NRI Tax: Singapore-based Indian pays ₹1.70 lakh by mistake, wins refund after ITAT upholds DTAA claim

A non-resident Indian living in Singapore has won a tax dispute after the Income Tax Appellate Tribunal (ITAT), Pune, allowed his claim for a refund of ₹1.70 lakh paid on capital gains from Indian mutual funds. The tribunal ruled that failure to claim relief within the prescribed return-filing timeline does not automatically extinguish a taxpayer’s rights under a Double Taxation Avoidance Agreement (DTAA).

The case highlights the importance of understanding tax treaties for non-resident Indians (NRIs) investing in Indian financial assets and the remedies available when eligible taxpayers miss claiming treaty benefits in their original income tax returns.

Why was the NRI’s tax liability disputed?

According to details shared by Sujit Bangar, founder of TaxBuddy, on social media, the taxpayer, identified as Varun, lives and works in Singapore and holds investments in Indian mutual funds.

After selling some of these investments, Varun paid ₹1.70 lakh in capital gains tax and subsequently filed his income tax return (ITR). He later realised that he could potentially claim relief under the India-Singapore DTAA, which governs the allocation of taxing rights between the two countries.

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The treaty treatment of capital gains depends on the nature of the income, the applicable treaty provisions and the taxpayer’s circumstances. In Varun’s case, the claim was that the gains were taxable only in Singapore, where such gains are generally not subject to tax under the circumstances described.

Consequently, he argued that his tax liability in India was nil.

Why did the Income Tax Department initially refuse the refund?

After discovering the potential treaty benefit, Varun sought a refund. However, the deadline for filing a revised return had expired.

The tax authorities reportedly rejected his request, taking the position that the benefit should have been claimed when he filed his original return.

Varun then approached ITAT Pune, arguing that his entitlement under the tax treaty should not be denied merely because he had failed to make the claim at the appropriate stage.

He relied on judicial precedents, including the Bombay High Court’s ruling in Pruthvi Brokers & Shareholders and the Mumbai ITAT decision in Anushka Sanjay Shah, which support the principle that legitimate claims can, in appropriate circumstances, be considered during appellate proceedings even if they were not raised in the original return.

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What does the ruling mean for NRIs?

On October 12, 2026, ITAT Pune reportedly ruled in Varun’s favour, allowing his DTAA claim and paving the way for the ₹1.70 lakh refund.

The case underscores that missing a procedural deadline does not necessarily prevent a taxpayer from pursuing a legally valid claim through the appropriate appellate process. However, the outcome depends on the applicable treaty provisions, supporting documents and facts of each case.

NRIs investing in Indian mutual funds should check the relevant DTAA, obtain a valid Tax Residency Certificate (TRC), maintain supporting documentation and claim eligible treaty benefits while filing their original ITR.

Those who discover an omission later should seek professional tax advice on available remedies rather than assume that the amount paid cannot be recovered.

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