What NRI Taxation Means in India
NRI taxation in India is governed by the Income Tax Act 1961, CBDT circulars, DTAA treaties, and FEMA rules for fund movement.
If you are an NRI, only income that arises, accrues, or is received in India is taxable.
Examples of taxable income for NRIs include:
- Rental income from property in India
- Interest from NRO fixed deposits
- Capital gains from sale of property or mutual funds
- Salary for services rendered in India
- Business income linked to Indian operations
Your residential status decides your entire tax liability, not your nationality
Understanding Your Residential Status
Your tax liability for 2026 is determined using the rules for AY 2025 26.
You can be classified as:
1. NRI
You are an NRI if:
- You spent less than 120 days in India during the financial year, and
- Less than 365 days in India over the last 4 years.
2. RNOR
You qualify as RNOR if:
- You were an NRI for 9 out of the previous 10 years, or
- You stayed in India for 729 days or less in the previous 7 years.
RNORs have partially taxable global income.
3. Resident
Global income is fully taxable in India.
Use passport stamps, travel records, and airline history when calculating days. Even a small error can change your tax status.
What Income is Taxable for NRIs in 2026
Interest Income
- NRO FD interest is fully taxable.
- NRE FD interest remains exempt only if your NRI status continues.
NRI tax rules change every year. Always confirm the latest CBDT updates before filing.
Rental Income
Taxed after allowing standard deduction and municipal taxes.
Capital Gains
Applies to:
- Property
- Shares
- Mutual funds
- Gold
Salary Income
Salary is taxable in India if services are performed in India, even if the payment is credited abroad.
NRI Tax Rates and TDS Rules
TDS applies to most NRI incomes.
Key TDS rates:
- Rent paid to NRI: 30 percent
- Property sale: 20 percent for LTCG, up to 30 percent for STCG
- NRO FD interest: 30 percent
- Mutual funds: 10 percent to 20 percent
NRIs often overpay TDS. You can request a lower TDS certificate using Form 13.
Capital Gains Tax for NRIs
Long term capital gains on property
Taxed at 20 percent with indexation.
Short term capital gains
Taxed at slab rates.
Exemptions
NRIs can claim exemptions under Sections 54, 54EC, and 54F by reinvesting gains.
DTAA and Double Taxation Relief
DTAA helps NRIs avoid paying tax twice on the same income. India has DTAA agreements with more than 80 countries including USA, Canada, UAE, UK, Singapore, and Australia.
DTAA provides:
- Tax credit
- Exemption
- Reduced TDS rates
Essential Forms for NRI Tax Filing
Form 15CA
Declaration of remittance for sending funds abroad.
Form 15CB
Chartered Accountant certificate verifying tax compliance.
ITR Forms
- ITR 2 for most NRIs
- ITR 3 if you have business or professional income in India
Step-by-Step NRI Tax Filing Process
- Identify your residential status
- Download Form 26AS and AIS
- Compute taxable income
- Apply DTAA benefits if applicable
- Calculate capital gains
- Fill ITR 2 or ITR 3
- E verify using Aadhaar OTP or net banking
- Apply for refund if TDS exceeds actual tax liability
Common Mistakes NRIs Make
- Filing incorrect ITR form
- Ignoring RNOR implications
- Not claiming DTAA benefits
- Assuming NRE interest becomes taxable after returning to India
- Missing capital gains reinvestment deadlines
- Relying on outdated advice from relatives or bank staff
When an NRI Must File ITR
You must file ITR if:
- Indian taxable income exceeds INR 2.5 lakh
- You earned capital gains
- You want a TDS refund
- You want to carry forward losses
- You received rental income
How NRIHelpLine Supports You
NRIHelpLine provides:
- Residential status determination
- Expert filing of ITR 2 and ITR 3
- DTAA benefit assessment
- Capital gains tax computation
- Form 15CA and 15CB filing
- TDS refund handling
- Full tax planning guidance
Your counseling session fee is fully adjustable when you confirm the service.
NRI tax rules change every year. Always confirm the latest CBDT updates before filing.
FAQs
Do NRIs need to file ITR even if TDS is deducted?
Which ITR form is used by NRIs?
Is NRE interest taxable in India?
Are capital gains taxable for NRIs?
Do NRIs pay tax on global income?
Can NRIs claim Section 54 exemption?
Can NRIs e verify ITR from abroad?
What if AIS and Form 26AS do not match?
Talk to our experts now
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Expert’s Note
AIS mismatches lead to scrutiny notices. Always reconcile AIS and Form 26AS properly.
Sanjeev Sharma (Advocate – NRI HelpLine Tax & Property Law Specialist)
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