The article highlights essential points that NRIs must consider while planning their taxes in India, including investments, deductions, and DTAA.
NRI taxation in India plays an important role for Non-Resident Indians (NRIs) who have financial ties to the country. Unlike resident taxpayers, NRIs are only taxed on income earned or accrued in India, while their global income remains tax-free unless they qualify as Residents or RNORs (Resident but Not Ordinarily Resident).
Many NRIs face confusion regarding what income is taxable, how to claim exemptions, compliance requirements, and penalties for non-compliance. This guide will explain NRI tax rules, filing obligations, exemptions, and practical scenarios to help NRIs manage their tax liabilities efficiently.
Do NRI Pay Tax In India?
Yes, NRIs pay tax in India on income earned within the country. This includes rental income, capital gains, interest from deposits, and business profits. Tax liability is based on residential status (182-day rule). ITR filing is required if income exceeds ₹2.5 lakh or to claim TDS refunds. DTAA (Double Taxation Avoidance Agreements) can help reduce tax liability.
Who is a Non-Resident in Income Tax? Understanding NRI Status
The Income Tax Act classifies taxpayers based on their physical presence in India. Residential status determines whether an individual’s global income or only Indian income is taxable in India.
| Status | Definition | Taxability in India |
| Non-Resident Indian (NRI) | Spent less than 182 days in India in a financial year. | Only Indian income is taxable (e.g., rent, capital gains, interest). |
| Resident | Spent 182 days or more in India in a financial year OR 60+ days in the current year and 365+ days in the last 4 years. | Global income is taxable in India. |
| Resident but Not Ordinarily Resident (RNOR) | Spent less than 729 days in India in the past 7 years OR was an NRI in 9 out of the last 10 years. | Only Indian income is taxable, but foreign income may be taxed in certain cases. |
Maintaining NRI status is crucial for financial and legal purposes as it impacts investment rules, taxation of foreign income, and banking regulations.
Determination of NRI Status
182-Day Rule for NRI Status
A taxpayer is classified as an NRI if they satisfy either of the following conditions:
- Stayed in India for less than 182 days in a financial year (April 1 – March 31).
- Stayed in India for less than 60 days in the current year and less than 365 days in the last four financial years.
For Indian citizens leaving India for employment or as crew members on an Indian ship, only the 182-day rule applies.
Recent Amendment: Stricter Tax Residency Rules
- 120-Day Rule for High-Income NRIs:
- If an NRI earns ₹15 lakh or more in India, they are considered an Indian resident if they stay in India for 120 days or more in a financial year.
- Stateless Taxpayer Clause:
- NRIs who do not qualify as tax residents in any other country may be deemed Indian residents for tax purposes.
RNOR Category & Its Benefits
NRIs returning to India can benefit from RNOR status, which allows them to:
- Keep foreign income tax-free in India for a few years.
- Claim DTAA benefits to avoid double taxation.
Exceptions & Special Cases
- Indian seafarers, diplomats, business persons with global earnings.
- Resident individuals on temporary foreign assignments and impact on tax status.
What is Considered as Taxable Income for NRIs?
NRIs are taxed only on income earned or accrued in India. Below are the key taxable income categories:
| Category | Taxability |
| Salary Earned in India | Fully taxable under income tax slab rates. |
| Rental Income from Property | Taxed at slab rates; TDS @ 30% applies. |
| Capital Gains (Property, Stocks, Mutual Funds) | LTCG @ 20% with indexation; STCG @ 15% (stocks) or slab rates (property). |
| Fixed Deposit & Savings Interest (NRO Account) | 30% TDS applies; NRE & FCNR account interest is tax-free. |
| Business/Profession Income in India | Fully taxable in India. |
NRIs must file an ITR if their taxable income exceeds ₹2.5 lakh or to claim TDS refunds.
Taxable Income Categories for NRIs
NRIs are required to pay tax in India only on income earned or accrued within the country. Their global income remains tax-free in India unless they qualify as Residents or RNORs (Resident but Not Ordinarily Resident) under tax laws. Below are the key taxable income categories for NRIs:
How Much Foreign Income is Tax-Free in India?
1. Salary Earned in India
- If an NRI receives a salary in India from an Indian employer, it is fully taxable under Indian tax laws.
- If the salary is received outside India for work performed abroad, it is not taxable in India.
- TDS (Tax Deducted at Source) is applicable as per the applicable income tax slab rates.
