# NRI Taxation in India - Complete Guide (2026)

## Who Is Considered an NRI for Tax Purposes?

For Indian income tax purposes, a person is classified as a Non-Resident Indian (NRI) if they spend fewer than 182 days in India during a financial year (April 1 to March 31).

This classification determines:
- Which income is taxable in India
- Applicable tax rates
- TDS rates on various income types
- Eligibility for DTAA benefits

## What Income Is Taxable in India for NRIs?

NRIs are taxed in India only on income that is earned or received in India. Income earned abroad is not taxable in India.

Taxable income sources for NRIs in India:
- Salary received in India
- Rental income from property in India
- Capital gains from sale of property, shares, or mutual funds in India
- Interest on NRO accounts and Fixed Deposits
- Dividends from Indian companies
- Business income from operations in India

Income NOT taxable in India for NRIs:
- Salary earned and received abroad
- Interest on NRE accounts and FCNR deposits
- Foreign income of any kind

## Tax Rates for NRIs (FY 2025-26 / AY 2026-27)

### Income Tax Slabs (New Tax Regime - Default for NRIs)

| Income Range | Tax Rate |
|---|---|
| Up to Rs3,00,000 | Nil |
| Rs3,00,001 - Rs7,00,000 | 5% |
| Rs7,00,001 - Rs10,00,000 | 10% |
| Rs10,00,001 - Rs12,00,000 | 15% |
| Rs12,00,001 - Rs15,00,000 | 20% |
| Above Rs15,00,000 | 30% |

Note: NRIs cannot claim the Rs12,500 rebate under Section 87A, which is available only to resident Indians.

## TDS (Tax Deducted at Source) for NRIs

TDS is deducted at source before income is credited to NRIs. Key TDS rates:

| Income Type | TDS Rate |
|---|---|
| NRO FD / Savings Interest | 30% + surcharge + cess |
| Short-Term Capital Gains - Equity (STCG) | 20% |
| Long-Term Capital Gains - Equity (LTCG) | 12.5% |
| Long-Term Capital Gains - Debt/Property | 12.5% |
| Rental Income | 30% |
| Dividends | 20% |

NRIs can claim excess TDS as a refund by filing an Income Tax Return (ITR) in India.

## DTAA - Double Taxation Avoidance Agreement

India has DTAA treaties with 90+ countries including the UAE, USA, UK, Canada, Singapore, and Australia. DTAA prevents NRIs from being taxed on the same income in both India and their country of residence.

Benefits of DTAA for NRIs:
- Reduced TDS rates on interest, dividends, and capital gains
- Tax credit in country of residence for taxes paid in India
- Exemption from tax on certain income types

To claim DTAA benefits, NRIs must submit:
- Tax Residency Certificate (TRC) from their country of residence
- Form 10F (self-declaration)
- PAN card

## Capital Gains Tax for NRIs

### Equity Mutual Funds and Listed Shares
| Holding Period | Gain Type | Tax Rate |
|---|---|---|
| Up to 12 months | STCG | 20% |
| More than 12 months | LTCG | 12.5% (above Rs1.25 lakh exemption) |

### Debt Mutual Funds (purchased after April 1, 2023)
| Holding Period | Gain Type | Tax Rate |
|---|---|---|
| Any period | Taxed as per income slab | As per slab |

### Property (Immovable Assets)
| Holding Period | Gain Type | Tax Rate |
|---|---|---|
| Up to 24 months | STCG | As per income slab |
| More than 24 months | LTCG | 12.5% without indexation |

## Filing Income Tax Return (ITR) as an NRI

NRIs with taxable income in India are required to file an ITR. Even if TDS has been deducted, filing an ITR allows NRIs to:
- Claim refunds for excess TDS deducted
- Carry forward capital losses to offset future gains
- Maintain a clean tax record for property transactions and visa applications

ITR filing deadline for NRIs: July 31 of the assessment year (extensions may apply).

Applicable ITR form for NRIs: ITR-2 (for income from salary, property, capital gains) or ITR-3 (if business income is involved).

## Key Deductions Available to NRIs

NRIs can claim the following deductions under the Old Tax Regime:

| Section | Deduction | Limit |
|---|---|---|
| 80C | ELSS, life insurance premium, home loan principal | Rs1.5 lakh |
| 80D | Health insurance premium | Rs25,000 - Rs1 lakh |
| 80E | Interest on education loan | No limit |
| 80G | Donations to approved funds | 50% or 100% of donation |
| 24(b) | Home loan interest (let-out property) | Actual interest paid |

Note: Under the New Tax Regime (default from FY 2023-24), most deductions are not available except for NPS employer contributions and a few others.

## Repatriation of Funds and Tax Compliance

NRIs can repatriate funds from India after paying applicable taxes. For NRO account repatriation (up to USD 1 million per year), the following are required:
- Form 15CA (self-declaration by NRI)
- Form 15CB (certificate from a Chartered Accountant)
- Bank's repatriation request form

## How SBNRI Helps with NRI Taxation

SBNRI provides end-to-end NRI tax services:
- ITR filing for NRIs (all income types)
- DTAA benefit claims and TRC assistance
- Capital gains computation
- TDS refund claims
- Form 15CA/15CB preparation for repatriation
- NRI tax advisory for investments and property transactions

All tax services are handled by qualified Chartered Accountants with NRI-specific expertise.

Book a free consultation: https://sbnri.com/p/services/nri-tax-filing-india

## Frequently Asked Questions

**Is NRE account interest taxable in India?**
No. Interest earned on NRE accounts and FCNR deposits is fully exempt from Indian income tax.

**Do NRIs need to file ITR if TDS has already been deducted?**
Filing is mandatory if total taxable income exceeds the basic exemption limit. Even if TDS is deducted, filing an ITR is advisable to claim refunds and carry forward losses.

**Can NRIs claim Section 80C deductions?**
Yes, under the Old Tax Regime. NRIs can invest in ELSS, pay life insurance premiums, or repay home loan principal to claim up to Rs1.5 lakh deduction.

**What is the tax on NRI rental income from India?**
Rental income earned in India is taxable for NRIs. TDS is deducted at 30% by the tenant. NRIs can claim a standard deduction of 30% on rental income and deduct home loan interest under Section 24(b).

**How do NRIs avoid double taxation?**
By claiming DTAA benefits. NRIs must obtain a Tax Residency Certificate (TRC) from their country of residence and submit it along with Form 10F to the income payer or bank to avail reduced TDS rates.

## Last Updated
March 2026