UAE-based NRIs are being urged to file their Indian Income Tax Returns (ITRs) before the July 31 deadline, even if they live in a tax-free country. Experts warn that failure to report Indian income, claim refunds on TDS, or disclose overseas assets could lead to penalties and increased scrutiny under India’s tightened tax laws.
As the July 31 deadline nears, Indian nationals living and working in the UAE have been strongly advised to file their Income Tax Returns (ITRs) in India for the assessment year 2024–25, even if they believe they are exempt. The move comes amidst stricter monitoring by Indian authorities and increased scrutiny of overseas financial activities, including foreign income and assets held by Indian citizens residing abroad.
According to taxation experts, filing an ITR is not just a formality; it has now become a key compliance requirement for Non-Resident Indians (NRIs) due to recent changes in Indian tax law and reporting obligations.
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There’s a growing misconception among many NRIs in the UAE that their foreign income or tax-free status in the UAE exempts them from Indian tax filings. However, if an NRI has income sourced from India — such as rent from property, interest from savings or fixed deposits, capital gains, or dividends — they are required to file an ITR if the gross total income exceeds ₹2.5 lakh (before any deductions).
In addition, if an NRI has invested in Indian stock markets, mutual funds, or earns income from any Indian business, they also fall under the tax filing obligation. Tax experts emphasize that failing to report this income could attract penalties or legal issues.
A critical reason for NRIs to file their ITRs is the opportunity to claim refunds on Tax Deducted at Source (TDS). In many instances, Indian banks deduct TDS at 30% on interest income for NRIs — often higher than the actual tax liability. Filing a return allows NRIs to claim the excess TDS back, provided they fall within the taxable slab or are eligible for deductions under Indian law.
Additionally, any sale of property or financial assets in India generally triggers TDS deductions, which can again be re-adjusted through the return filing process.
NRIs who have returned to India and qualify as “resident but not ordinarily resident” (RNOR) or full residents under Indian tax laws are now mandated to disclose their overseas income and assets in their ITRs. This includes any foreign bank accounts, stocks, or real estate. Experts warn that non-disclosure could potentially trigger scrutiny under India’s Black Money Act.
Moreover, under the Foreign Account Tax Compliance Act (FATCA) and Common Reporting Standard (CRS) frameworks, Indian authorities now receive detailed data about foreign bank accounts and investments held by Indian citizens. This data-sharing mechanism between countries makes non-reporting riskier than ever before.
The Indian government is increasingly aligning its tax laws with international standards. With increasing data transparency, there is a strong emphasis on tax compliance by all citizens, including those living abroad. The Central Board of Direct Taxes (CBDT) has issued clear instructions on filing obligations and initiated multiple outreach campaigns to raise awareness among NRIs.
The new rules have particularly impacted those who often travel between India and the UAE, as their residency status may be re-evaluated. If an individual has spent more than 182 days in India during the previous year or qualifies under the new 120-day rule (with global income above ₹15 lakh), they may be treated as a resident for tax purposes.
The Indian government has made significant improvements in the ITR e-filing portal, allowing seamless digital filing for NRIs using Aadhaar and PAN. For UAE-based residents, filing online without the need for physical documentation is a major benefit. However, many are still advised to consult tax advisors to ensure correct filing and avoid misreporting.
NRIs can now use Form ITR-2 or ITR-3 depending on their sources of income, and are allowed to link their foreign bank accounts for refunds in some cases.
Missing the July 31 deadline could result in penalties of up to ₹5,000 under Section 234F of the Income Tax Act. In cases where income is taxable in India but not reported, the taxpayer may also face additional interest, scrutiny, or even prosecution under certain conditions.
It is important to note that even if your Indian income falls below the taxable threshold, filing a return is useful to maintain a clean compliance record — especially for NRIs planning future investments, property sales, or repatriation of funds.
With tighter global compliance standards and increased data sharing among governments, NRIs — particularly those in the UAE — can no longer afford to ignore their Indian tax responsibilities. Filing an ITR on time helps avoid legal complications, ensures tax savings, and provides financial credibility for future activities in India.
As experts put it, “Just because you live tax-free in the UAE doesn’t mean your Indian tax responsibilities disappear.” NRIs should use the remaining time before the deadline to evaluate their income sources, consult financial advisors if necessary, and complete their ITR filing promptly.