2. Income from House Property (Rental Income)
- Rental income from property in India is taxable, regardless of whether it is transferred abroad or retained in India.
- TDS of 30% is deducted at the source when a tenant pays rent to an NRI.
- Deductions available:
- 30% standard deduction on rental income (Section 24(a)).
- Deduction on home loan interest (Section 24(b)).
- Municipal taxes paid can be deducted.
3. Capital Gains from Property or Stock Transactions
- Capital gains from selling property, shares, mutual funds, or other assets in India are taxable.
- Taxation on Capital Gains:
| Type of Asset | Holding Period for LTCG | LTCG Tax Rate | STCG Tax Rate |
| Immovable Property (Real Estate) | More than 2 years | 20% with indexation | As per tax slab |
| Listed Shares / Equity Mutual Funds | More than 1 year | 10% (above ₹1 lakh) | 15% (Section 111A) |
| Unlisted Shares | More than 2 years | 20% with indexation | As per tax slab |
| Debt Mutual Funds | More than 3 years | 20% with indexation | As per tax slab |
- NRIs can claim tax exemptions under:
- Section 54 – Reinvesting capital gains in another property.
- Section 54EC – Investing gains in capital gains bonds (NHAI/REC bonds) within six months.
4. Fixed Deposit and Savings Account Interest
- Interest earned on NRO (Non-Resident Ordinary) accounts is fully taxable at 30% TDS.
- Interest from NRE (Non-Resident External) and FCNR (Foreign Currency Non-Resident) accounts is tax-free in India.
- NRIs should maintain separate NRE and NRO accounts to optimize tax benefits.
5. Income from Business/Profession in India
- If an NRI has business income from India, such as freelancing, professional consultancy, or a proprietorship, it is fully taxable in India.
- If an NRI is a partner in an Indian firm, the profit share is tax-free, but remuneration and interest on capital are taxable.
- Tax audit compliance may be required based on the business turnover and profit margins.
NRI Tax in India: Tax Rates, Slabs & Exemptions
NRIs are subject to income tax in India on earnings accrued or received within the country. Their global income remains tax-free unless they qualify as Residents or RNORs under tax laws. Tax rates for NRIs follow the same slab rates as resident taxpayers, but NRIs are not eligible for the Section 87A rebate, which provides tax relief for incomes below ₹5 lakh under the old regime and ₹7 lakh under the new regime.
NRI Tax Rates & Slabs Under New & Old Regimes
NRIs can opt for either the old tax regime with deductions or the new regime with lower tax rates but no deductions.
Comparison Table: NRI Tax Rates Under New & Old Regimes
| Income Slab (₹) | Old Regime (With Deductions) | New Regime (Without Deductions) |
| Up to 2.5 lakh | No Tax | No Tax |
| 2.5 lakh – 5 lakh | 5% | 5% |
| 5 lakh – 7.5 lakh | 20% | 10% |
| 7.5 lakh – 10 lakh | 20% | 15% |
| 10 lakh – 12.5 lakh | 30% | 20% |
| 12.5 lakh – 15 lakh | 30% | 25% |
| Above 15 lakh | 30% | 30% |
Special Tax Provisions
NRIs are subject to specific tax provisions under the Indian Income Tax Act, primarily concerning TDS (Tax Deducted at Source) applicability and capital gains taxation. These provisions ensure tax compliance on income earned in India and help regulate tax collection at the source.
TDS Rates on Different Income Sources for NRIs
| Income Type | TDS Rate | Exemptions or Deductions Allowed? |
| Rental Income (NRO Account) | 30% | Standard deduction (30%) on rental income applies |
| Capital Gains – Short-Term (STCG) on Property | As per Slab Rate | No deductions allowed |
| Capital Gains – Long-Term (LTCG) on Property | 20% with indexation | Exemptions under Sections 54, 54EC, 54F apply |
| Capital Gains – Short-Term (STCG) on Shares/Equity MF | 15% (Section 111A) | No deductions allowed |
| Capital Gains – Long-Term (LTCG) on Shares/Equity MF | 10% on gains above ₹1 lakh (Section 112A) | No indexation benefit |
| Interest on NRO Fixed Deposits | 30% | No deductions allowed |
| Interest on NRE/FCNR Deposits | Tax-Free | Fully exempt |
| Dividend Income from Indian Companies | 20% | No deductions allowed |
TDS on NRI Rental Income
- TDS at 30% applies to rental income earned in India by NRIs.
