You moved abroad for a job, a degree, or your family. India did not move out of your life, though. A parent may live in your flat. An old bank account may still earn interest. You may own a plot in your hometown and plan to sell it soon.
Each of these ties can create a tax bill in India, even when you live thousands of miles away. This NRI taxation basics guide explains the rules in plain words. You will learn how India decides your tax status, which income it taxes, how bank accounts and property sales work, and how a tax treaty helps you avoid paying twice.
DeshSansaar covers Indian culture, lifestyle and wellness for readers at home and abroad. Money rules are part of staying connected, so this guide sits right beside those stories.
One update before we start. India replaced its 1961 income tax law with the Income-tax Act, 2025 on 1 April 2026. The new law uses a single “tax year” instead of “financial year” and “assessment year.” The residency tests for NRIs were carried over. Rates and limits can change with each Budget, so check the official sources listed at the end before you act.
Who Counts as an NRI for Income Tax?
Your passport does not decide this. Your days in India do. The tax department counts them every year, so your status can change from one year to the next.
The 182-Day Test
Stay in India for 182 days or more in a tax year, and you are a resident. India can then tax your income from anywhere in the world.
The 60-Day Plus 365-Day Test
You are also a resident if you spent 60 days or more in India this year and 365 days or more in the four years before it. If you fail both tests, you are a non-resident Indian (NRI) for that year.
Longer Limits for Indian Citizens and PIOs
The 60-day limit is relaxed for Indian citizens who leave India for work. It also changes for citizens and persons of Indian origin who visit India. For them, the limit becomes 182 days. If your Indian income is above ₹15 lakh, it becomes 120 days, and you may be treated as resident but not ordinarily resident (RNOR).
Keep a simple travel log. Note every entry and exit date, and check your count before each trip.
Deemed Residents and RNOR
An Indian citizen with Indian income above ₹15 lakh who is not taxed in any other country is called a deemed resident. This often affects people who live in countries with no income tax. Deemed residents are taxed as RNOR, so their foreign income stays outside Indian tax.
RNOR status also covers returning NRIs who were non-resident in nine of the last ten years, or who stayed 729 days or fewer in India during the last seven years.
NRI Income Tax Rules: What India Taxes and What It Does Not
Your status decides what India can tax. This table shows the basic picture.
| Status | What India taxes |
|---|---|
| NRI | Income earned or received in India |
| RNOR | Income earned or received in India, plus foreign income from a business controlled from India |
| Resident | Income from anywhere in the world |
For an NRI, India-linked income usually includes:
- Rent from Indian property
- Interest on NRO accounts and other Indian deposits
- Dividends from Indian companies
- Capital gains on Indian shares, mutual funds or property
- Salary for work done in India
Your salary in Dubai, Toronto or Singapore is not taxed in India while you remain an NRI. NRIs pay tax at the same slab rates as residents, but they cannot claim the low-income rebate that residents get.
NRE, NRO and FCNR Accounts: How Interest Is Taxed
Your account type matters as much as your balance. Here is how the three common NRI accounts compare.
| Account | What it holds | Interest tax in India |
|---|---|---|
| NRE | Foreign earnings, held in rupees | Exempt while you are an NRI |
| NRO | Income earned in India, such as rent or dividends | Taxable. Banks deduct TDS at 30% plus surcharge and cess, unless a treaty rate applies |
| FCNR (B) | Term deposits in foreign currency | Exempt while you are an NRI |
Keep foreign earnings in your NRE account and use the NRO account only for India-based income. This keeps your records clean and makes filing far easier.
RBI also limits how much you can send abroad from an NRO account each year. The current cap is USD 1 million per financial year, after taxes are paid. When you return to India for good, move your accounts to resident accounts within a reasonable time. Keeping NRE or NRO accounts after you become a resident under FEMA breaks the rules.
Selling Property, Shares or Renting Out a Home
Property Sales
When an NRI sells Indian property, the buyer must deduct tax before paying you. For property held more than 24 months, long-term capital gains are taxed at 12.5% without indexation. For property held 24 months or less, the gain is taxed at your slab rate.
Here is the catch. Unless you hold a lower deduction certificate, the buyer may deduct tax on the full sale price, not just your profit. That can lock up a large sum until you claim a refund. Apply for the certificate before the sale, not after.
Shares and Mutual Funds
Long-term gains on listed shares and equity mutual funds are taxed at 12.5% above ₹1.25 lakh a year. Short-term gains are taxed at 20%. Your broker or fund house usually deducts the tax, but you still report the gains in your return.
Rental Income
Tenants must deduct TDS at 30% (plus surcharge and cess) on rent paid to an NRI landlord. When you file, you can claim a standard deduction of 30% of net rent and other allowed costs. If the TDS was higher than your real tax, the extra comes back as a refund.
Gifts, Inheritance and Family Transfers
Family money moves across borders all the time, so the basics are worth knowing. Gifts from a relative, such as a parent, sibling or spouse, are not taxed in the hands of the person who receives them. India has no inheritance tax either.
