ITR-2 vs. ITR-3: Which Form Do NRIs Need?

June 04, 2025

Filing Indian Taxes: Which ITR Form is Right for You as an NRI?

As a Non-Resident Indian (NRI), navigating the world of Indian taxation can be tricky. Understanding the different Income Tax Return (ITR) forms simplifies the process, ensuring you file accurately and avoid any headaches. This guide breaks down when to use ITR-2 and ITR-3, making your tax filing journey smoother.

ITR-2: Your Form if You're Primarily an Investor

ITR-2 is designed for NRIs whose income mainly comes from investments and capital gains, rather than running a business in India.

Here are some examples:

  • An NRI who earned capital gains by selling shares of an Indian company listed on the stock exchange.
  • An NRI who owns rental properties in India and receives income from tenants.
  • An NRI who has invested in cryptocurrency and realized profits from trading.

Remember: ITR-2 covers income from sources like:

  • Capital Gains
  • Multiple Housing Properties
  • Foreign Assets
  • Unlisted Equity Shares

It does not include income earned from running a business or professional practice in India.

ITR-3: For NRIs with Business or Professional Income

If your income includes earnings from a business or professional activity conducted in India, ITR-3 is the form for you.

Consider these examples:

  • An NRI who provides consulting services to Indian companies and earns an income.
  • An NRI who owns and operates an online business that serves the Indian market.
  • An NRI who actively trades cryptocurrency as part of a professional trading strategy.

ITR-3 covers all the income sources listed under ITR-2 plus:

  • Income from Business or Professional Consultation in India
  • Crypto as Income from Business or Profession

Key Points for ITR-3:

  • This form requires detailed information about your business operations and financial transactions.

Need Help?

Experts at Taxero can help you avoid hassles and complete your tax filing on time.



Note: Above details are meant for generalized situations and shall not be used as a legal basis for any particular situation readers may have. We do provide tax consultations for specific scenarios and can be reached through our contact us form.



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