- The tenant is responsible for deducting and depositing TDS before transferring rent to the NRI.
- NRIs can claim a refund on TDS by filing an ITR if actual tax liability is lower.
How NRIs Can Reduce TDS on Rental Income?
- Apply for a Lower TDS Certificate (Form 13) from the Income Tax Department.
- Deduct home loan interest and municipal taxes before tax calculations.
- File ITR to claim excess TDS refunds.
Capital Gains Taxation for NRIs
NRIs earning capital gains from the sale of property, shares, or mutual funds in India are taxed based on the holding period of the asset.
Short-Term vs. Long-Term Capital Gains Tax for NRIs
| Asset Type | Short-Term Capital Gains (STCG) Tax | Long-Term Capital Gains (LTCG) Tax |
| Real Estate (Property) | As per income tax slab rates | 20% with indexation benefit |
| Listed Shares/Equity Mutual Funds | 15% (Section 111A) | 10% (above ₹1 lakh) (Section 112A) |
| Unlisted Shares | As per slab rates | 20% with indexation |
| Debt Mutual Funds/Bonds | As per slab rates | 20% with indexation |
Tax Exemptions on Long-Term Capital Gains for NRIs
- Section 54 – Exemption on LTCG from property sale if reinvested in another residential property in India.
- Section 54EC – Exemption if gains are invested in NHAI or REC Capital Gains Bonds within six months (maximum limit: ₹50 lakh).
- Section 54F – Exemption on capital gains from any asset sale if reinvested in a house property (for full exemption, entire sale proceeds must be reinvested).
Deductions & Exemptions for NRIs
| Section | Deduction Type | Eligibility for NRIs |
| Section 80C | LIC, EPF, PPF, NPS, ELSS, Tax-saving FDs (5 years) | Allowed (PPF can be continued if opened before becoming an NRI) |
| Section 80D | Health Insurance Premium | Allowed (₹25,000 for self & family, ₹50,000 for senior citizen parents) |
| Section 80E | Education Loan Interest | Allowed (No upper limit on deduction) |
| Section 24(b) | Home Loan Interest | Allowed (₹2 lakh deduction on self-occupied property) |
| House Property Standard Deduction | 30% on Rental Income | Allowed |
Impact of Recent Finance Act Amendments on NRI Taxation
The recent amendments introduced by the Finance Act, 2024, have brought significant changes to the taxation framework for Non-Resident Indians (NRIs). Here’s an overview of the key impacts:
1. New Tax Regime as Default
- Default Regime: The Finance Act, 2024, has amended Section 115BAC, making the new tax regime the default for individuals, including NRIs, from Assessment Year (AY) 2024-25 onwards.
- Opting for Old Regime: NRIs can choose to be taxed under the old tax regime by submitting Form 10-IEA on or before the due date for filing the income tax return. This option is available annually for those without business income, while those with business income can opt out only once in a lifetime.
2. Revised Tax Slabs
Old Tax Regime:
- 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%
New Tax Regime under Section 115BAC:
- Up to ₹3,00,000: Nil
- ₹3,00,001 – ₹6,00,000: 5%
- ₹6,00,001 – ₹9,00,000: 10%
- ₹9,00,001 – ₹12,00,000: 15%
- ₹12,00,001 – ₹15,00,000: 20%
- Above ₹15,00,000: 30%
Note: The new tax regime offers lower tax rates but does not allow most deductions and exemptions available under the old regime.
3. Long-Term Capital Gains (LTCG) Taxation
- Revised Rate: For property transfers on or after July 23, 2024, the LTCG tax rate for NRIs is set at 12.5% without indexation benefits.
- Prior Rate: Before this date, LTCG was taxed at 20% with indexation benefits.
4. Tax Deducted at Source (TDS) on Property Sales
- TDS Rate: For property sales by NRIs on or after July 23, 2024, TDS is deducted at 12.5% of the sale value.
- Calculation Basis: TDS is calculated on the entire sale value, not just the capital gains.
5. Taxation of Dividend Income
- Taxable in Hands of NRIs: Dividend income received from Indian companies is now taxable at the applicable slab rates for NRIs.
- Previous Treatment: Earlier, dividends were subject to Dividend Distribution Tax (DDT) and were exempt in the hands of shareholders.
