ITR Filing for NRIs, AY 2026-27: The Form, the July 31 Deadline, and the Rebate That Was Never Yours

Every February the Budget headline says income up to Rs 12 lakh is now tax-free, and every June a fresh batch of NRIs files on that assumption, or skips filing entirely, and walks straight into the one rebate the law withholds from them. For AY 2026-27 the form, the regime and the deadlines are settled, and three of them changed from last year in ways that matter to you. The gap between getting this right and getting it wrong is rarely a notice; far more often it is a five- or six-figure refund you never claimed because TDS made you feel finished.

The 30-second answer: For AY 2026-27 (FY 2025-26) NRIs file by July 31, 2026 using ITR-2, on the e-filing portal, from anywhere. The August 31, 2026 extension is for ITR-3/ITR-4 business cases only and does not move your date. The new regime is the default: nil up to Rs 4 lakh, 5% to Rs 8 lakh, 10% to Rs 12 lakh, then 15/20/25% bands and 30% above Rs 24 lakh. The expensive catch: the Section 87A rebate that zeroes tax up to Rs 12 lakh is residents-only, so you pay slab tax from the first rupee over Rs 4 lakh. File even when TDS is already deducted, because that is how you reclaim the excess. Belated returns run to December 31, 2026; revised returns now to March 31, 2027.

This is the hub for NRI tax filing. It assumes you already know your residency status; if not, fix that first via the residency and RNOR rules, because every line below depends on it. What follows is the part worth your time: when filing is mandatory and when it is a pure refund play, ITR-2 versus ITR-3 and what changed in the AY 2026-27 forms, the rebate trap in rupees, the regime choice for someone with no salary, advance tax, the deadlines that protect a refund versus the ones that do not, and how to get the money paid into an account that will actually accept it.

Whether you even have to file is now two different numbers

Start with the threshold, because the answer changed and most checklists still quote the old one. As an NRI you must file if your gross Indian-source income before deductions exceeds the basic exemption limit. Under the new regime, the default for FY 2025-26, that limit is Rs 4 lakh; under the old regime it is still Rs 2.5 lakh. So the "do I have to file" line now depends on which regime you are in, and the new default raised the floor for passive-income NRIs by Rs 1.5 lakh. The test is on gross income, so you cannot net off Section 80C first and declare yourself under the line.

There is one trap inside this that catches NRIs specifically: capital gains break the threshold logic. Because an NRI cannot set the basic exemption against equity or other special-rate gains (more on this below), even a small long-term gain can make filing mandatory regardless of how far below Rs 4 lakh your other income sits. If you sold a single equity fund this year, assume you file.

The more useful question is not whether you must file but whether you should, and for most NRIs the answer is yes even when income is below the line. The first reason is the one that pays: reclaiming over-withheld TDS. Indian payers deduct at flat statutory rates that ignore your slab entirely. NRO interest is hit at 30% plus 4% cess, an effective 31.2%, climbing higher with surcharge. For a large share of NRIs the return is not a tax bill at all, it is a refund application, and the refund is frequently the larger part of a year's interest. The second reason is preserving capital losses: a return filed on or before July 31 carries a capital loss forward for up to eight assessment years against future gains. A belated return forfeits that. For an NRI sitting on an unrealised gain elsewhere, a preserved loss is often worth several multiples of the few hours filing takes. The third is friction: a continuous filing history is the document a visa office, a lender or a buyer's CA asks for, and a gap in the trail is the thing you end up explaining at the worst moment.

There is a genuine exemption from filing, and it is narrower than people hope. Section 115G relieves an NRI from filing only when their entire Indian income is investment income or long-term capital gains on which the correct TDS has already been deducted. Add a rupee of rent, NRO savings interest below the TDS threshold, or any income where TDS fell short, and 115G falls away and filing is back on. In practice almost nobody qualifies cleanly, and even those who do usually file anyway to recover the over-withholding. Treat 115G as a footnote, not a plan.

ITR-2 for almost everyone, and what changed in the form this year

NRIs are barred from ITR-1 (Sahaj) outright; it is reserved for ordinarily resident individuals and the portal will reject your submission, so do not waste an evening on it. The form for the typical NRI is ITR-2: salary, rent from one or more house properties, capital gains, dividends, NRO interest, all of it. Reach for ITR-3 only if you have Indian business or professional income computed under profits and gains of business or profession. ITR-3 is a superset, heavier to fill, and the only reason to choose it is genuine business income. The decision in one line: business or profession means ITR-3, everything else means ITR-2, ITR-1 is never yours.

