NRI Taxation in India — Complete Guide to Income Tax for Non-Resident Indians
By Parul Singh, GST Practitioner · Income Tax · Updated June 2026
Table of Contents
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Residential Status -- The Key to NRI Taxation
In my 15+ years as a tax practitioner in Karol Bagh, I have handled NRI taxation for dozens of clients -- from software engineers in the US who still own property in Delhi to businessmen in Dubai with investments in Connaught Place. The first step is determining your residential status.
Official Reference: Section 6 of the Income Tax Act 1961 defines residential status. A person is a resident if they stay in India for 182+ days in the financial year, or 60+ days in the year plus 365 days in the preceding 4 years.
| Status | Condition | Taxable in India |
|---|---|---|
| Resident | 182+ days in India | Global income |
| RNOR | Resident but Not Ordinarily Resident | Indian income + foreign business income from India |
| Non-Resident (NRI) | Less than 182 days in India | Only Indian income |
📍 Real Example -- Software Engineer in US with Delhi Property
Vikram, originally from Dwarka, moved to the US in January 2024. In FY 2025-26, he visited India for only 25 days. His status: Non-Resident. His US salary is NOT taxable in India. But his rental income of ₹4.8 lakh from his apartment in Vasant Kunj IS taxable. He also has ₹2.5 lakh FD interest in SBI -- this is taxable too.
What Income Is Taxable in India for NRIs
| Income Type | Taxable for NRI? |
|---|---|
| Salary earned in India | Yes |
| Rental income from Indian property | Yes |
| Interest from Indian bank FDs | Yes (TDS at 20%) |
| Capital gains on Indian assets | Yes |
| Salary earned abroad | No |
| Capital gains on foreign assets | No |
⚠️ Common Mistake: Many NRIs from Delhi do not know that their Indian bank FD interest is subject to TDS at 20% (not 10% like residents). If your total Indian income is below the basic exemption limit, you can file Form 15CA/15CB or apply for a lower TDS certificate under Section 197.
DTAA -- Avoiding Double Taxation
India has Double Taxation Avoidance Agreements with 90+ countries. DTAA ensures income taxed in one country is not taxed again in another.
Official Reference: Section 90 of the Income Tax Act 1961 provides for DTAA. NRIs can claim the benefit of the lower of: Indian tax rate or the rate prescribed in the DTAA.
TDS on NRI Payments
| Payment Type | TDS Rate |
|---|---|
| Interest | 20% (or DTAA rate) |
| Technical fees | 10% |
| Royalty | 10% |
| Long-term capital gains | 10-20% |
| Any other income | 30% (or DTAA rate) |
💡 Pro Tip from Parul: If you are an NRI looking for a reliable tax advisor in Delhi, I offer specialized NRI taxation services. WhatsApp me at +91 95401 04776. I have clients across the US, UK, UAE, Singapore, and Canada.
ITR Filing for NRIs
NRIs must file ITR in India if their Indian income exceeds the basic exemption limit. The applicable form is usually ITR-2.
- Determine residential status for the financial year
- Identify taxable Indian income
- Claim DTAA benefits if applicable
- File ITR-2 declaring Indian income and DTAA claims
- E-verify using net banking or bank account
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Frequently Asked Questions
Is an NRI required to file ITR in India?
Yes, if your Indian income exceeds the basic exemption limit. You must also file to claim refund of excess TDS.
What is the TDS rate on NRI bank FD interest?
Banks deduct TDS at 20% on FD interest paid to NRIs. Apply for lower TDS certificate under Section 197 if income is below exemption limit.
Can an NRI claim Section 80C deductions?
NRIs can claim most Section 80C deductions for investments in India -- ELSS, life insurance, NSC, etc. However, NRIs cannot open new PPF accounts.
How do I claim DTAA benefit?
Obtain a Tax Residency Certificate (TRC) from the foreign country and submit it with Form 10F on the IT portal. Claim the benefit in your ITR.
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