6. Changes in Residency Rules
- 120-Day Rule: Indian citizens or Persons of Indian Origin (PIOs) earning over ₹15 lakh from Indian sources are considered residents for tax purposes if they stay in India for 120 days or more during the financial year, reduced from the previous 182-day threshold.
- Implication: Such individuals may be classified as Resident but Not Ordinarily Resident (RNOR), limiting their tax liability to Indian-sourced income.
7. Taxation of Rental Income
- Mandatory Reporting: From FY 2024-25, NRIs must report all rental income under ‘Income from House Property.’
- Deductions: Deductions include municipal tax, a standard deduction of 30% on the annual rent value, and interest on any home loan against the property.
8. Tax Collected at Source (TCS) on Foreign Remittances
- Liberalized Remittance Scheme (LRS): TCS is applicable on foreign remittances under LRS, with specific rates and thresholds as per the Finance Act, 2024.
Tax Filing & Compliance for NRIs: Everything You Need to Know
Filing taxes as a Non-Resident Indian (NRI) can be tricky due to varying tax rules, deadlines, and required forms. While NRIs are only taxed on their income earned or accrued in India, staying compliant is crucial to avoid penalties and optimize tax benefits. Here’s everything you need to know about NRI tax filing and compliance in India.
1. Who is Considered an NRI for Tax Purposes?
Your residential status determines your tax liability. As per the Income Tax Act, 1961, an individual qualifies as an NRI if:
- They spend less than 182 days in India during the financial year (April 1 – March 31).
- For Indian citizens and Persons of Indian Origin (PIOs) earning above ₹15 lakh from Indian sources, the threshold is 120 days.
If you qualify as an NRI, only your income earned or received in India is taxable.
2. What Income is Taxable for NRIs?
As an NRI, the following income sources are taxable in India:
- Salary: If earned in India or received in an Indian bank account.
- Rental Income: Taxed after deductions like municipal taxes and a standard 30% deduction.
- Capital Gains: Profit from the sale of property, stocks, or mutual funds in India.
- Interest Income:
- NRO Account Interest – Taxable at 30% TDS.
- NRE & FCNR Account Interest – Exempt from tax.
- Dividend Income: Taxable at applicable slab rates.
3. Which ITR Form Should NRIs Use?
Choosing the right Income Tax Return (ITR) form is essential:
- ITR-1: NRIs cannot use this form (meant for Indian residents).
- ITR-2: Suitable for NRIs with income from salary, property, capital gains, or foreign assets.
- ITR-3: Required for NRIs having business or professional income in India.
Filing the incorrect form may lead to rejection or penalties.
4. Tax Deducted at Source (TDS) for NRIs
TDS rates for NRIs are often higher than those for residents:
- Sale of Property: TDS at 20% (LTCG) or 30% (STCG) on capital gains.
- Rental Income: Tenant must deduct TDS at 30% before paying rent.
- Fixed Deposit (FD) Interest: 30% TDS on NRO accounts.
NRIs can apply for a lower TDS certificate from the Income Tax Department using Form 13.
5. How to File Income Tax Returns (ITR) as an NRI
- Step 1: Determine Taxable Income – Compute total taxable income from Indian sources.
- Step 2: Choose the Right ITR Form – Most NRIs file ITR-2 or ITR-3.
- Step 3: Claim Deductions & Exemptions – NRIs can claim:
- Section 80C (PPF, ELSS, Life Insurance Premium, etc.).
- Section 80D (Health Insurance Premiums).
- Section 80E (Education Loan Interest).
- Step 4: Pay Advance Tax if Needed – If total tax liability exceeds ₹10,000, advance tax must be paid.
- Step 5: File ITR Online – Use the Income Tax e-Filing portal before July 31 (due date).
6. Tax Refunds & Avoiding Double Taxation
- Refund Claim: If excess TDS was deducted, NRIs can claim a refund when filing ITR.
- Double Taxation Avoidance Agreement (DTAA): India has DTAA with several countries. NRIs can claim tax relief by submitting Form 10F and Tax Residency Certificate (TRC).
ITR Filing Rules & Due Dates for NRIs
Filing Income Tax Returns (ITR) as a Non-Resident Indian (NRI) involves understanding specific rules, deadlines, and compliance requirements. Here’s a comprehensive guide to assist NRIs in navigating the ITR filing process:
1. Who Must File ITR?
As an NRI, you are obligated to file an Income Tax Return in India under the following circumstances:
- Income Exceeds ₹2.5 Lakh: If your total income accrued or received in India during a financial year surpasses ₹2,50,000, you must file an ITR
- Capital Gains: Any capital gains arising from the sale of assets or investments in India are taxable, necessitating the filing of an ITR, irrespective of the amount.