Three changes in the AY 2026-27 forms are worth knowing before you start. First, Schedule AL, the assets-and-liabilities disclosure, now triggers only above Rs 1 crore of total income, up from Rs 50 lakh, which quietly removes the schedule for a swathe of NRIs who used to dread it. Second, Schedule TDS added a column for the TDS section code (194I for rent, 195 for most NRI payments, and so on), so your claimed credits must now tie to the exact section the payer used; a mismatch here is a fresh failure mode this year. Third, the 23 July 2024 date split was dropped from the capital-gains rate lines because the old 15% and 20% short-term and 10% long-term rates are gone, but Schedule 112A still asks whether each lot was sold before or on/after 23 July 2024, and the NRI-specific Section 115F reinvestment fields survive, so keep your dated contract notes. The whole thing is filed online and verified online; you never have to be in India.

The rebate trap, in rupees

The new tax regime is the default for FY 2025-26. Its slabs:

Income slab (Rs)	Rate
Up to 4,00,000	Nil
4,00,001 to 8,00,000	5%
8,00,001 to 12,00,000	10%
12,00,001 to 16,00,000	15%
16,00,001 to 20,00,000	20%
20,00,001 to 24,00,000	25%
Above 24,00,000	30%

A 4% cess sits on top, and surcharge applies at higher incomes. Now the line that costs NRIs real money. For residents, the Section 87A rebate wipes out all tax on income up to Rs 12 lakh under this regime, which is exactly the "zero tax up to 12 lakh" headline. The rebate is restricted to resident individuals, full stop. As an NRI you are taxed on the slabs above from the first rupee over Rs 4 lakh, with nothing to erase the result. The standard deduction of Rs 75,000 that extends the resident's tax-free ceiling to Rs 12.75 lakh only helps if you have salary income, which most NRIs do not have in India.

Put the gap in one number. Take Meera, an NRI in the UK, with FY 2025-26 Indian income of Rs 12,00,000 from NRO interest and net rent, filing under the new regime. Nil on the first Rs 4 lakh; 5% on the next Rs 4 lakh is Rs 20,000; 10% on the next Rs 4 lakh is Rs 40,000. Tax of Rs 60,000, plus 4% cess of Rs 2,400, totals Rs 62,400. A resident with the identical Rs 12,00,000 pays Rs 0, because Section 87A covers it entirely. Same income, same slabs, same regime, and the NRI pays Rs 62,400 while the resident pays nothing. That is the rebate trap in a single figure, and it is the number to budget for rather than the newspaper's.

The trap has a sharper edge just above Rs 12 lakh, where residents get marginal relief and you do not. A resident on Rs 12,10,000 pays roughly Rs 10,000 (relief caps their tax at the extra income earned), not the Rs 61,500 the slabs would suggest. An NRI on Rs 12,10,000 pays the full slab tax of about Rs 61,500 plus cess, because marginal relief rides on the rebate that you cannot claim. The Rs 12 lakh to 12.75 lakh band is therefore brutally inefficient for an NRI in a way it simply is not for a resident, which is worth knowing if you have any control over the timing of a discretionary realisation.

Old regime or new, when you have no salary to deduct against

The 87A rebate is off the table under both regimes for non-residents, so the choice between them is purely arithmetic on your facts. The new regime gives wider slabs and a Rs 4 lakh nil band but strips most deductions. The old regime keeps Section 80C, 80D and home-loan interest but uses narrower slabs and a Rs 2.5 lakh exemption.

Your Indian income looks like	Usually wins	Why
Mostly NRO interest, dividends, rent, few deductions	New regime	Wider slabs, Rs 4 lakh nil band, nothing to deduct anyway
Large home-loan interest on a let-out Indian flat	Run both	Old-regime interest set-off can beat the wider new slabs
Meaningful 80C plus 80D plus housing interest	Often old regime	Stacked deductions outweigh the wider bands
Capital gains dominate the return	Regime barely matters	Gains are taxed at their own rates outside the slab table

The portal computes both if you ask. Do the comparison every year, because the answer moves with your income mix, and remember that several deductions a resident leans on are simply not open to NRIs, so the old regime helps you less than it would an equivalent resident. For someone without business income the regime is chosen fresh at filing each year with no lock-in, so a heavy-interest year can sit in the old regime and the next year move to the new. Treat it as an annual calculation, never a one-time election.

Advance tax, and the interest you pay for ignoring it

If your tax after TDS is Rs 10,000 or more, you owe advance tax in instalments, not a lump at filing. The cumulative targets for FY 2025-26 are 15% by June 15, 45% by September 15, 75% by December 15, and 100% by March 15. For NRIs much of the liability is often already covered by TDS at source, which is the whole reason advance tax is frequently nil for you. The gap appears where income escapes TDS or is under-withheld: dividends below the deduction threshold, a self-occupied-to-let-out switch, a capital gain the registrar did not fully tax.

