NRI tax mistakes you might be making—and how to fix them

Non-Resident Indians (NRIs) don’t usually set out to break tax rules. But all it takes is an old savings account, a forgotten FD, or one missed form, and suddenly, you're tangled in an NRI tax complication you didn’t see coming.

The biggest problem? You don’t know what you don’t know. Maybe a friend said a filing isn’t needed. Maybe no one told you about Form 67. But getting NRI tax rules wrong can cost you money, refunds, or other consequences.

Here’s how to avoid the most common slip-ups before they snowball.

Misjudging your residential status
 

Before anything else, get this part right. Your residential status under Indian tax law decides what income is taxable, what forms you’ll need, and whether foreign income must be reported. It’s step zero of the NRI tax process and getting it wrong can complicate everything that follows.

Your NRI tax status isn’t fixed—it resets every year based on your India visits. Before you file, invest, or plan anything, check your status first.

Using the wrong bank account type
 

Still using your old savings account after moving abroad? That’s not just outdated; it’s non-compliant. Your account type directly affects taxability, reporting, and fund transfers. It’s one of the most common NRI tax slip-ups and also one of the easiest to fix.

Fixing your account type isn’t just a technicality; it’s what makes the rest of your NRI tax journey far less stressful. If you’re unsure where to begin, banks like IDFC FIRST Bank offer quick NRO account conversions and expert assistance to keep you compliant from day one.

Thinking Indian income isn’t taxable
 

Many NRIs think their tax obligations end at the border. But if you’re earning from Indian FDs, rent, or dividends, you are expected to pay tax. This is where NRI tax confusion meets the fine print of India’s tax rules—and the role of the Double Taxation Avoidance Agreement (DTAA) gets misunderstood.

Living abroad doesn’t exempt you from taxes on income earned in India; it just changes the rules. Know them, follow them, and you’ll stay in the clear.

Ignoring DTAA formalities
 

DTAA doesn’t work on autopilot. To avoid double taxation, you must file the right forms at the right time. Miss a step, and you could end up paying full NRI tax anyway.

DTAA can lower your NRI tax, but only if you follow the rules that make it count.

Skipping Income Tax Return (ITR) filing without checking rules
 

Not earning a salary in India doesn’t always mean you can skip filing. If you have income here—rent, interest, capital gains—you may still need to file ITR. Missing a return can lead to penalties, lost refunds, and NRI tax trouble.

Skipping your return isn’t harmless; it’s a tax mistake that can cost you far more than just paperwork.

Why come to IDFC FIRST Bank for your NRI tax needs
 

Getting your NRI tax compliance right is easier when your bank is already a step ahead. That’s where the IDFC FIRST Bank NRI Banking services make a difference.

Here’s why thousands of NRIs trust IDFC FIRST Bank -

1. NRO and NRE accounts simplify tax compliance and help manage savings efficiently
2. Quick access to automated interest certificates for smoother filing
3. Online banking, 24/7 account access, and expert support—no matter where you are
4. Minimal documentation and an easy digital onboarding process
5. Recognised among the World’s Best Banks 2025 by Forbes in partnership with Statista

Whether you're starting your NRI journey or just fixing past oversights, IDFC FIRST Bank helps you stay compliant and in control.

Be tax-ready, avoid penalties, and optimise your Indian income—start by getting your NRI tax basics right with IDFC FIRST Bank. Explore the bank’s NRI banking services now!

What makes IDFC FIRST Bank NRI Banking stand out?
 

1. A comprehensive suite of NRE, NRO, and Seafarer Savings Accounts tailored for global Indians
2. Earn interest daily and enjoy monthly interest payouts on your savings
3. Attractive interest rates up to 7.00% p.a. on NRE and NRO Savings Accounts
4. Tax-free returns on NRE Savings and Fixed Deposits for optimised wealth growth
5. Flexible and fully repatriable NRE and FCNR Deposit options with assured returns
6. Open accounts instantly and manage them seamlessly via our top-rated mobile banking app
7. Higher ATM withdrawal limits, cashback benefits, and free VISA Signature Debit Card with no annual charges
8. 24/7 seamless, zero-fee fund transfers and remittance solutions for convenient money management
9. Access mutual funds, travel insurance, term insurance, and the FIRST WOW! Credit Card for a complete financial solution