- TDS Refunds: If excess Tax Deducted at Source (TDS) has been deducted from your income, filing an ITR is essential to claim a refund.
Additionally, filing an ITR is mandatory if you wish to carry forward losses to subsequent years or if you have earned income from property held under a trust for charitable or religious purposes.
2. Due Date for NRI ITR Filing
The deadline for filing ITR for NRIs is typically July 31st of the assessment year. For instance, for the Financial Year 2023-24 (Assessment Year 2024-25), the due date is July 31, 2024. This date may be extended by the Income Tax Department, so it’s advisable to stay updated on any announcements.
3. Applicable ITR Forms for NRIs
Selecting the correct ITR form is crucial for accurate filing:
- ITR-1 (Sahaj): NRIs cannot use this form; it is designated for resident individuals with income from salary, one house property, and other sources, excluding lottery winnings and income from racehorses.
- ITR-2: Applicable to NRIs who have income from salary, multiple house properties, capital gains, and other sources, but do not have income from business or profession.
- ITR-3: Suitable for NRIs with income from business or profession, in addition to the incomes applicable for ITR-2.
Choosing the appropriate form ensures compliance and facilitates accurate processing of your tax return.
4. E-Verification & Linking PAN with Aadhaar for NRIs
- E-Verification: After submitting your ITR, it’s mandatory to verify it. NRIs can e-verify through methods such as Net Banking, Aadhaar OTP (if Aadhaar is linked), or by sending a signed physical copy of the ITR-V to the Centralized Processing Center (CPC) in Bengaluru.
- PAN-Aadhaar Linking: As per Section 139AA of the Income-tax Act, individuals who are allotted PAN and are eligible to obtain an Aadhaar number are required to link their Aadhaar with PAN. However, Non-Resident Indians (NRIs) are exempt from this requirement if they do not possess an Aadhaar. This implies that if NRIs have both Aadhaar and PAN, they are required to link them.
It’s essential to ensure that your PAN is active to avoid complications in financial transactions and tax filings.
NRI Tax Payments, Refunds & Compliance
- Modes of tax payment (online, through NRO accounts).
- Refund claims & TDS deductions (how to claim refunds for excess TDS).
- Penalties for non-filing and late filing.
How NRI Taxation Works in Real-life Scenarios
NRI taxation isn’t just about rules—it’s about real-life situations that impact your finances. Whether you’re earning abroad, managing investments in India, or returning home, your tax liability changes. Understanding how different scenarios are taxed can help you plan better and avoid surprises. Here are some common real-life NRI taxation scenarios with examples.
Earning Salary Abroad but Owning Property in India
Scenario: Rahul, an NRI living in the U.S., earns a salary there but owns a house in Mumbai, which he rents out for ₹30,000 per month.
Tax Treatment:
- Rahul’s foreign salary is not taxable in India.
- His rental income (₹3,60,000 per year) is taxable in India after deductions:
- Standard Deduction (30%) under Section 24: ₹1,08,000
- Taxable Income = ₹3,60,000 – ₹1,08,000 = ₹2,52,000
- If this is his only Indian income, no tax is payable as it’s below the ₹2.5 lakh exemption limit.
- TDS Deduction: The tenant must deduct 30% TDS before paying rent.
Selling Property in India as an NRI
Scenario: Priya, an NRI in Dubai, sells her flat in Delhi for ₹80 lakh, which she bought 10 years ago for ₹40 lakh.
Tax Calculation:
- Long-Term Capital Gain (LTCG) applies (holding > 2 years).
- Indexed Cost of Acquisition (assuming Cost Inflation Index (CII) = 348 in 2014 & 785 in 2024):
- Indexed Cost = (₹40,00,000 × 785) ÷ 348 = ₹90,34,482
- LTCG = ₹80,00,000 – ₹90,34,482 = No Capital Gain (Capital Loss)
- Since Priya incurred a capital loss, she owes no tax.
- However, TDS at 20% on ₹40 lakh (₹8 lakh) will be deducted by the buyer.
Earning Interest from Indian Bank Accounts
Scenario: Arjun, an NRI in Canada, has ₹50 lakh in an NRO fixed deposit earning 7% annual interest (₹3,50,000 per year).