Miss it and two interest charges follow, neither punitive in name but both real in rupees. Section 234B runs 1% a month from April 1 of the assessment year where you have paid under 90% of assessed tax by year end. Section 234C runs 1% a month on each quarterly shortfall against the cumulative targets. On a Rs 5 lakh under-provision discovered at filing, 234B alone over four months is Rs 20,000 of avoidable interest. If you have material non-TDS income, estimate and pay on schedule.

The deadlines, and which ones actually protect a refund

The due date for AY 2026-27 for non-audit individuals, which is essentially every NRI filing ITR-2, is July 31, 2026. This is the year to be careful, because the headline extension does not reach you. For AY 2026-27 the government pushed the non-audit business and professional deadline to August 31, 2026, but only for ITR-3 and ITR-4; salaried and ITR-2 filers stay on July 31. So unless you run a business or profession in India, August 31 is not your date, and assuming it is can cost you a late fee for a month you thought you had.

Miss July 31 and the windows behind it carry consequences:

• A belated return until December 31, 2026 under Section 139(4), with a Section 234F fee of up to Rs 5,000 (Rs 1,000 if total income is below Rs 5 lakh).
• Section 234A interest on unpaid tax from the due date, plus 234B and 234C as above.
• A revised return window that the Finance Act extended to March 31, 2027 for AY 2026-27, up from the old December 31, useful if you discover an error after filing.
• Loss of the right to carry forward most capital losses, which only a timely return preserves.

Then the long backstop. An updated return (ITR-U) can now be filed up to 48 months from the end of the assessment year, extended from 24 months by the Finance Act 2025, but the additional tax climbs with delay: 25% within 12 months, 50% within 24, 60% within 36, and 70% within 48, all on top of the normal tax and interest. Crucially, ITR-U cannot create or increase a refund. It is the tool for declaring income you missed, never a backdoor to the refund you forgot. So if your return is a refund claim, the only dates that protect it are July 31 and, at the outer edge, December 31, 2026. After that an unclaimed refund is effectively gone, no matter how long the ITR-U window stays open.

How to file, the sequence that avoids a notice

The portal pre-fills most of the return now, because so much is already reported under your PAN, but the pre-fill is a draft and treating it as gospel is the most common way an NRI lands a query.

Register and log in with your PAN as the user ID. If you have never registered, you will need a mobile and email that can actually receive OTPs abroad; keep a non-Indian number on file if your Indian SIM is dormant, because every verification step pings it.

Confirm your PAN is operative. A non-resident without Aadhaar is not required to link it, and the portal recognises this against your status, but an inoperative PAN triggers higher TDS and stalls refunds, so check the status before you touch anything else.

Pull AIS and Form 26AS first. Form 26AS shows TDS credited against your PAN; the Annual Information Statement (AIS) is broader, listing interest, dividends, securities trades, rent and more that third parties reported about you. Reconcile both against your own bank and broker statements before you fill a single schedule. A mismatch you leave uncorrected, including against the new TDS-section-code column, is precisely what generates a notice months later.

Report each head in its schedule. House property for rent, after the 30% standard deduction and any home-loan interest. Capital gains for shares, funds and property, at their own special rates outside the slab table. Other sources for NRO interest and dividends. Salary if you have Indian salary. NRE interest is exempt while you qualify as an NRI and does not enter taxable income, but keep the records.

Claim DTAA relief where the same income is taxed twice, through Schedule TR (relief claimed) and Schedule FSI (foreign-source income) where relevant, backed by a Tax Residency Certificate and a Form 10F filed online. The mechanics are in DTAA relief for NRIs and DTAA mechanics: TRC, Form 10F and Section 90.

Pay any balance via the portal's e-pay-tax challan before you submit, then e-verify within 30 days of filing. NRIs without Aadhaar OTP verify by EVC through a pre-validated Indian bank account or by Digital Signature Certificate. An unverified return is treated as never filed, and the day-30 lapse has thrown plenty of people past the deadline without their noticing.

The refund: getting it computed right and getting it paid

Here is the case that proves filing pays even when tax is "already done". Arjun, an NRI in the UAE, has one source of Indian income for FY 2025-26: NRO fixed-deposit interest of Rs 8,00,000. His bank withheld at 31.2%, so Rs 2,49,600 went to the government at source. When Arjun files ITR-2 under the new regime, his actual liability is nil on the first Rs 4 lakh and 5% on the next Rs 4 lakh, which is Rs 20,000, plus Rs 800 cess, a true bill of Rs 20,800. His refund is Rs 2,49,600 minus Rs 20,800, or Rs 2,28,800, plus the interest the department pays on excess held. If Arjun does not file, that Rs 2,28,800 simply stays with the Treasury. The UAE levies no personal income tax, so there is no foreign credit to chase; the entire recovery is the Indian return.

