🧾 Taxation Rules for NRIs in India: A Complete Guide (2025)

India is home to millions of Non-Resident Indians (NRIs) who continue to maintain strong financial ties with the country. Whether it’s income from property, investments, or bank accounts, NRIs must understand the tax implications to remain compliant with Indian laws and avoid penalties.

In this blog, we explain everything NRIs need to know about taxation in India — including residency status, taxable income, exemptions, and how to file returns.

🌍 Who is an NRI for Tax Purposes?

According to the Income Tax Act of India, your residential status determines whether you are taxed as a resident or non-resident.

You're considered an NRI (Non-Resident Indian) if:

• You stay outside India for 183 days or more in a financial year (April to March),
• OR
• You have been in India for less than 60 days during the year and less than 365 days in the past 4 years.

✅ Note: Budget 2020 introduced new rules for Indian citizens earning ₹15 lakh+ from Indian sources. They may be deemed residents if they don’t pay tax in any other country (i.e., “stateless persons”).

💰 What Income is Taxable for NRIs in India?

Only income earned or received in India is taxable for NRIs. Here's a breakdown:

Type of Income Taxable for NRI? Remarks

Salary earned in India ✅ Yes Even if paid to an overseas account

Income from house property ✅ Yes Rent, capital gains, etc.

Capital gains from Indian assets ✅ Yes Real estate, shares, mutual funds, etc.

Interest on NRO account ✅ Yes Taxed at 30% (plus surcharge and cess)

Interest on NRE/FCNR accounts ❌ No Fully tax-free, provided NRI status is maintained

Income from business in India ✅ Yes If business is controlled/set up in India

Foreign income ❌ No Not taxable unless received directly in India

📉 TDS (Tax Deducted at Source) for NRIs

TDS is applicable on almost all payments to NRIs. Here's a quick guide:

• Rent: 30% TDS by tenant (Form 15CA/CB filing required)
• Interest on NRO account: 30% TDS
• Capital gains on property: 20% (for long-term), 30% (for short-term)
• Mutual fund redemption: 10% to 20% depending on holding period and fund type

💡 NRIs can file for a lower TDS certificate (Form 13) if actual tax liability is lower.

🏠 Tax on Property Income for NRIs

If you own property in India:

• Rental income is taxable (after standard 30% deduction)
• Property taxes can be claimed as a deduction
• Interest on home loan can also be claimed
• You can claim one property as self-occupied; others are deemed let out

📊 Capital Gains Tax for NRIs

• Short-term capital gains (held < 2 years): taxed at 30%
• Long-term capital gains (>2 years): taxed at 20% with indexation
• TDS must be deducted by buyer when selling a property
• You can claim exemptions under Sections 54, 54EC, etc., on reinvestment

🧾 Filing Income Tax Returns as an NRI

Do NRIs need to file ITR in India?

Yes, if:

• Total taxable income in India exceeds ₹2.5 lakh,
• OR
• You want to claim a refund or carry forward a loss

✅ Documents Required:

• PAN Card
• Passport (for residency proof)
• Income documents (rent, interest, capital gains)
• Form 26AS (for TDS details)
• Bank account (for refunds)

📅 Due Date:

• July 31st of the assessment year (i.e., for FY 2024–25, deadline is July 31, 2025)

✅ Tax Exemptions and Deductions Available to NRIs

Section Benefit Applicable for NRIs?

80C Investments like ELSS, life insurance ✅ Yes

80D Health insurance premiums ✅ Yes

80E Education loan interest ✅ Yes

80G Donations ✅ Yes

80TTA Savings account interest (₹10,000) ❌ No (NRE/NRO excluded)

54/54F Reinvestment of capital gains ✅ Yes

💡 Pro Tips for NRIs on Tax Compliance

1. Avoid dual taxation using DTAA (Double Taxation Avoidance Agreement) if your income is taxed in both India and your country of residence.
2. Convert accounts: Maintain NRE/NRO accounts — not regular resident accounts.
3. File ITR even if TDS is deducted, especially if eligible for a refund or deduction.
4. Appoint a representative in India for easier compliance.
5. Use online portals like ClearTax or IndiaFilings for hassle-free ITR filing.

✈️ Final Thoughts

Taxation for NRIs in India can seem complex, but with proper planning and awareness, you can reduce your liability and stay compliant. Always consult a qualified tax advisor or CA, especially if you have multiple income sources in India.

📌 Stay updated with the latest changes in the Income Tax Act to ensure you're filing correctly every year.

📥 Bonus: Useful Resources for NRIs

• Income Tax e-Filing Portal
• DTAA Country List
• RBI Guidelines for NRI Accounts