Sold shares
• Redeemed mutual funds
• Sold a residential or commercial property
• Redeemed bonds
• Exited a Portfolio Management Service (PMS)

Each of these transactions has its own tax rules.

Calculating capital gains involves much more than looking at the sale amount. Your CA needs complete information about the purchase cost, sale consideration, holding period, type of asset, and any exemptions that may apply.

For example, two people may sell properties for the same amount. However, their final tax liability could be completely different because of differences in purchase price, holding period, or exemption claims.

Another point that is often overlooked is capital losses.

If you incurred losses during the financial year, reporting them correctly allows you to carry them forward and adjust them against future capital gains, subject to the applicable tax provisions. Missing the filing deadline or reporting them incorrectly could mean losing this benefit.

Before filing your return, prepare a complete list of every investment transaction completed during the financial year instead of reporting only those that generated profits.

8. Are We Claiming DTAA Benefits Correctly?

Many NRIs live and work in countries that have a Double Taxation Avoidance Agreement (DTAA) with India.

The purpose of these agreements is to ensure that the same income is not taxed twice.

While this sounds straightforward, many taxpayers assume that DTAA benefits are applied automatically.

They are not.

Claiming treaty benefits usually requires proper documentation based on your country of residence and the nature of your income. Depending on your situation, you may need documents such as a Tax Residency Certificate (TRC) and other supporting declarations before claiming relief.

Imagine claiming DTAA benefits without maintaining the required documents. If the Income Tax Department later asks for evidence, arranging those documents years after filing can become difficult.

Instead of assuming you qualify, discuss the following with your CA:

• Am I eligible for DTAA benefits?
• Which income qualifies?
• What supporting documents should I keep?
• Have all treaty-related disclosures been completed correctly?

Proper documentation today can save considerable time and effort later.

9. Can I Explain the Source of Large Money Transfers?

Many NRIs transfer significant amounts to India throughout the year.

These transfers may include:

• Salary savings
• Retirement funds
• Investment capital
• Property sale proceeds
• Money for family support
• Funds transferred before permanently returning to India

These transfers may not always be taxable.

However, you should always be able to explain where the money came from if questioned.

For example, if ₹50 lakh is transferred from your overseas bank account into your Indian account, it may simply represent your accumulated savings earned abroad.

Even though the amount itself may not be taxable in India, the Income Tax Department may still ask about its source.

To avoid future difficulties, keep documents such as:

• Overseas bank statements
• Salary slips
• Foreign tax returns
• Remittance advice
• Property sale documents
• Gift deeds, where applicable

A simple habit of maintaining these records can make responding to future tax queries much easier.

Final Thoughts

For NRIs, filing an Income Tax Return is not just about reporting income or calculating tax. It is about ensuring that every financial transaction has been reported accurately and that the information shared with your chartered accountant reflects your complete financial picture.

Before sending your documents this year, spend a little extra time reviewing your bank accounts, investments, rental income, capital gains, overseas transfers, and tax records. These simple checks can help reduce the chances of notices, delayed refunds, or additional compliance in the future.

The goal isn’t to question your CA’s expertise. It’s to work together and ensure nothing important has been left out. A complete and accurate Income Tax Return today can save significant time, effort, and stress in the years ahead.

Need Expert Help with Your NRI Tax Filing?

Filing an Income Tax Return as an NRI involves more than entering numbers into a form. From determining your residential status to reporting rental income, capital gains, bank interest, and claiming DTAA benefits, even a small oversight can lead to unnecessary notices or delays.

At PrimeWealth, our NRI tax experts help ensure your Income Tax Return is accurate, compliant, and tailored to your financial situation. Whether you’re living abroad, planning to return to India, or managing investments across countries, we provide personalized guidance to help simplify the tax filing process.

Get in touch with PrimeWealth for expert assistance with NRI tax filing and comprehensive financial planning for your India and overseas investments.

Disclaimer: The information provided in this blog is for general informational and educational purposes only and should not be considered tax, legal, or financial advice. Tax laws, residential status, and reporting requirements may vary based on individual circumstances and are subject to change. While every effort has been made to ensure the accuracy of the information, readers should consult a qualified tax professional or chartered accountant before filing their Income Tax Return or making any financial decisions. PrimeWealth shall not be held responsible for any actions taken based solely on the information provided in this article.