NRIs Face Major Compliance Overhaul: New ITR Forms Force Dual Disclosure of Turnover and Deemed Profit

The Income Tax Return (ITR) landscape is undergoing a significant revamp for Assessment Year (AY) 2026-27. Non-resident Indian taxpayers (NRIs) must now adopt stricter reporting standards, fundamentally changing how income from specific business activities must be declared. The revisions mandate the separate disclosure of both total turnover/receipts and the corresponding presumed net profit for select business schemes.

This overhaul impacts taxpayers utilizing sections 44B, 44BB, 44BBA, 44BBC, and 44BBD. These changes signal an increased level of regulatory visibility regarding the financial activities of non-residents earning income in India.

Mandatory Dual Disclosure: NRIs Must Report Receipts and Deemed Income​

Previously, non-residents covered under these various sections did not need to separately report their gross receipts or the presumptive income derived from them in their ITR filings. However, the revised ITR forms introduce a critical requirement.

Under the new guidelines, taxpayers must now specifically report both the gross receipts and the deemed income in the newly established Schedule BP. This compliance change applies through ITR-3, ITR-5, and ITR-6.

As Parag Jain, Tax Head at 1 Finance, noted, all non-resident entities must now separately disclose their turnover alongside the deemed income. Furthermore, the new Section 44BBD requires mandatory compliance for any non-residents involved in the electronics manufacturing sector.

Understanding the New Presumptive Tax Regimes for Non-Residents​

The underlying principle of all five sections remains presumptive taxation. This method simplifies compliance by fixing a percentage of gross receipts as taxable income, bypassing the need for extensive maintenance of full books of accounts. This deemed income applies regardless of the actual profit or loss incurred by the business.

The changes are crystallized through the introduction of Section 44BBD via the Finance Act, 2025. This specific scheme targets non-residents providing services or technology for setting up or producing electronic goods in India. Effective from AY 2026-27, this section taxes 25 percent of the specified receipts as taxable income.

Parag Jain explained that while the presumptive tax benefit remains, the key shift is in department visibility. The Tax Department can now robustly cross-check a non-resident's declared gross receipts against official TDS records, payment data from Indian companies, and remittance trails.

Impact on Foreign Retirement Accounts and Filing Deadlines​

Beyond presumptive tax reporting, the ITR forms have also changed concerning individuals with foreign retirement savings. Previously, there were no restrictions on the ITR forms choice for those holding such accounts.

Taxpayers are now barred from filing ITR-1 or ITR-4 if they possess foreign retirement accounts. Additionally, the specific field for claiming Section 89A relief has been removed from these simpler forms, compelling adherence to more detailed filings.

To address this, individuals must now file ITR-2 or ITR-3 and also submit Form 10-EE. This action is crucial for those seeking to defer annual tax on accruals from sources like US 401(k), Self-Invested Personal Pension (SIPP), or Registered Retirement Savings Plan (RRSP).

Taxpayers filing for salaried income, pension, or student status are required to submit their returns by July 31, 2026. However, the deadline for the filing of returns related to Tax Year 2026-27 remains July 31, 2027.