NRI and Returning to India: File Your Taxes Correctly Before a Notice Arrives

Your PAN never left — even if you did

You may leave India, but your PAN never leaves India. NRO interest, rent from a flat in Pune, a mutual fund redemption, TDS on a property sale — it can all land on your profile while you are working in San Jose or Dubai.

The old idea that "if I do not mention it, nobody will know" is dead. The portal, AIS, CRS across 120-plus countries, and FATCA on US-linked accounts mean your India-side activity is far more visible than it was ten years ago.

Our filing checker takes a few minutes if you want a second opinion. Do not wing it with the wrong form.

Which year are we filing for?

Right now it is FY 2025-26, assessed as AY 2026-27. The financial year ended 31 March 2026.

This is the last return round under the older Income-tax Act framework that ran through 31 March 2026. TDS and remittance rules from 1 April 2026 onward follow the new regime — but the ITR you file today still uses the old section numbers and forms for FY 2025-26.

Official non-resident rules for this year are on the Income Tax Department site for AY 2026-27.

Why AIS mismatches turn into notices

Before you file, pull these from the portal:

• Form 26AS — tax deducted or collected at source.
• AIS — wider picture, transaction by transaction.
• TIS — same data grouped by income head.

Sold a flat? AIS may show the sale. Bought another and claimed exemption? The portal does not connect those two unless your return does. Redeemed mutual funds? AIS often shows the gross amount, not your actual gain after purchase cost.

AIS is useful but not perfect. Wrong entries happen. Flag them in the portal before you file. Reconcile first, correct what is off, then submit the return that tells the full story.

That is how someone with "no India income" still gets a surprise — one NRO line, one redemption, one TDS entry, and silence on the return side.

When do you actually have to file?

Section 139 lists the legal triggers. In practice, filing also makes sense when it is not strictly required.

You are likely in filing territory if:

• Taxable India income crosses the threshold for your status.
• Too much TDS was withheld and you want it back.
• You sold property, booked capital gains, or need to claim an exemption.
• You are ROR and hold foreign assets that must be disclosed.

Filing annually is often smarter than hunting for a narrow exemption that might not hold. Each return also records your India day count — data you will need later for RNOR, lower TDS certificates, and big property deals.

Section 195 TDS — where NRIs lose money quietly

Pay an NRI? The payer often must withhold tax under Section 195. These three situations show up most often:

DTAA and lower-deduction certificates can help — but usually need paperwork and often a track record of filing. Once the money is already withheld at the higher rate, your return is the reconciliation tool.

NRI, RNOR, or ROR — get this wrong and everything else breaks

Passport, visa stamp, and FEMA status do not decide your tax residency. Only the Income Tax Act does. The day-count rules for AY 2026-27 are on the official non-resident page.

First: are you a resident at all?

You are a resident if either condition hits:

• 182 days or more in India this financial year, or
• 60 days or more this year and 365 days or more in the previous four years.

Indian citizens and PIOs visiting India often get the 60-day test relaxed to 182 days. That is why most NRIs watch the 182-day line when planning trips home.

Then: RNOR or ROR?

If you are resident, you may still be RNOR when:

• You were non-resident in 9 of the last 10 financial years, or
• You were in India for 729 days or fewer in the previous 7 financial years.

Fail both tests and you are ROR — global income, full disclosure. Our RNOR guide walks through the numbers year by year.

Income then splits into five heads: salary, house property, capital gains, other sources, business/profession. F&O trading is usually business income — that pushes you from ITR-2 to ITR-3.

Which ITR form should you use?

Do not file ITR-1 as an NRI. That form is for residents with simple salary. Use it wrongly and you may tell the department you are resident — then global income and foreign assets become fair game for questions.

• ITR-2 — default for most NRIs: salary, rent, capital gains, dividends, no business income.
• ITR-3 — when you have business/profession income, including F&O.

Form mapping for non-residents is in the AY 2026-27 guidance.

Tax slabs for AY 2026-27

Ignore WhatsApp forwards that say "no tax up to ₹12 lakh for everyone." Rebate rules depend on regime and status. Under the new tax regime for non-residents in AY 2026-27, official slabs are:

Health and education cess of 4% applies on tax plus surcharge where relevant. Old-regime slabs and rebate limits differ; compare both on the official page before choosing a regime in the return.

Timing your return — and avoiding a double-tax year

Return timing matters as much as the return itself: 401(k) deferral, treaty articles for US/UK/Canada, UAE residents getting TDS refunds on Indian mutual funds, and what happens when two countries want the same transition year.

Land in India in July? The US may count you as a calendar-year resident. India looks at April to March. Same income, two systems — unless treaty allocation and day counts are planned first. That unplanned overlap is a crash landing.

Pick your return date before you book the ticket, not after you land. Treaty mechanics are in our DTAA guide. Keep Form 67, TRC, and Form 10F timelines in mind if foreign tax was already withheld.

Two clocks run at once — FEMA and income tax

FEMA and income tax run on different clocks:

• FEMA follows intent. Come back to settle, work, or shift banking — you can be resident from day one. NRE/NRO redesignation and RFC planning sit here under RBI FEMA rules.
• Income tax follows days in India across the full financial year under Section 6.

So yes — you can be FEMA-resident and still NRI or RNOR for tax in the same year. That is legal when you plan it. It is a disaster when you did not know the two clocks existed.

Banking-side detail is in our FEMA guide for returning NRIs.

When RNOR ends, the work jumps

The shift to ROR is a compliance cliff. What catches families off guard:

• Schedule FA — every overseas account and asset on record.
• 401(k), IRA, HSA — classify correctly; treaty deferral forms where they apply.
• US RSUs and shares — India uses FIFO, not US lot-by-lot reporting. Reconstruct from day one.
• Too many foreign brokerage accounts — each one is another line to reconcile.

Close or merge overseas accounts you do not need before ROR hits. Complexity scales with account count, not just balance.

On US retirement specifically, see 401(k) options when moving to India.

A straight filing path for FY 2025-26

The sequence people skip when they are busy:

1. Log into the e-filing portal.
2. Pull AIS, TIS, and Form 26AS.
3. Flag anything in AIS that is wrong.
4. Confirm residential status for FY 2025-26.
5. Pick ITR-2 or ITR-3. Not ITR-1.
6. Match capital gains, property exemptions, and TDS credits.
7. File by 31 July 2026 unless audit rules give you more time.

If you want a CA in the loop, Desi Return's India tax filing service works the same way: pick the tier that fits your income, upload documents, get reviewed, approve the draft, file.

Related guides

• RNOR status, eligibility, and the 729-day rule for returning NRIs
• DTAA, Form 67, and foreign tax credit for NRIs
• FEMA rules and foreign-asset compliance after return
• 401(k) and US retirement account options when moving to India
• Free tool: Do you need to file taxes in India?

Nobody is asking you to fear the tax department. They are asking you to respect the trail your PAN already has. In 2026 that trail shows up sooner, travels further, and gets matched harder than most NRIs expect.

Abroad, planning a move, or already back — reconcile AIS, file the right form for FY 2025-26, and sort out RNOR before ROR catches you off guard.

General information only — not personal tax advice. Complex cases need a qualified CA.