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

Efiling 634 views 6 replies

Murali

Accounts

60 Points Joined January 2024

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 (6)

prasad Nilugal

GST Practitioner & Accounts

15072 Points Joined March 2014

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

153 Points Joined October 2021

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 Joined January 2024

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

Ryan Vaz

VR4U

153 Points Joined October 2021

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 Joined January 2024

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

2 Points Joined February 2026

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