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NRI Taxes & ITR Filing
How to File Income Tax for NRIs
A Comprehensive Guide (2026) for Global Indians
What is NRI Taxation in India?
NRI taxation is regulated under the Income Tax Act, 1961. Unlike residents, NRIs are liable to pay tax only on income earned or received within Indian borders. Adhering to TDS provisions, filing deadlines, and reporting norms is essential to avoid penalties.
Taxable Income Includes:
- Salary: Earned in India or for services performed in India.
- Rent: From house property located in India.
- Capital Gains: From the sale of Indian shares, mutual funds, or real estate.
- Interest: From NRO savings accounts and fixed deposits.
Tax-Free Income: Interest earned on NRE and FCNR accounts is fully exempt from tax in India.
Step 1: Determine Residential Status
Your tax liability is determined by the number of days you spend in India.
| Stay in India | Residential Status |
|---|---|
| ≥ 182 days in the financial year | Resident |
| < 182 days in the financial year | Non-Resident (NRI) |
| 60 days + 365 days in past 4 years | Resident (Conditions apply) |
Step 2: Know Your Tax Slabs (FY 2025-26)
NRIs can choose between the Old Regime and the New Regime (Default).
New Tax Regime (Default)
| Income Range | Tax Rate |
|---|---|
| Up to ₹4,00,000 | 0% |
| ₹4,00,001 – ₹8,00,000 | 5% |
| ₹8,00,001 – ₹12,00,000 | 10% |
| ₹12,00,001 – ₹16,00,000 | 15% |
| ₹16,00,001 – ₹20,00,000 | 20% |
| ₹20,00,001 – ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
*Note: Rebate u/s 87A is typically not available for NRIs.
TDS Rates for NRIs
| Income Type | TDS Rate |
|---|---|
| Salary | As per Slab Rates |
| Rental Income (India) | 30% |
| Capital Gains (Long Term) | 12.5% / 20% (Asset dependent) |
| Interest (NRO Account) | 30% |
Available Deductions (Old Regime)
| Section | Deduction Detail | Limit |
|---|---|---|
| 80C | LIC, ELSS, Tuition Fees, Principal on Home Loan | ₹1,50,000 |
| 80D | Health Insurance Premium | As per limits |
| 80E | Education Loan Interest | No Limit |
| 80G | Donations to specified funds | Varies |
Step-by-Step Filing Process
- Collect Documents: PAN, Passport, Form 26AS, AIS, Bank Statements (NRE/NRO).
- Select ITR Form: Use ITR-2 (Salary/Property/Capital Gains) or ITR-3 (Business).
- Claim DTAA: Use the Double Taxation Avoidance Agreement to prevent paying tax twice (Requires TRC & Form 10F).
- Verify: Verify via Aadhaar OTP, Net Banking, or send signed ITR-V to CPC Bangalore.
Expert Insight: If your tax liability exceeds ₹10,000 after TDS, you must pay Advance Tax in installments to avoid interest u/s 234B and 234C.
Frequently Asked Questions
1. I am an NRI. Will I be subject to capital gains tax if I sell a flat that I own in India?
Yes. You will be liable for capital gains tax in India upon the sale of your flat. Further, the purchaser himself must deduct taxes on the gains you make. The tax deduction rate for a long-term gain is 12.5%, while short-term capital gains are taxed at slab rates.
2.What types of income are taxable for NRIs in India?
NRIs are required to pay tax in India on income earned or received in India, such as:
Salary
Rent
Capital gains
Interest
However, certain incomes like agricultural income or tax-free bonds may be exempt.
3. Will an NRI be taxed for income earned from agricultural land?
No. NRIs are not taxed on income earned from agricultural land.
4.Can an NRI open a post office savings account?
No. Post Office schemes are not available to NRIs. Existing accounts can continue until maturity but cannot be renewed.
5.Is NRI FD tax-free?
No. Post Office schemes are not available to NRIs. Existing accounts can continue until maturity but cannot be renewed.
6.When are you considered as a non-resident Indian (NRI)?
A person is considered an NRI if they do not meet resident criteria. You are a resident if:
Stayed in India ≥ 182 days, OR
Stayed ≥ 60 days in current year + 365 days in last 4 years
If not, you are considered an NRI.
7.I am an NRI. I have rental income from India and salary income from the US. What income should I offer in India?
Only income earned in India is taxable.
Rental income (India) → Taxable
Salary from US → Not taxable in India
8.When should an NRI file income tax return in India?
An NRI must file ITR if:
Income in India exceeds ₹2.5 lakh, OR
Required under law
📅 Due date: 31st July (generally)
9.I am an NRI aged 65 years. Do I need to file ITR if income is ₹2.8 lakh?
Higher exemption limits for senior citizens apply only to residents, not NRIs.
👉 So, you must file ITR if income exceeds ₹2.5 lakh.
10.Should taxes be deducted when payments are made to NRIs?
Yes. Payments like:
Rent
Professional fees
require TDS deduction by the payer.
👉 The payer must obtain a TAN to deduct tax.
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