Tax appears later, when someone sells the gifted or inherited asset. The seller pays capital gains tax, and the cost and holding period of the earlier owner usually carry over. Keep the gift deed, the will and old purchase papers. You will need them on the day of sale.
DTAA Explained Simply
DTAA stands for Double Taxation Avoidance Agreement. It is a treaty between India and another country. Its job is simple: the same income should not be taxed in full twice. India has signed such treaties with more than 90 countries, and the Income Tax Department lists every agreement on its website.
How the Relief Works
Treaties give relief in two ways. Under the exemption method, only one country taxes the income. Under the credit method, both countries may tax it, but your home country gives you credit for the tax you paid in India.
Take a simple case. An NRI in the United States earns rent from a flat in Pune. India taxes that rent. When the NRI files in the US, the Indian tax paid is claimed as a foreign tax credit. The same rent is not taxed in full twice.
What You Need to Claim Treaty Benefits
- A tax residency certificate (TRC) from the tax authority of your country of residence.
- The self-declaration form the law asks for. It was called Form 10F under the earlier Act, so check the current form number on the official portal.
- Your Indian PAN.
- Give all three to the bank, tenant or buyer before tax is deducted.
A treaty can lower the tax applied to you. You may use whichever is better for you, the treaty or Indian law. Anti-abuse rules can still apply, so keep clean records of every claim.
A Note for Gulf-Based Indians
If you live in a country with no income tax, a treaty may give little relief, because there is no foreign tax to credit. Watch the deemed-resident rule instead, since high Indian income can change your status.
How to File Your Return as an NRI
You must file if your Indian income is above the basic exemption limit. It also pays to file when you want a refund of extra TDS, need to report capital gains, or wish to carry forward a loss. Follow these steps.
- Keep your PAN active. You need it for banks, property deals and returns.
- Pick the right form. NRIs cannot use ITR-1. Most file ITR-2, or ITR-3 if they have business income.
- Collect your papers: passport with entry and exit stamps, bank statements, TDS certificates, your Annual Information Statement, and the TRC if you claim treaty relief.
- File on the Income Tax e-Filing portal before the due date. It is usually 31 July for individuals who do not need an audit, and late filing can attract a fee of up to ₹5,000.
- Verify the return with an EVC from your bank account or with a digital signature.
Plan Your India Trips with a Day Count
Many NRIs cross the 182-day line by accident. A long family visit, a wedding season or a parent’s surgery can push the count up fast. Plan your year before you book tickets. Mark every day in India on a calendar, and slow down as you near your limit.
Bringing relatives or friends from abroad with you?
Common Mistakes NRIs Make
- Not counting days. A long visit can change your status without warning.
- Keeping NRE accounts after becoming a resident. This breaks FEMA rules.
- Skipping the lower deduction certificate before a property sale.
- Asking for the TRC too late, then paying full TDS.
- Assuming no tax applies because you live in a low-tax country. Deemed-resident rules can still reach you.
- Ignoring small incomes. Interest and rent add up, and TDS records show up in your tax statement anyway.
Staying Connected to India Beyond the Tax Form
Tax is one side of an NRI’s bond with India. Family, health and daily habits are the other side. Many NRIs look for ways to keep those habits going from abroad, from stories on India’s links with the wider world to care routines that travel well.
Wellness is a good example. Time zones make regular clinic visits hard, so online programs help. MorningSun runs online lifestyle programs for NRIs that cover diet, daily routine and stress. They suit people who want Ayurvedic guidance without flying home.
Small comforts count too. Some NRIs stock their shelves with natural products from home, such as the Ayurvedic skincare range from Advik Ayurveda.
Missing a steady health routine abroad?
Your Yearly NRI Tax Checklist
- Count your days in India before each trip, and again on 31 March.
- Review your NRE, NRO and FCNR balances and the interest earned.
- Collect TDS certificates from banks, tenants and buyers.
- Get a fresh TRC each year if you claim treaty benefits.
- Note every sale, gift or investment you made in India.
- File on time and keep a copy of the return for at least six years.
- Review your residency again if you plan to return to India.
Planning medical care for family in India and want to budget early?
The Takeaway
Good NRI tax planning starts with three questions. How many days did I spend in India? Which of my income comes from India? And which treaty relief can I claim? Answer these every year, keep your papers ready, and file on time. Ask an expert for large property deals or unusual income. The rules feel manageable once you know where to look.
FAQs:
No. While you are an NRI, only income earned or received in India is taxable here.
Generally 182 days in a tax year. Some visitors with high Indian income face a 120-day limit.
No. NRE and FCNR (B) interest is exempt while you are an NRI. NRO interest is taxable.
A treaty between two countries that stops the same income from being taxed twice.
No. NRIs generally file ITR-2 or ITR-3, depending on the type of income.
Yes. The buyer deducts tax, often on the full sale price, unless you get a lower deduction certificate.