Filing Return of Income in India

A return of income (ROI) is how you report your annual income and taxes paid to the tax department. NRIs file in ITR-2, or ITR-3 if there’s business or professional income involved.

Who is actually liable to file

Filing is mandatory if your taxable income exceeds the basic exemption limit, ₹2,50,000 under the old regime, or ₹4,00,000 under the new regime (the new-regime nil slab was raised from ₹3,00,000 in a recent Budget). But even below that limit, you must still file if, during the year, you have:

• Short-term capital gains on listed equity shares, equity mutual fund units, or business trust units
• Any long-term capital gain chargeable to tax
• Deposited over ₹1 crore in aggregate in one or more current accounts
• Spent over ₹2 lakh on foreign travel for yourself or anyone else, from an Indian bank account
• Spent over ₹1 lakh on electricity consumption in India
• Business turnover or gross receipts exceeding ₹60 lakh
• Professional gross receipts exceeding ₹10 lakh
• Total TDS and TCS of ₹25,000 or more
• Aggregate savings account deposits in India of ₹50 lakh or more

Taxable income here means gross total income before exemptions on reinvested capital gains and before Chapter VI-A deductions like donations, insurance premiums, or Mediclaim, so your actual filing threshold is often lower than your final tax bill would suggest.

When you’re exempt from filing

If your entire gross total income is only investment income or LTCG from a specified foreign exchange asset (shares, debentures, deposits with an Indian public company bought in convertible foreign exchange), and tax has already been fully deducted at source on both, filing is not mandatory.

Due dates

Stage	Deadline
Normal due date (no audit)	31 July following the financial year
Belated return	Up to 3 months before the end of the relevant assessment year
Updated return (ITR-U)	Up to 24 months from the end of the relevant assessment year
Under condonation of delay approval	By the date specified in the approval order
In response to a department notice	By the date specified in the notice

Revising a filed return: if you spot an error or omission, you can revise it anytime up to 3 months before the end of the relevant assessment year, or before assessment is completed, whichever comes first.

Consequences of filing late

• Capital gains losses and business losses from that year can no longer be carried forward and set off against future income
• 1% simple interest per month or part month on any unpaid tax
• Late fee: nil if income is below the exemption limit, ₹1,000 if income is up to ₹5 lakh, ₹5,000 above that
• Willful delay can trigger prosecution, though this is generally avoided if you file before the deadline for belated returns, or if your net tax payable (after advance tax and TDS) doesn’t exceed ₹10,000

Updated Return (ITR-U)

This lets you voluntarily disclose income you missed earlier, within 24 months of the assessment year’s end, on payment of additional tax. It protects you from penalty if the mistake is later found by the tax officer. You cannot use it to file a loss return, reduce your earlier tax liability, or increase a refund. The additional tax is 25% of assessed tax plus interest if filed within 12 months of the assessment year’s end, and 50% if filed between 12 and 24 months.

Condonation of delay

If you missed a filing deadline entirely and there is a genuine refund at stake, you can apply for condonation of delay, up to 6 years from the end of the relevant assessment year. Courts have accepted lack of knowledge of Indian tax law as valid grounds for genuine hardship, but approval sits entirely at the tax officer’s discretion, and only applies to refund cases arising from excess TDS, TCS, advance tax, or self-assessment tax.

Why filing voluntarily is usually worth it anyway

TDS on NRI income runs anywhere from 10% to over 30%, well above your actual liability in most cases. Income below the basic exemption limit still gets TDS deducted, capital losses can’t offset gains at the TDS stage, and NRO account TDS often runs at 30.9% even when your DTAA rate is lower. Filing is how you claim that difference back, and refunds carry 6% annual interest while they’re pending.

It also matters for losses: capital losses can only be carried forward to offset future gains if you filed on time in the year the loss occurred. House property loss carry-forward is capped at ₹2,00,000 per year against other income, with the balance carried forward against future house property income only. Filing also builds the documentation trail needed for repatriating funds from NRO to NRE accounts, and gives you clean records if you eventually return to India or need to prove your tax history abroad.