There has been a lot of noise and misinformation around the Income Tax Bill 2025, creating unnecessary panic among Non-Resident Indians (NRIs). However, there are no drastic changes in tax bill that negatively impact NRIs. While some updates have been introduced, the overall tax structure remains familiar, ensuring better compliance and ease of taxation.
To clear any confusion, let’s break down what has changed in 2025 and what remains the same for NRIs.
What Has Changed in the Income Tax Bill 2025?
New Income Tax Slabs Introduced
One of the most significant updates in 2025 is the introduction of new income tax slabs, replacing the earlier structure. The revised tax brackets aim to simplify taxation while keeping rates largely consistent.
For NRIs, the new tax slabs are:
| Annual Income (INR) | Tax Rate (%) |
| Up to ₹4,00,000 | 0% |
| ₹4,00,001 – ₹8,50,000 | 5% |
| ₹8,50,001 – ₹12,50,000 | 10% |
| ₹12,50,001 – ₹16,50,000 | 15% |
| ₹16,50,001 – ₹20,00,000 | 20% |
| ₹20,00,001 – ₹25,00,000 | 25% |
| Above ₹25,00,000 | 30% |
These changes in tax bill provide a clearer tax structure without increasing the tax burden on NRIs.
Higher TCS Threshold for Foreign Remittances
For resident Indians sending money abroad from their regular savings account, the TCS limit under the Liberalized Remittance Scheme (LRS) has increased from ₹7 lakh to ₹10 lakh. This means:
- No TCS for remittances up to ₹10 lakh.
- TCS at 5% for education and medical remittances beyond ₹10 lakh.
- TCS at 20% for other remittances above ₹10 lakh.
However, NRIs do not have to pay TCS when sending money from their NRO accounts. Instead, they need to submit Form 15CA & Form 15CB, which certify tax payments before remittance. Using these forms, NRIs can transfer funds abroad without TCS deductions, making the process smoother and more tax-efficient.
Simplification of TDS and TCS Rules
A key change in tax bill 2025 is the consolidation of TDS (Tax Deducted at Source) and TCS (Tax Collected at Source) provisions into a single section. Previously, these rules were scattered across different sections of tax law, making compliance cumbersome. Now:
- TDS and TCS rules are grouped together for better clarity.
- No changes to existing TDS rates for NRIs on property sales, rent, or interest income.
- NRIs can still apply for a lower TDS certificate (Form 13) to reduce tax deductions at the source.
Introduction of a Standardized Tax Year
The Income Tax Bill 2025 replaces the previous system of separate financial and assessment years with a unified tax year from April to March. This aligns India’s tax system with global standards and simplifies tax filing for NRIs.
Stronger Tax Recovery and Digital Tracking
The government has expanded its powers to track financial transactions, ensuring better tax compliance. Now, tax authorities can access electronic records such as emails, online banking transactions, social media activity, and digital payments. Additionally:
- Tax officers can freeze Indian assets of NRIs who have unpaid tax dues.
- Digital monitoring tools are being used to detect tax evasion.
For NRIs, this means ensuring accurate and timely tax filings to avoid scrutiny.
What Has Not Changed in the Income Tax Bill 2025?
Capital Gains Taxation Remains the Same
If you’re investing in Indian markets, there are no changes in the tax bill regarding capital gains taxation rules. It remains same from the reforms introduced in July 2024:
1. Indexation Benefit Removed
- The indexation benefit, which allowed taxpayers to adjust the purchase cost of assets for inflation, was removed on July 22, 2024 for certain long-term assets.
- To offset this, the long-term capital gains (LTCG) tax rate was lowered to 12.5%.
2. Long-Term Capital Gains (LTCG) Tax for NRIs
- LTCG applies to assets held for more than 12 months for listed securities (stocks, mutual funds, bonds). The tax rate is 12.5%.
- For real estate and unlisted shares, the LTCG tax remains at 20%, without indexation benefits.
3. Short-Term Capital Gains (STCG) Tax for NRIs
- STCG applies to assets held for less than 12 (for listed securities) or 24 months (for others).
- Listed securities are taxed at 20%, while other short-term capital assets (real estate, unlisted shares, mutual funds) are taxed at applicable slab rates.
