NRI Tax Filing Myths, Mistakes & Fixes – What Every Global Indian Must Know
"I'm an NRI. I don't need to file taxes in India."
"NRE and NRO accounts are tax-free."
"I just picked the simplest ITR form."
Sound familiar?
When it comes to Indian tax filing, Non-Resident Indians (NRIs) don't just face technical forms—they battle outdated advice, common myths, and complex rules. In this fifth article from our NRI Tax Filing Series, we're cutting through the noise to highlight:
What's true,
What to avoid, and
How to fix your compliance and stay stress-free.
What You'll Learn:
The truth behind persistent NRI tax myths
Common filing mistakes (that delay refunds or trigger notices)
What do TDS, DTAA, and ITR forms mean
Step-by-step fixes to protect your finances
Real examples, practical tips, and assertive takeaways
Myth 1: "As an NRI, I don't need to file an ITR."
Truth: You must file an ITR if:
Your Indian income exceeds ₹2.5L (old regime) or ₹3L (new regime)
TDS/TCS deducted exceeds ₹25,000
You made high-value transactions (e.g. >₹50L in deposits, sales, remittances)
Even if TDS is deducted:
Filing ensures refunds
Maintains an audit trail for remittances or global reporting
Helps avoid future scrutiny
Myth 2: "NRE/NRO accounts are tax-free."
Reality:
NRE/FCNR interest is tax-free only if you qualify as an NRI
NRO interest is fully taxable—banks deduct 30% TDS unless you apply for a lower rate
DTAA relief may reduce TDS, but only if:
You obtain a Tax Residency Certificate (TRC)
Submit Form 10F
Claim treaty relief in your ITR
Mistake: Using the Wrong ITR Form
Fix:
Use ITR-2 for capital gains, multiple properties, or foreign assets
Use ITR-3 for business or professional income
Avoid ITR-1/4 if reporting:
Foreign income
Capital gains
DTAA relief
Mistake: Not Checking Form 26AS and AIS
Fix:
Reconcile your income with Form 26AS & AIS (available on the income tax portal)
Watch for:
Mismatched TDS
Missed capital gains
Property sale disclosures
Mismatches can:
Delay refunds
Trigger tax scrutiny
Myth 3: "I live abroad—India can't tax me."
Reality:
If the source of income is in India, it's taxable:
Rent from an Indian property
Interest from Indian banks
Dividends from Indian companies
Capital gains from Indian assets
Even with DTAA, filing remains mandatory to claim relief.
Mistake: Not Applying for Section 197 Certificate
Fix:
Apply for Form 13 on the portal if:
Your income is below the taxable threshold
You qualify for DTAA
→ Reduces or eliminates TDS deduction
→ Improves cash flow and avoids refund delays
Myth 4: "Small foreign accounts don't matter."
Reality:
If you're an ROR (Resident and Ordinarily Resident), you must report all foreign assets in Schedule FA, including:
Overseas bank accounts
Foreign mutual funds, shares
Property, pension, trusts
Even dormant or jointly held accounts
Non-reporting triggers penalties up to ₹10L per asset under the Black Money Act.
Mistake: Ignoring DTAA Benefits
Fix:
Obtain a Tax Residency Certificate (TRC)
Submit Form 10F
Claim credit for foreign taxes under DTAA in your ITR
→ This ensures you don't pay tax twice on the same income
Mistake: Misunderstanding Your Residency Status
Fix:
Track Indian stay days annually
Classify correctly as NRI / RNOR / ROR
Understand new "deemed residency" rules:
From April 2026, you may be treated as a resident if income from India is>₹15L and stay is≥120 days
Incorrect classification may:
Led to the wrong ITR form
Omit required disclosures
Invalidate exemptions
Final Thoughts: Don't Let Assumptions Cost You
Tax compliance is no longer just a local issue—it's a global responsibility for NRIs.
At Angel Services, we help you:
Assess your tax residency
Choose the correct ITR
File accurate returns
Maximize DTAA relief
Ensure global asset disclosures are correct and complete
Let's simplify your cross-border tax compliance—so you can focus on what matters most.
Follow us for weekly updates in our NRI Tax Filing Series.
Have questions? DM us or visit www.theangelservices.com