NRI Taxation in India 2026: Complete Guide for Non-Resident Indians
By GSRC and Associates, Chartered Accountants
Step 1 — Determine Your Residential Status
Your tax liability in India depends entirely on whether you are a Resident, Non-Resident (NR), or Resident but Not Ordinarily Resident (RNOR) for a given financial year.
You are an NRI (Non-Resident) if:
- You were in India for fewer than 182 days during the financial year, OR
- You were in India for fewer than 60 days during the financial year AND fewer than 365 days in the preceding 4 financial years
For Indian citizens and PIOs leaving for employment abroad, the 60-day threshold is extended to 182 days.
What Income Is Taxable for NRIs in India?
An NRI pays Indian income tax only on income that:
- Accrues or arises in India — salary for services rendered in India, rent from property in India, interest on NRO accounts, capital gains from Indian assets
- Is deemed to accrue in India — salary paid by the Indian government to a citizen posted abroad
Income earned entirely outside India is not taxable in India for NRIs.
Common Sources of Indian Income for NRIs
| Income Type | TDS Rate | Notes |
|---|---|---|
| Rent from Indian property | 30% + surcharge + cess | Tenant must deduct TDS; 30% standard deduction allowed on rental income |
| Interest on NRO account | 30% + surcharge + cess | NRE account interest is tax-exempt in India |
| Short-term capital gains (equity) | 15% (Section 111A) | STCG on listed shares; DTAA may reduce if applicable |
| Long-term capital gains (equity > ₹1L) | 10% (Section 112A) | LTCG above ₹1 lakh per year; no indexation |
| LTCG on immovable property | 20% + surcharge + cess | Buyer must deduct 20% TDS on sale value (not profit); indexation available |
| Dividend from Indian companies | 20% + surcharge + cess | DTAA may reduce to 10–15% for many countries |
| Salary (India source) | As per slab | If work done partly in India and partly abroad, only India-portion is taxable |
DTAA — Double Taxation Avoidance Agreement
India has DTAAs with over 90 countries. If you have already paid tax on the same income in your country of residence, DTAA prevents you from paying full tax in India too. You can either:
- Exemption method — Income is exempt in one country (usually India for certain income types)
- Credit method — Tax paid in India is credited against tax payable in your country of residence
To claim DTAA benefits in India:
- Obtain a Tax Residency Certificate (TRC) from the tax authority of your country of residence
- Submit TRC + Form 10F to the Indian payer (bank, tenant, broker) before income is paid
- The payer deducts TDS at the DTAA rate instead of the standard Indian rate
DTAA benefits can significantly reduce TDS — for example, US-India DTAA caps dividend TDS at 15%, and UAE-India DTAA may exempt certain income entirely (UAE has no personal income tax).
NRI Bank Accounts — NRE vs NRO vs FCNR
| Account | Currency | Interest Tax | Repatriable? |
|---|---|---|---|
| NRE (Non-Resident External) | INR | Tax-free in India | Fully repatriable |
| NRO (Non-Resident Ordinary) | INR | Taxable at 30% TDS | Up to USD 1M/year after tax |
| FCNR (Foreign Currency NR) | Foreign currency | Tax-free in India | Fully repatriable |
For rental income and property sale proceeds in India, money comes into the NRO account. You can repatriate up to USD 1 million per financial year from NRO after paying applicable taxes and providing the CA Certificate in Form 15CA/15CB.
ITR Filing — Is It Mandatory for NRIs?
You must file an ITR if your Indian income (before deducting TDS) exceeds the basic exemption limit of ₹2.5 lakh. Even if TDS has been deducted, filing lets you:
- Claim a refund if TDS was deducted at a higher rate than your actual liability
- Carry forward capital losses to offset future gains
- Establish clean income records for property transactions or future investments
NRIs typically file ITR-2 (no business income) or ITR-3 (business/professional income in India). The deadline is the same as for residents: 31 July (extended dates apply in some years).
Form 15CA and 15CB — Repatriation
When an NRI remits money out of India from an NRO account (for rental income, property sales, etc.), the Indian bank requires:
- Form 15CA — Declaration by the remitter (filed online on the Income Tax portal)
- Form 15CB — Certificate from a Chartered Accountant confirming that taxes have been paid and the remittance is in compliance with FEMA
GSRC and Associates routinely issues Form 15CB certificates and guides NRI clients through the 15CA/15CB process. Contact us for assistance.
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