For NRIs, understanding what’s taxable & what’s not in India can get confusing quickly. Many invest in NRE deposits, bonds, or Indian companies, while others earn capital gains on assets. But the Income Tax Act offers a small but powerful provision that brings genuine relief—NRIs don’t always have to file a tax return in India.
This relaxation comes from Section 115G, which provides an exemption from filing a return if specific conditions are met. It was introduced to make compliance easier for NRIs whose income is already taxed at source. Let’s break it down in a simple, human way that actually makes sense.
What Is Section 115G?
Section 115G provides an exemption for Non-Resident Indians from filing an income tax return in India if certain conditions are satisfied.
In short, if an NRI’s only income is from specified investments or capital gains & full TDS has been deducted, the non-resident Indian does not need to file a return.
This is officially titled:
“Return of income not to be filed in certain cases.”
Who Can Claim This Exemption?
To skip filing an ITR under Section 115G, all these must be true:
- You must be an NRI under Indian tax laws
- Your income in India should come only from:
- Investments under Chapter XII-A (like NRE deposits, specified bonds)
- Long-term capital gains from these investments
- Tax must already be deducted at source on this income
- You should not have any other taxable income in India
If these conditions are met → Return filing becomes optional.
Also Read: Special Provisions for Non-Residents Turning Resident
Why Section 115G Exists
The government created this provision because:
- Most NRIs earn & pay taxes abroad
- Their Indian incomes are usually investment-based"
- These incomes already have TDS automatically deducted
- Filing an ITR from another country can be complicated
So instead of forcing NRIs to file returns just for procedural reasons, Section 115G provides relief when the tax is already collected.
A Small Real-Life Example
Imagine you’re an NRI working in Dubai. In India, you only earn interest on your NRE fixed deposit & a bit of long-term capital gain from a specified asset.
Your bank already deducts TDS at the correct rate.
Under Section 115G, you do not need to file an income tax return—no hassle, no paperwork, no late-night panic about due dates.
It’s a small but meaningful relief for people living miles away.
Important Point: The Moment You Have Any Other Income, Filing Becomes Mandatory
The exemption under Section 115G disappears if you earn:
- Rental income
- Business income
- Salary in India
- Short-term capital gains
- Income from other sources not covered under Chapter XII-A
In those cases, you must file a return, even if TDS has been fully deducted.
Also Read: Taxation Rules for Non-Residents on Dividends, Interest, Royalties & Fees
What If an NRI Wants to File a Return Anyway?
You can file voluntarily. Many NRIs do this to:
- Claim a refund of excess TDS
- Carry forward capital losses
- Keep financial records updated
- Apply for a home loan or visa documentation
Section 115G makes filing optional, not forbidden.
Benefits of Section 115G
- ✔ Saves time for NRIs who have only investment income
- ✔ Avoids unnecessary compliance when TDS is already deducted"
- ✔ Encourages investment in Indian financial instruments
- ✔ Helps ensure NRIs are not penalised for missing return deadlines
- ✔ Offers clarity in situations where income is simple & fully taxed
Section 115G TDS: The Combination That Makes Filing Optional
The biggest condition is TDS must be deducted correctly.
If the TDS is short, incorrect, or missing—return filing becomes necessary.
NRIs should always ensure:
- Banks apply the correct tax rate
- Form 15G/15H (if applicable) is not mistakenly given
- TDS certificates (Form 16A) are collected
A little attention here ensures maximum ease.
Also Read: Alternate Minimum Tax for Non-Corporates
Conclusion
Section 115G may not show up in everyday conversations, but for NRIs, it carries enormous value. It removes the pressure of filing a return when the income is simple, the tax is already collected, & compliance adds no extra benefit.
In a world where tax rules often feel overwhelming, this section feels like a small gesture of understanding. But if you’re unsure whether you qualify—or if your income mix makes things complicated—experts at CallMyCA.com can guide you with clarity, patience, and the reassurance you deserve.
