ITR Filing for NRI (Dubai) – TDS u/s 194H & ITR-2 vs ITR-3 Confusion

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Murali

Accounts

60 Points Posted on 31 December 2025

Hello Experts,

I need some guidance regarding filing the income tax return for an NRI (Non-Resident Indian) who is residing in Dubai. The situation is as follows:

The NRI has someone acting on their behalf in India.
Some income has been earned, and TDS has been deducted under Section 94H @ 2%.
The amount has been credited to the NRI’s Indian bank account for FY 2024-25.

Questions:

Can the NRI file an Income Tax Return for FY 2024-25 in this case?
If yes, should they file ITR-2 or ITR-3?
When selecting ITR-2, there seems to be no option to show the net profit. If we mention the full commission of ₹17 lakhs, tax liability arises. How can this be addressed in ITR-2?

Replies (8)

Quick Summary

This discussion addresses an NRI in Dubai who received commission income with TDS deducted under Section 194H. Experts clarify that TDS should likely be under Section 195, and ITR-3 is the appropriate form, not ITR-2, to report commission as business income and claim expenses. Filing ITR-3 requires providing Balance Sheet and P&L details, even for smaller turnovers.

prasad Nilugal

GST Practitioner & Accounts

8998 Points Posted on 31 December 2025

1) If someone is paying to NRI or on his behalf to Power of Attorney holder, TDS required to be deducted under section 195 of the income tax Act 1961 and not under section 194H , same section (194H) is applicable to Payment made to resident Indian.

2) After making above correction, NRI required to file ITR3 .

( I hope someone is acting on behalf of NRI as you mentioned in your query is Power of Attorney holder )

Take more opinion on this.

Ryan Vaz

VR4U

138 Points Posted on 01 January 2026

Yes, the NRI can and should file an Income-tax Return for FY 2024-25 since income has accrued/been received in India and TDS has been deducted.
ITR-3 is the correct form, not ITR-2, because commission income is treated as business income.
In ITR-2, you cannot show expenses against commission income; therefore tax arises on gross receipts. To tax only net profit, the income must be reported under Profits & Gains of Business or Profession (PGBP) in ITR-3.

Murali

Accounts

60 Points Posted on 01 January 2026

Thanks for replying. But in ITR 3 required to show BS also?

Ryan Vaz

VR4U

138 Points Posted on 01 January 2026

Yes. When you file ITR-3, you are required to furnish Balance Sheet (BS) and Profit & Loss (P&L) details. Even if turnover is small and books are not mandatorily required under section 44AA, ITR-3 still asks for a simplified BS (capital, assets, liabilities).

Since NRIs cannot opt for section 44AD and commission income is generally not covered by 44ADA, full business schedules apply.

Murali

Accounts

60 Points Posted on 23 February 2026

He also received interest from the bank under Section 195. The bank deducted TDS under Section 195. Can we consider both incomes in ITR-3. Pleae confirm

amma rose

22 Points Posted on 24 February 2026

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Rushabh

Automation Expert

4436 Points Posted on 13 November 2026

Yes, the NRI can file an Indian return for FY 2024–25 (AY 2025–26) if required under the Act, or voluntarily to report the income and claim credit for TDS. The key issue is the nature of the ₹17 lakh receipt: if it is commission income earned from a business or profession, it is generally reported in ITR-3, not ITR-2. ITR-2 does not provide for computing business income by deducting related expenses from gross commission.

Report the income under the appropriate business/profession schedule in ITR-3 and claim eligible expenses supported by records; the taxable profit is not automatically the gross commission. Confirm the applicable TDS section and certificate: section 94H concerns commission or brokerage, but the stated 2% rate and payer/payee details should be checked against the Form 16A and AIS/26AS. Also determine whether the commission is taxable in India based on where the services were performed and the source rules; residence in Dubai or credit to an Indian bank account alone does not settle that question. If the receipt is not business income, its correct head and return form may differ.

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Aashok Kumar Sharma

Finance/Compliance Consultant

77177 Points Posted on 14 November 2026

Agree on ITR-3. Points that complete the picture:

• No presumptive option: Sec 44AD applies only to residents, and commission/brokerage income is excluded from it anyway. The NRI must compute actual profit.

• Expenses: Commission received (Rs 17 lakh) less expenses actually incurred to earn it: sub-agent payments, travel and communication for this business, with bills. Only the net profit is taxed.

• Balance sheet: If books are not maintained, ITR-3 permits the "No account case" option, where only the key figures (gross receipts, gross profit, expenses, net profit) are filled instead of a full balance sheet.

• Both incomes in one return: Bank interest (TDS under Sec 195) goes in Schedule OS of the same ITR-3. NRO interest is taxable; NRE interest is exempt (Sec 10(4)(ii)).

• TDS section: Payment to a non-resident falls under Sec 195, not 194H. The payer should correct its TDS return (Form 27Q), otherwise credit may mismatch. Claim whatever credit appears in Form 26AS.

• Residential status: Confirm days in India (Sec 6) so the NRI status is correct. Basic exemption applies, but the Sec 87A rebate is not available to NRIs.

• Future years: Apply for a lower or nil deduction certificate (Sec 197) if the expected tax is lower than the TDS.