Income Tax for NRI in India —
What Is Taxable & How to File
How residential status is decided, which income is taxable in India, which ITR form to use, DTAA relief, NRE/FCNR exemptions, TDS on NRO income and repatriation — all updated for FY 2025-26.
An NRI pays income tax in India only on India-sourced income — salary for work in India, rent from Indian property, capital gains on Indian assets and interest on NRO accounts. Foreign income is not taxable in India. Most NRIs file ITR-2; the usual due date is 31 July. NRE and FCNR interest is fully exempt, while NRO interest suffers 30% TDS. DTAA with 90+ countries prevents double taxation.
Residential Status — NRI, RNOR or Resident
Your residential status for each financial year decides what is taxable in India. It is based on physical stay, not citizenship or visa. There are three categories under the Income-tax Act.
| Status | Stay in India (this FY) | India income | Foreign income |
|---|---|---|---|
| NRI (Non-Resident) | < 182 days* | Taxable | Not taxable |
| RNOR (Not Ordinarily Resident) | Resident, but recent returnee | Taxable | Not taxable** |
| Resident & Ordinarily Resident | 182+ days (ordinarily resident) | Taxable | Taxable (global) |
*Secondary test: also NRI if in India < 60 days this FY and < 365 days across the 4 preceding FYs. The 60-day test is relaxed to 182 days for Indian citizens/PIOs leaving for employment or visiting India. **RNOR foreign income is exempt except business controlled from India.
An Indian citizen with India income above ₹15 lakh who is not liable to tax in any other country can be deemed resident (RNOR). High earners visiting India also face a 120-day threshold (instead of 182) if their India income exceeds ₹15 lakh. Count arrival and departure days as days in India, and confirm your status before filing.
Which Income Is Taxable for an NRI?
An NRI is taxed only on income that accrues, arises or is received in India. The table below covers the common income types and the TDS/tax rate that applies (FY 2025-26).
| Income type | Taxable in India? | Rate / TDS | Notes |
|---|---|---|---|
| Salary for work done in India | Yes | Slab | Even if paid abroad — work location decides |
| Rent from Indian property | Yes | 30% TDS | Tenant deducts u/s 195; file ITR to reconcile |
| LTCG on listed equity / equity MF | Yes | 12.5% | Over ₹1.25L/yr; holding > 12 months |
| STCG on listed equity / equity MF | Yes | 20% | Section 111A (post 23 Jul 2024) |
| Capital gains on Indian property | Yes | 12.5% / slab | LTCG 12.5% (held > 24m); STCG at slab; buyer deducts TDS |
| NRO account interest | Yes | 30% TDS | DTAA can reduce the rate |
| NRE savings / FD interest | Exempt | Nil | Section 10(4)(ii) — while you are an NRI |
| FCNR deposit interest | Exempt | Nil | Section 10(4) / 10(15) |
| Dividend from Indian companies | Yes | 20% TDS | DTAA rate applies with TRC + Form 10F |
| Foreign salary (work done abroad) | No | — | Taxable only in the country of employment |
Section references follow the Income-tax Act, 2025 (renumbered from the 1961 Act, effective AY 2026-27); the underlying exemptions are unchanged. Rates and surcharge should be confirmed on incometax.gov.in.
The new regime is the default and NRIs are taxed under the same slabs. However, the enhanced Section 87A rebate (making income up to ₹12 lakh tax-free) is available to resident individuals only — an NRI cannot claim it. NRIs also do not get the basic-exemption benefit against special-rate capital gains, so tax is often payable from the first rupee of gains.
Which ITR Form Should an NRI File?
Choosing the wrong form triggers a defective-return notice. An NRI cannot use ITR-1 (Sahaj) — it is restricted to residents. Pick the form by income type:
| NRI scenario | ITR form | Due date | Notes |
|---|---|---|---|
| Salary + house property + capital gains (India) | ITR-2 | 31 July | Most common NRI form |
| Any foreign bank account / foreign asset | ITR-2 | 31 July | Schedule FA reporting |
| Business or professional income in India | ITR-3 | 31 July / 31 Oct* | *31 Oct if tax audit applies |
| Partner in an Indian firm / LLP | ITR-3 | 31 July / 31 Oct* | Firm audit can extend the due date |
| ITR-1 (Sahaj) | Not allowed | — | Residents only — NRIs cannot use it |
Filing is mandatory if India income exceeds the basic exemption, or to claim a refund of excess TDS (very common for NRIs with 30% TDS on NRO/rent).
Refund Example — NRO Interest TDS
NRO interest — 30% TDS deducted
After DTAA / return filing
Banks deduct a flat 30% (plus cess) on NRO interest regardless of your actual slab. Filing an ITR — or submitting a DTAA Tax Residency Certificate (TRC) + Form 10F to the bank — is how NRIs recover the excess.
Had 30% TDS on NRO interest, rent or property sale? We file your ITR-2 and claim the refund.
Get My NRI Refund →DTAA, TDS & Repatriation
India has Double Taxation Avoidance Agreements (DTAA) with 90+ countries. Income taxed in India can usually be credited against your home-country tax, or a lower treaty TDS rate can be applied at source.
- To claim a DTAA rate you need a valid TRC plus Form 10F filed online.
- Repatriation: up to USD 1 million per financial year from NRO to NRE/abroad after tax, using Form 15CA + 15CB (a CA certificate).
- NRE and FCNR balances are freely repatriable without the $1M cap.
- NRIs cannot buy agricultural land, plantations or farmhouses (inheritance/gift excepted) under FEMA.
If your India tax liability after TDS exceeds ₹10,000 in a year, you must pay advance tax in four instalments (15 Jun / 15 Sep / 15 Dec / 15 Mar), or face interest under Sections 234B and 234C. Capital gains and rent that escape full TDS commonly create this liability for NRIs.
Selling Indian property or shares as an NRI? Get TDS, DTAA and 15CA/15CB handled together.
Talk to a Tax Expert →NRI Tax Filing Checklist
Everything an NRI typically needs to file cleanly and claim the right refunds in India:
- Confirm residential status (day count)
- PAN linked to the correct address
- Form 26AS / AIS TDS reconciliation
- NRO / NRE / FCNR interest statements
- Capital gains statement (broker / property)
- TRC + Form 10F for DTAA
- Correct ITR form (ITR-2 / ITR-3)
- Schedule FA for foreign assets (if any)
- Advance tax where liability > ₹10,000
- Form 15CA / 15CB for repatriation
- Bank details for refund credit
- E-verify the return within 30 days
The single biggest NRI leakage is unclaimed refund. A flat 30% TDS on NRO interest, rent or property sale is almost always higher than your actual liability once slabs, indexation options and DTAA are applied — but the money is only recovered by filing an ITR. Don't skip the return just because income seems small.
NRI Income Tax — Frequently Asked Questions
Related TaxClue Services
Next in this income-tax cluster
NRI Income Tax — Filed Right, Refund Claimed
From residential-status checks and ITR-2/ITR-3 filing to DTAA relief, capital-gains computation and Form 15CA/15CB for repatriation, TaxClue's CA-led team handles it end-to-end — 100% online, wherever you live.