Latest Update for AY 2025–26:
ITR Due Date (Non-Audit Cases) extended to 15 September 2025.
Form 67 must be filed before ITR to claim Foreign Tax Credit (FTC).
Capital Gains Schedule requires detailed ISIN, acquisition/sale dates.
Form 64A/64E filing for AIFs, REITs, InvITs due by 15 June 2025.
CBDT Notification dated 10 October 2024 revised cost of acquisition rules for certain units of debt mutual funds and hybrid funds under amended Section 112.
New ITR schema requires reporting of foreign investment outside India with country-wise breakup.
Residential Status & RNOR Qualification — Sec 6 & Sec 5 Explained
A taxpayer's residential status determines the scope of income taxable in India. Under Section 6 of the Income-tax Act, 1961:
A person is Resident if:
Present in India for 182 days or more during the relevant FY, or
Present in India for 60 days or more in the FY and 365 days or more in the preceding 4 FYs.
Non-Resident (NRI): Fails both conditions.
Resident but Not Ordinarily Resident (RNOR) [Section 6(6)]:
Was a non-resident in 9 out of 10 preceding FYs, or
Stayed in India for ≤729 days in the preceding 7 FYs.
Under Section 5:
RNORs are taxed only on:
Income received or deemed to be received in India.
Income that accrues or arises in India.
They are not taxed on foreign income that is:
Earned and retained abroad.
Not deemed to accrue or arise in India.
Judicial Support:
Anurag Jain v. ITO (2020): Foreign salary credited abroad not taxable for RNOR.
Ravi Kant v. ITO (2022): Foreign shares’ capital gains exempt if retained abroad.
RNOR Planning: Return & Leave in Same FY
The RNOR status offers significant tax planning opportunities, especially if an individual returns and departs within the same financial year.
Example:
Mr. Arjun returns on 10 June 2024 and departs again on 5 January 2025.
Stay = 209 days → Resident.
Non-resident for 9/10 previous FYs and stayed <729 days in last 7 FYs → RNOR.
Result:
Indian income taxable.
Foreign income earned and retained abroad = not taxable.
Mid-Year Salary Shift: Same or New Employer
Scenario 1: Leaves in May or July 2024
Stay <182 days → NRI.
Salary earned abroad and retained abroad → Not taxable.
If credited to Indian account → Taxable under Section 5(2).
Scenario 2: Leaves in December 2024
Stay >182 days → Resident.
If also qualifies as RNOR → foreign income retained abroad not taxable.
Tax Tips:
Use Schedule R in ITR-2 to claim RNOR.
Do not remit foreign salary to India if not required.
If claiming DTAA relief, obtain TRC from foreign country.
Illustration:
Mr. Akshay worked in India till Dec 2024, left for Germany.
Resident in FY 2024–25, qualifies as RNOR.
Salary earned in India → Taxable.
Salary earned and retained abroad → Not taxable.
Salary remitted to India → Taxable.
Common Income Streams – RNOR/NRI Taxability Matrix
| Income Source | RNOR | NRI | Section Reference |
|---|---|---|---|
| NRO Interest | ✅ | ✅ | Sec 5, Sec 195 |
| NRE/FCNR Interest (as NRI) | ❌* | ❌ | Sec 10(4)(ii) |
| Salary Abroad (retained) | ❌ | ❌ | Sec 5(1)(c) |
| Salary Abroad (sent to India) | ✅ | ✅ | Sec 5(1)(c) |
| Indian Mutual Fund Gains (Equity) | ✅ | ✅ | Sec 111A, 112A |
| Indian Debt MF Gains | ✅ | ✅ | Amended Sec 112 |
| Foreign Capital Gains (retained) | ❌ | ❌ | Sec 5 |
Capital Gains – Reporting & Taxability
Listed Shares & Equity Mutual Funds
STCG (<12 months): 15% u/s 111A
LTCG (>12 months): 10% exceeding ₹1 lakh u/s 112A
Unlisted Shares
LTCG: 20% with indexation (resident)
LTCG: 10% without indexation (non-resident)
Debt Mutual Funds / Hybrid Funds
After Finance Act 2023 and clarified by CBDT Notification dated 10 Oct 2024:
No indexation benefit
Entire gains taxable at applicable slab rates (even if held >36 months)
Foreign Capital Gains
RNORs: Taxable only if brought to India or accrued in India
If retained abroad → Not taxable
ITR Compliance:
Use Schedule CG with ISIN-wise disclosure
Foreign shares → declare in Schedule FA and report gain in Schedule CG
Match with AIS/Form 26AS
AIFs, REITs & InvITs – Pass-Through Instruments
| Instrument | Taxability | Form | Section |
| AIF Category I/II | Investor taxed | Form 64C | Sec 115UB |
| AIF Category III | Taxed at fund level | NA | Rule 12CA |
| REIT/InvIT | Pass-through | Form 64A | Sec 115UA |
Disclose income in Schedule OS and Schedule PTI
Keep track of Form 64C/64A issued by the fund
Form 67 – Foreign Tax Credit Compliance (Rule 128)
Must be filed before ITR to claim FTC
Upload TRC, foreign income details, and tax paid evidence
Report corresponding income in Schedule FSI and credit in Schedule TR
Non-compliance leads to denial of credit even if taxes were paid abroad.
PAN / AIS / CKYC Mismatches & Tips
Ensure PAN is linked to all bank, MF, and trading accounts
Update residential status in CKYC via banks/AMCs
Review AIS/TIS regularly – submit feedback for incorrect entries
Match TDS entries in ITR with Form 26AS
Avoid using ITR-1 – use ITR-2 for better alignment with AIS/CG/PTI schedules
FY 2024–25 Compliance Calendar
| Task | Due Date | Remarks |
| Form 64A/64C (REIT/AIF) | 15 June 2025 | Pass-through income disclosure |
| Form 67 (FTC) | Before ITR | Must be filed before ITR filing |
| ITR Filing (non-audit) | 15 Sept 2025 | Extended deadline |
| Belated/Revised Return | 31 Dec 2025 | u/s 139(5)/(8A) |
| Foreign Asset Disclosure | With ITR | Mandatory for ROR under Schedule FA |
Common Mistakes & How to Avoid
| Mistake | Impact | Tip |
| Using ITR-1 as RNOR/NRI | Return considered defective | Use ITR-2 and fill Schedule R correctly |
| Including foreign income as RNOR | Over-taxation | RNORs not liable for retained foreign income |
| Late filing of Form 67 | FTC claim denied | File Form 67 before submitting ITR |
| Ignoring AIS/TIS mismatches | TDS/refund mismatch | Use AIS feedback utility to correct discrepancies |
| Skipping foreign asset details | Penalty & scrutiny | Use Schedule FA and Schedule CG properly |
RNOR/NRI Checklist for AY 2025–26
✅ Assess residency status under Section 6 + RNOR eligibility under Section 6(6)
✅ Maintain updated PAN/KYC across NRE/NRO/DEMAT accounts
✅ Regularly monitor AIS/TIS, reconcile with books
✅ File Form 67 in time for FTC
✅ Report foreign assets under Schedule FA if ROR
✅ Avoid remitting foreign salary to India (RNORs)
✅ Use ITR-2, enable Schedule R to reflect RNOR status
✅ Final ITR due by 15 September 2025
✅ ISIN-wise capital gain and country-wise foreign investment disclosure required
