Australia NRI filing ATO tax return and India ITR: DTAA and foreign income offsets
Australian tax residents must include India-source income (NRO interest, rental, capital gains) in their Australian tax return. India taxes the same income. The Australia-India DTAA (1991) and the Australian Foreign Income Tax Offset (FITO) on the individual tax return prevent double taxation. NRE interest is exempt from India tax but is still Australian-taxable.
India TDS is claimed as a Foreign Income Tax Offset on your Australian return
Australian tax residents declare India NRO interest, rental income and capital gains on their Australian individual tax return at the gross amount. India TDS already paid is claimed as a Foreign Income Tax Offset (FITO) against Australian income tax on the same income. The Australia-India DTAA Article 11 caps NRO interest withholding at 15%. NRE interest, while India-exempt, is fully taxable in Australia.
Key points
- ATO worldwide income: India income is mandatory — Australia taxes residents on worldwide income — all India-source income must be declared on your Australian individual tax return.
- Foreign Income Tax Offset (FITO) — India TDS paid on NRO income and capital gains is claimed as FITO on your Australian return, reducing Australian tax on the same income.
- Australia-India DTAA: NRO interest at 15% — Article 11 of the Australia-India DTAA caps withholding on NRO bank interest at 15%. Claim treaty rate via TRC and Form 10F submitted to the Indian bank.
How ATO-India dual tax works for NRIs
Income declaration: Declare gross India income (before TDS) in the relevant section of your ATO individual tax return — interest income, rental income and capital gains schedules.
FITO claim: On the ATO return, complete the 'Foreign income tax offset' label (Item 20 — Total foreign income). Provide India TDS amount. ATO limits the offset to the Australian tax payable on that foreign income.
Capital gains discount: Australia's 50% CGT discount for assets held 12+ months applies to Indian property gains on the Australian return (for Australian residents). However, ATO has been tightening this for non-residents — as an Australian resident with India property, you should qualify for the 50% discount.
ATO-India DTAA overlap: where India taxes more than Australia (e.g. India 30% TDS vs ATO rate of 20%), the Australian FITO is limited to the ATO tax amount — you don't get a cash refund of the difference. Claim the excess TDS back via India ITR.
ATO tax return timeline for Indian income
October 31 is the standard ATO individual return deadline (or May 15 if using a registered tax agent, which is common for NRIs with India income).
Keep India Form 16A (TDS certificate), Form 26AS and broker capital gains statements as ATO may request supporting documents.
Australian tax year: July 1 to June 30 (does not align with India's April 1 to March 31 — apportion India income for the relevant Australian year).
Frequently asked questions
Does Australia tax NRE FD interest?
Yes. NRE interest is exempt in India but Australia taxes residents on worldwide income. There is no FITO available since India did not withhold tax on NRE interest. Declare NRE interest in full on your ATO return.
What if I am an Australian temporary resident, not a permanent resident?
Temporary Australian residents are taxed only on Australian-source income and employment income — foreign investment income is generally exempt. If you hold a temporary visa (e.g. 457, TSS, student), you may not need to declare India passive income. Confirm with a tax agent.
Is India property CGT on the Australian return calculated in AUD?
Yes. Convert the India purchase price, improvement costs and sale proceeds to AUD at the prevailing Bank of Australia or RBA exchange rates at each date. The gain in AUD (not INR) is reported on the ATO return.