How Should Expats File Their Income Tax Returns in India?

India has become a major hub for foreign professionals, multinational employees, entrepreneurs, and digital nomads. Whether you’re here for a few months or several years, if you’re earning income in India, you may fall under expat tax regulations. Many expats often wonder: Do I need to file an income tax return in India? If yes, how should I go about it?

In this guide, we’ll break down everything you need to know about income tax for expats in India — from tax residency rules to step-by-step filing procedures, exemptions, and real-world examples.

At Adopremium, we don’t just specialize in Luxury Serviced Apartments in India, but we also guide expats with essential relocation and compliance needs, including taxation awareness.

Understanding Expat Tax in India

Before diving into filing procedures, it’s important to understand what expat tax means.

An expat (expatriate) in India may have multiple income sources:

• Salary from an Indian employer

• Salary from a foreign employer for services rendered in India

• Allowances and benefits (housing, travel, meal vouchers)

• Rental income from property in India

• Income from investments or businesses

Under Indian law, all income earned or accrued in India is taxable, regardless of where you are paid.

Tax Residency Rules for Expats

Your tax residency status determines whether you are taxed only on Indian income or on global income.

1. Resident

You qualify as a resident if you stay in India:

• For 182 days or more during a financial year, OR

• For 60 days or more in a year and 365 days or more in the preceding 4 years.

Residents are taxed on their global income.

2. Non-Resident (NRI)

If you don’t meet the above conditions, you’re a non-resident, and you are taxed only on Indian-sourced income.

3. Resident but Not Ordinarily Resident (RNOR)

Special status for returning Indians or long-term expats. RNORs are taxed only on income earned in India or from businesses controlled in India.

Income Sources Taxable for Expats in India

• Salary Income: Taxable if services are rendered in India, even if paid abroad.

• Perquisites: Housing allowance, car, utilities, relocation allowance may be taxed.

• Business/Professional Income: If operations are in India.

• Capital Gains: From property or investment sales in India.

• Other Income: Interest from Indian bank accounts, dividends, etc.

Double Taxation Avoidance Agreement (DTAA)

A major concern for expats is double taxation – being taxed in India and again in their home country.

Fortunately, India has DTAA with over 90 countries. This agreement allows expats to:

• Claim tax credit for taxes paid in India.

• Seek exemption in one country if income is already taxed in another.

• Avoid paying tax twice on the same income source.

Example: An American expat working in Bangalore can claim relief under the India–USA DTAA to avoid double taxation on salary.

Step-by-Step Guide: Filing Income Tax for Expats in India

Here’s a detailed process to ensure compliance:

Step 1: Determine Tax Residency

Check if you qualify as a Resident, Non-Resident, or RNOR. This affects your taxable income.

Step 2: Collect Required Documents

• PAN card (Permanent Account Number)

• Passport with visa details (to track days of stay)

• Form 16 / Salary slips

• Foreign income statements

• Tax payment receipts

• Form 67 (for DTAA relief claims)

Step 3: Register on the Income Tax Portal

• Visit www.incometax.gov.in

• Register with PAN and create a login.

Step 4: Choose the Correct ITR Form

• ITR-2: For expats with salary, rental, or capital gains income.

• ITR-3: If you have business or professional income.

Step 5: Report All Indian Income

Disclose salary, rental, business, or investment income earned in India.

Step 6: Claim DTAA Benefits

Fill Form 67 to declare foreign taxes paid and claim credit under DTAA.

Step 7: Submit and Verify

File the return online, e-verify via Aadhaar OTP, net banking, or by sending a signed ITR-V to CPC Bangalore.

Common Mistakes Expats Should Avoid

• Not applying for a PAN card before earning income.

• Assuming foreign-paid salary is tax-free if work is done in India.

• Forgetting to file Form 67 when claiming DTAA relief.

• Not maintaining proper visa and passport entry/exit records.

• Missing the July 31st deadline for filing.

Real-World Example

John, a UK-based IT consultant, worked in Bangalore for 10 months in 2023. His salary was paid in the UK, but since services were rendered in India, it became taxable here. Initially, John skipped filing thinking foreign-paid salary wasn’t taxable. Later, he received a notice from the IT department. After consulting experts, he filed ITR-2, disclosed his Indian income, and claimed DTAA relief to avoid double taxation in the UK.

This example highlights the importance of compliance.

Why Expats Should Seek Professional Help

Indian tax laws can be complex, especially when dealing with multiple income sources, DTAA claims, and compliance requirements. Many expats prefer professional assistance to ensure accurate filing.

Platforms like Adopremium don’t just provide Luxury Serviced Apartments in India, but also connect expats with reliable legal and tax advisory partners. This holistic relocation support ensures peace of mind.

Call to Action

Filing income tax for expats in India doesn’t have to be stressful. With the right guidance, you can stay compliant and avoid penalties.

If you’re an expat relocating to India, explore Adopremium’s Luxury Serviced Apartments in India for a comfortable stay while we connect you with trusted partners for expat tax solutions.

Visit Adopremium today to make your relocation smooth, secure, and hassle-free.

FAQs on Expat Tax in India