Had Arjun acted at the front end instead, he would never have lent that money. A lower-deduction certificate under Section 197 (Form 13), applied for before the interest accrued, tells the bank to withhold at his real rate, and a DTAA reduction can cut the headline rate on interest where the treaty allows. Either way the leakage is stopped at source rather than reclaimed a year later. The trade-off is effort versus float: for Arjun's Rs 2.28 lakh tied up for roughly fourteen months, the Section 197 route is clearly worth it; for a few thousand rupees of over-withholding it usually is not. The mechanics are in TDS for NRIs and how to claim refunds and how to reduce NRO TDS using a DTAA.

Whatever the size, the refund pays into a pre-validated Indian bank account linked to your PAN, which for an NRI is almost always the NRO account. Add it on the portal and complete pre-validation, which checks the account against your PAN and name, well before July rather than on filing day. An unvalidated account, a name mismatch, or an account gone dormant is the single most common reason a correct refund hangs. The same pre-validated account generates your EVC for verification, so this step does double duty.

What you do not have to report, and the year that changes

One relief surprises people: as a non-resident or RNOR you do not fill Schedule FA, the foreign assets and income schedule, which binds only the ordinarily resident. Your overseas accounts, foreign shares, vested RSUs and foreign property stay off the Indian return entirely while your status holds. This is not permanent. It flips the year you become ordinarily resident, typically once you have been back in India long enough to fail the RNOR tests, at which point worldwide assets and income come into scope and Schedule FA becomes mandatory, with the Black Money Act attaching serious penalties to omissions. The year you move back is the one most likely to go wrong, which is why it deserves deliberate planning; the detail is in reporting foreign assets in Schedule FA and the status mechanics in the residency rules.

The notices that catch NRIs, and the edge cases

Most NRI notices are reconciliation queries, not evasion charges. The frequent triggers: an AIS or 26AS mismatch where reported income does not tie to third-party data, now including the TDS-section-code column added this year; a refund held for bank validation because the NRO account is unvalidated, dormant or name-mismatched; DTAA relief claimed without a TRC and Form 10F on record; and a high-value transaction flag, typically a large property sale or securities trade sitting in AIS with no matching return. Respond inside the portal with documents attached by the stated date; an ignored notice is what turns a routine query into a problem.

A few edge cases worth holding in view. Capital gains run on their own rates, not the slab table above, and the basic exemption usually cannot be set against them for NRIs, which is the capital gains guide and, for real estate, selling property in India as an NRI. The Section 115G no-file relief exists but is narrow, as covered above. And the year your status changes, in either direction, can split your filing obligations and disclosures mid-year; plan it rather than discover it.

The closing read

The honest read for AY 2026-27 is that NRI filing is not difficult, but it punishes two assumptions and one calendar mistake. The first assumption is that the Rs 12 lakh rebate is yours; it is not, so budget for slab tax from the first rupee over Rs 4 lakh, and steer clear of the Rs 12 to 12.75 lakh band if a discretionary realisation gives you the choice, because marginal relief rescues residents there and leaves you exposed. The second is that TDS means you are finished; far more often it means India is holding more of your money than it should, and only a filed, verified return into a pre-validated NRO account gets it back, as Arjun's Rs 2.28 lakh shows. The calendar mistake is reading the August 31 headline as your deadline: it is not, July 31 is, unless you run an Indian business. So for the common case, file ITR-2 by July 31, 2026, reconcile against AIS and 26AS first, default to the new regime unless real deductions tilt the old one your way, claim your refund, and e-verify within 30 days. Do that and filing becomes a refund exercise rather than a risk. The exception worth paying a CA for is the year your residency status changes or a large property sale lands; that is the point to stop relying on any guide, this one included.

Related guides

• NRI residency and RNOR rules
• Capital gains tax for NRIs on shares and mutual funds
• DTAA: how NRIs avoid double tax
• DTAA mechanics: TRC, Form 10F and Section 90
• TDS for NRIs and how to claim refunds
• Tax on Indian rental income for NRIs
• Tax on NRO account interest
• RSU and ESOP taxation for NRIs
• Reporting foreign assets in Schedule FA
• NRE vs NRO vs FCNR accounts
• How to reduce NRO TDS using a DTAA
• Selling property in India as an NRI
• All Taxation guides
• All Banking guides

This guide is educational and general in nature. It is not individual tax advice. Rates, thresholds, forms and deadlines change between Budgets, and several rules here, including the ITR-3 August 31 extension and the revised-return window, are specific to AY 2026-27, so confirm your position with a qualified chartered accountant before you file.