NRI Taxation in India — Complete Guide

Determining Your Residential Status

Your tax liability in India depends entirely on your residential status. Under the Income Tax Act, there are three categories:

• Resident and Ordinarily Resident (ROR): Present in India for 182+ days in the FY, OR 60+ days in FY and 365+ days in preceding 4 FYs. Taxed on worldwide income.
• Resident but Not Ordinarily Resident (RNOR): Resident in India for less than 2 out of 10 preceding FYs, or in India for less than 730 days in preceding 7 FYs. Taxed only on Indian income and income received in India.
• Non-Resident (NR): Does not meet the resident criteria. Taxed only on income earned or received in India.

What Income is Taxable for NRIs?

• Salary received in India or for services rendered in India
• House property income from property located in India (rental income)
• Capital gains from sale of property, shares, or mutual funds in India
• Interest income on Indian bank accounts (NRO accounts are taxable; NRE accounts are exempt)
• Dividend income from Indian companies
• Income from business controlled from India

Not taxable for NRIs: Interest on NRE and FCNR deposits, income earned outside India (unless received in India).

TDS on NRI Income

• Salary: TDS at applicable slab rates
• Property sale: 12.5% on LTCG (long-term) or slab rates on STCG. Buyer must deduct TDS before payment.
• Rent on Indian property: 30% TDS (tenant must deduct)
• Interest (NRO account): 30% TDS
• Dividend: 20% TDS

DTAA Benefits — Avoiding Double Taxation

India has Double Taxation Avoidance Agreements with 90+ countries (US, UK, UAE, Singapore, Canada, Australia, etc.). DTAA allows NRIs to claim relief so the same income isn't taxed twice.

• Exemption method: Income taxed only in one country
• Credit method: Tax paid in India is credited against tax liability in the resident country
• Lower TDS rates: DTAA may provide lower TDS rates (e.g. 15% on dividends instead of 20% under India-US DTAA)

To claim DTAA benefits, NRIs must provide a Tax Residency Certificate (TRC) from their country of residence and submit Form 10F to the payer in India.

Selling Property in India as an NRI

1. Capital gains computation: Sale price minus indexed cost (for LTCG) or actual cost (for STCG). From FY 2025-26, LTCG on property is at 12.5% without indexation.
2. TDS by buyer: Buyer must deduct 12.5% (LTCG) or 30% (STCG) and deposit with government. Failure to deduct makes the buyer personally liable.
3. Lower TDS certificate: NRI can apply under Section 197 for a lower deduction certificate if actual tax is less than the TDS rate.
4. Exemptions: Section 54 (reinvest in residential property within 2 years) or Section 54EC (invest in specified bonds within 6 months, up to ₹50 lakh) can fully or partially exempt LTCG.
5. Repatriation: Sale proceeds can be repatriated after TDS compliance and obtaining Form 15CA/15CB certification from a CA.

Form 15CA / 15CB — Foreign Remittances

• Form 15CA: Online declaration by the remitter that applicable tax has been deducted
• Form 15CB: Certificate from a CA confirming the nature of payment, TDS compliance, and DTAA applicability
• Required for most remittances exceeding ₹5 lakh in a FY
• Banks will not process the remittance without these forms uploaded on the income tax portal

NRI ITR Filing — Key Points

• Which form: ITR-2 (for salary, property, capital gains) or ITR-3 (if business income in India)
• Mandatory if: Total Indian income exceeds basic exemption limit, or you want to claim TDS refund, or you have assets/property in India
• Bank account: You need an Indian bank account (NRO preferred) for receiving refunds
• Foreign assets: Schedule FA (Foreign Assets) must be filled by residents/RNOR — not required for NRIs
• E-verification: NRIs without Indian mobile/Aadhaar can verify using net banking or by sending signed ITR-V to CPC Bangalore