With the Indian income tax filing deadline approaching, here’s what Dubai-based NRIs need to know about picking the correct ITR form based on their income type and residential status.
As the Indian income tax return (ITR) filing season begins, a significant number of Indians residing in Dubai must carefully consider which ITR form to select. Despite living abroad, Non-Resident Indians (NRIs) with income sources in India, such as rental properties, capital gains, or interest income, are legally obligated to file tax returns under Indian law.
The Indian Income Tax Department offers multiple ITR forms, each tailored for different income brackets and taxpayer categories. Choosing the wrong one can lead to rejections, notices, or even penalties. For Dubai-based Indians, the implications of a mistake can extend beyond compliance—it can disrupt investments, delay fund repatriation, or hinder access to tax treaties, such as the India-UAE Double Taxation Avoidance Agreement (DTAA).
Which ITR Form Should NRIs in Dubai Use?
Here’s a simplified overview to help NRIs navigate their options:
- ITR-1 (Sahaj):
For resident individuals earning up to ₹50 lakh from salary, one property, or other sources of income, such as interest. NRIs are not eligible to use this form. - ITR-2:
The most commonly used form by NRIs. Applicable if you earn income in India from house property, capital gains, or other sources, and do not have business or professional income in India. - ITR-3:
For individuals with income from a business or profession in India. This form is suitable if you’re an NRI with proprietary business operations or are a partner in an Indian firm. - ITR-4 (Sugam):
Designed for residents using the presumptive income scheme. Generally not applicable for NRIs.
Why This Matters to Dubai-Based Indians
- Compliance and Penalty Avoidance:
Filing the incorrect ITR form may result in notices from the Indian tax department, delayed refunds, or legal complications. - Global Financial Integration:
With cross-border investments, tax transparency, and exchange of information between India and the UAE increasing, proper ITR filing ensures financial smoothness. - Repatriation and Investments:
Correct filing facilitates the smooth transfer of money between India and the UAE, especially for those investing in Indian real estate, equities, or startups. - Avoiding Double Taxation:
India and the UAE have a DTAA, which allows you to claim relief from double taxation if taxes are paid in one country. Filing under the correct ITR form ensures eligibility for such benefits.
Next Steps for NRIs in Dubai
- Determine Your Residential Status: Your tax filing obligations vary based on whether you are classified as a resident, resident but not ordinarily resident (RNOR), or non-resident.
- Collect Relevant Documents: PAN card, Indian bank details, investment statements, rent agreements, and income proof are necessary for filing.
- Consult a Tax Expert: Cross-border tax rules can be complex. A professional familiar with both Indian and UAE regulations can help you file correctly and legally save taxes.
- File Before the Deadline: The due date for filing ITR for the financial year 2024-25 is July 31, 2025. Delays attract penalties.
