Understanding NRI Taxation in India: Rules, Income Types & Filing Guide
Understanding NRI Taxation in India: Rules, Income Types & Filing Guide
Blog Article
NRI Taxation in India: What You Need to Know
If you're a Non-Resident Indian (NRI), understanding how taxes work in India is important to stay compliant and avoid penalties. This short guide explains who qualifies as an NRI, what income is taxable, how to file returns, and the recent changes that may impact you.
Who Is an NRI for Tax Purposes?
You are considered an NRI if:
You stay in India for less than 182 days in a financial year, or
You stay for less than 60 days in the current year and less than 365 days in the last four years combined.
Your total days in India matter—even short visits count.
What Income Is Taxable for NRIs?
Only income earned or received in India is taxable for NRIs. This includes:
Salary earned for work done in India
Rental income from property in India
Capital gains from the sale of property or shares
Interest from Indian bank accounts
Note:
Interest on NRO accounts is taxable.
Interest on NRE and FCNR accounts is tax-free.
Income earned abroad is not taxed in India if you're an NRI.
How to File Taxes as an NRI
If your Indian income exceeds ₹2.5 lakh in a year, you must file a return. Filing is done online through the Income Tax Department website.
Deadline for FY 2024–25: September 15, 2025.
Even if your income is below the limit, file a return if TDS was deducted to claim a refund.
NRI Income Tax Slabs (Old Regime)
| Income (₹) | Tax Rate |
|---|---|
| Up to 2,50,000 | Nil |
| 2,50,001 – 5,00,000 | 5% |
| 5,00,001 – 10,00,000 | 20% |
| Above 10,00,000 | 30% |
Add 4% health and education cess. A surcharge applies if income exceeds ₹50 lakh.
Special Rules and Points to Remember
TDS: Payers in India must deduct tax before transferring income to you (e.g., rent, fees). TDS is usually 30%.
Forms 15CA/15CB: Required for certain foreign remittances.
Capital Gains: Selling property or shares may trigger short- or long-term capital gains tax.
DTAA: India has tax treaties with many countries to avoid double taxation.
Recent Changes That Affect NRIs
Two Self-Occupied Homes: NRIs can now own up to two self-occupied properties without paying notional rent.
Higher TCS Limit: The TCS limit on foreign remittance under LRS has been raised from ₹7 lakh to ₹10 lakh.
Residency Rule Update: From April 2026, if you stay 120 days or more and earn over ₹15 lakh in India, you may be classified as a "Resident but Not Ordinarily Resident" (RNOR), possibly making your global income taxable.