- Debt mutual funds and certain other financial instruments are now automatically considered short-term if purchased after a certain deadline, also taxable at slab rates. However, there is a 30% TDS.
4. Exceptions to LTCG & STCG Holding Periods
- Real estate & unlisted shares are considered long-term only if held for more than 24 months. If sold before this, they are taxed as short-term gains.
- Debt-oriented mutual funds, regardless of tenure, are always taxed as short-term under the new rules.
- Zero-coupon bonds follow standard rules but may have specific exceptions under certain government schemes.
- Listed shares and equity mutual funds are taxed at 15% if sold within 12 months, but this applies only if the transaction is subject to Securities Transaction Tax (STT).
Taxation on Dividends, Interest, and Investments Unchanged
For NRIs earning income from Indian investments, no changes in tax bill have been introduced. The existing tax rates remain:
- Dividends and interest from Indian companies continue to be taxed at the same rate.
- Mutual Fund Investments: Income from mutual funds purchased in foreign currency remains taxed at 20%.
- Infrastructure Debt Fund Interest: The tax rate remains 5% on interest income from these funds.
NRI Residency Rules Stay the Same
The rules for determining NRI status remain unchanged:
- NRIs must spend fewer than 182 days in India in a financial year.
- NRIs earning over ₹15 lakh in India who are taxable abroad: The 120-day rule applies, and they may be considered Indian residents if they stay 120+ days in India.
- NRIs earning over ₹15 lakh in India who are not taxable anywhere else: They may be deemed Indian residents under Section 6(1A) regardless of stay duration.
NRIs should ensure they track their days spent in India to avoid unexpected tax liabilities.
Exemptions for NRI Income Continue
Certain tax benefits remain intact for NRIs:
- NRE account interest remains tax-free.
- FCNR deposits continue to be exempt from taxation.
- NRO account interest remains taxable at applicable slab rates.
- There is no inheritance tax, and gifts from relatives remain tax-free within certain limits.
Double Taxation Avoidance Agreements (DTAA) Still Protect NRIs
India continues to honor its DTAA agreements, ensuring NRIs do not face double taxation.
- NRIs can claim tax credit in the foreign country where they are tax residents.
- DTAA agreements help with information exchange and tax coordination between countries.
Also read: How to Check Income Tax Refund Status Online for NRIs/OCIs
Stay Informed, Stay Compliant
The Income Tax Bill 2025 introduces structured reforms but does not impose additional burdens on NRIs. Instead, it streamlines compliance and provides more clarity in taxation.
To navigate these changes effectively:
- File ITR Even Below Taxable Limit – Helps with refunds, financial planning, and maintaining compliance.
- Plan Capital Gains Tax Smartly – Consult an expert to minimize liabilities based on investment timelines.
- Ensure TDS Compliance – Avoid higher deductions by applying for a lower TDS certificate when required.
- Consult an NRI Tax Specialist – If unsure, reach out to CA Mohit for personalized tax guidance.
No need to worry—just stay informed, plan ahead, and manage taxes smartly!
Frequently Asked Questions (FAQs)
1. Do NRIs need to file an ITR in India if they have no taxable income?
Yes, it is advisable to file an ITR even if your income is below the taxable limit to maintain compliance and claim refunds if applicable.
2. Has the tax rate on NRI investments changed?
No, tax rates on mutual funds, infrastructure debt funds, and dividend income remain unchanged.
3. Do NRIs have to pay TCS if they send more than ₹10 lakh abroad?
No, TCS applies only to resident Indians under LRS. NRIs do not have to pay TCS when sending money from NRO accounts. However, for residents sending money abroad from their regular savings account, TCS is 5% on education/medical remittances beyond ₹10 lakh and 20% on other remittances. NRIs must submit Form 15CA & Form 15CB for tax compliance.
4. How will the new tax slabs impact NRIs?
The changes in tax slabs simplify taxation without increasing the tax burden on NRIs.
5. Can NRIs still benefit from DTAA agreements?
Yes, DTAA agreements continue to provide relief against double taxation.
6. What are the new tax recovery measures that impact NRIs
Authorities can now track digital transactions and freeze Indian assets in case of unpaid tax dues.
7. Will TDS rates on NRI property sales change?
No, TDS on long-term capital gains on property sales remains at 12.5%, and 30% for short-term gains.