Tax Treatment:
- Interest on NRO accounts is fully taxable in India.
- TDS at 30% will be deducted: ₹3,50,000 × 30% = ₹1,05,000.
- Interest from NRE/FCNR accounts is tax-free.
4. Returning to India and Changing Residential Status
Scenario: Meera, an NRI in the UK for 10 years, returns to India permanently in April 2024.
Tax Impact:
- Meera will be Resident but Not Ordinarily Resident (RNOR) for 2 years.
- Foreign income remains tax-free unless received in India.
- After 2 years, she becomes a Resident, and global income becomes taxable in India.
Resident Earning Abroad on a Temporary Assignment
Taxability of Salary Received in Foreign vs. Indian Account
If an Indian resident is on a temporary foreign assignment but retains Indian residency status, their global income is taxable in India.
- Salary credited to an Indian account is taxable in India.
- Salary received in a foreign account is also taxable if the person qualifies as an Indian Resident.
- Foreign tax credits (FTC) & DTAA benefits can help avoid double taxation.
Recently Relocated Abroad as an NRI
Implications of Retaining Assets & Investments in India
If you have investments in India after moving abroad:
- Rental Income: Taxed in India; 30% TDS applies if paid to an NRI.
- Mutual Funds & Fixed Deposits: Taxed at applicable NRI rates.
- NRO Interest: Fully taxable; TDS at 30% applies.
Full-Time NRI Residing Overseas
Managing Rental Income & Capital Gains in India
NRIs with property investments must:
- Pay TDS on rental income (30%), which can be reduced via DTAA benefits.
- Pay LTCG tax (20%) on property sales (with indexation benefits).
- File ITR to claim refunds on excess TDS deductions.
NRI Returning to India with RNOR Status
Planning Global Income Taxation Efficiently
When an NRI returns to India, they qualify as RNOR (Resident but Not Ordinarily Resident) for 2 years.
- Foreign income remains tax-free in India during this period.
- After 2 years, global income is taxable unless structured efficiently.
- Investments in FCNR accounts remain tax-free until maturity.
Indian Resident Earning Income from Overseas
Tax Impact of Earning from Abroad While Living in India
If an Indian resident earns freelance income, dividends, or salary from a foreign source, taxation applies as follows:
- Global income is taxable in India.
- Foreign tax credits (FTC) apply if taxes were already paid abroad.
- DTAA provisions help prevent double taxation.
Is an NRI Account Taxable?
NRIs must maintain specific bank accounts based on their residency status.
- NRE (Non-Resident External) Account:
- Interest is tax-free in India.
- Fully repatriable, but FEMA restrictions apply.
- NRO (Non-Resident Ordinary) Account:
- Interest is taxable at 30% TDS.
- Used for Indian income sources (rent, dividends, etc.).
- FCNR (Foreign Currency Non-Resident) Account:
- Interest is tax-free for NRIs.
- Can hold deposits in foreign currency, avoiding exchange rate risk.
DTAA Benefit: NRIs can claim DTAA deductions on NRO interest to reduce TDS burden.
What is Double Taxation for NRIs? DTAA Explained
DTAA (Double Taxation Avoidance Agreement) helps NRIs avoid paying tax twice on the same income.
How DTAA Works:
- India has DTAA agreements with over 85 countries (e.g., USA, UAE, UK, Canada, Australia).
- NRIs can claim tax relief through:
- Exemption Method – Income is taxed in only one country.
- Tax Credit Method – Tax paid in a foreign country is adjusted against Indian tax liability.
DTAA Provisions for NRIs:
- Foreign Salary & Business Income: Avoid double taxation using Form 10F & Tax Residency Certificate (TRC).
- Capital Gains: Certain DTAA treaties offer lower tax rates on capital gains.
FAQs on NRI Taxation
What is the 120 days rule for NRI?
As per the Finance Act, 2020, an Indian citizen or Person of Indian Origin (PIO) earning more than ₹15 lakh from Indian sources in a financial year will be considered a Resident but Not Ordinarily Resident (RNOR) if they stay in India for 120 days or more. This rule applies only if they were in India for 365+ days in the previous four years.
How long can an NRI stay in India without paying tax?
NRIs can stay in India for up to 181 days in a financial year without affecting their tax status. However, if their Indian income exceeds ₹15 lakh, they can only stay for 119 days to avoid being classified as a Resident (RNOR), which may make their global income taxable in India.
