Are you an NRI trying to file your tax return in India without missing anything? Many overseas Indians face the same challenge every year. Despite good intentions, errors often slip in, causing refund delays, tax notices, or penalties.
Some mistakes are so common that they have almost become a pattern. Misunderstanding residential status, overreporting foreign income, or choosing the wrong form are just a few examples of typical ITR filing mistakes. Let’s go over them and help you file accurately with clarity and confidence.
This is where confusion usually starts. People assume that staying outside India makes them an NRI automatically. But according to Indian tax laws, your residential status depends on the number of days you spend in India during a financial year.
To understand this better, imagine a simple decision web:
This calculation is essential. A wrong status can lead to using incorrect tax forms or reporting ineligible income.
Another common error is reporting global income that is not taxable in India. For example, income from foreign salary, overseas rental property, or interest from a foreign bank is not taxable if you are a valid NRI.
However, many taxpayers still include it, assuming it's safer to disclose everything. This often inflates the total taxable income and leads to paying extra tax unnecessarily.
Form selection matters more than most people think. Using the wrong ITR form can result in your return being marked defective or even rejected.
Here, a short list helps:
Never use ITR-1 if you are an NRI. That form is meant only for residents with simple income sources.
This mistake applies mainly to those who qualify as Resident and Ordinarily Resident (ROR) for the year. In such cases, you're required to disclose any foreign-held assets such as bank accounts, stocks, property, or mutual funds.
This disclosure must be done even if there is no income from those assets during the year. Ignoring this rule can attract penalties under the Black Money Act, which is a serious compliance issue.
Many countries have tax treaties with India, which allow you to avoid double taxation. However, most NRIs skip this benefit either because they don’t know how to claim it or they miss out on the required documents.
To claim relief under the Double Taxation Avoidance Agreement:
This can help you reduce your tax burden in India significantly.
You may have done everything correctly, but if your bank details are outdated or unvalidated, your refund will not reach you. Many NRIs forget to update or pre-validate their bank accounts on the income tax portal.
Here’s what you must check:
These are small steps but make a big difference in getting your refund without delays.
Set up a simple personal system that helps you stay on top of tax rules year after year. Create a digital folder with templates for calculating your residential status, saving TRC documents, and tracking refunds.
You can even build a custom checklist using Google Sheets or Notion. This will help you avoid repeated ITR filing mistakes and make your annual filing process far more predictable and stress-free.