NRI Taxation in India: Complete Guide (FY 2026-27)
Everything NRIs need to know about tax obligations in India — residency rules, taxable income, DTAA benefits, TDS rates, and NRE/NRO account taxation.
Residency Status: The 182-Day Rule
Your tax liability in India depends primarily on your residential status for the financial year. The key rule:
- If you stay in India for 182 days or more during the financial year, you are generally classified as a Resident
- If you stay for less than 182 days, you are generally classified as a Non-Resident (NRI)
There are additional conditions that may apply:
| Status | Stay in India (Current FY) | Additional Conditions |
|---|---|---|
| Resident & Ordinarily Resident (ROR) | 182 days or more | Resident in at least 2 of 10 preceding FYs AND stayed 730+ days in preceding 7 FYs |
| Resident but Not Ordinarily Resident (RNOR) | 182 days or more | Does not meet additional ROR conditions |
| Non-Resident (NRI) | Less than 182 days | No additional conditions required |
Important (FY 2026-27): Indian citizens earning over Rs 15 lakh from Indian sources who are not liable to tax in any other country may be deemed resident even with less than 182 days of stay.
What Income is Taxable for NRIs in India?
NRIs are taxed only on income that is earned or received in India. Income earned outside India is not taxable.
| Income Type | Taxable for NRI? | Details |
|---|---|---|
| Salary received in India | Yes | Salary for services rendered in India |
| Rental income from Indian property | Yes | Standard deduction of 30% available |
| Capital gains on Indian assets | Yes | Shares, mutual funds, property in India |
| Interest on NRO account | Yes | TDS deducted by bank |
| Interest on NRE account | No | Exempt for NRIs |
| Interest on FCNR deposits | No | Exempt for NRIs |
| Salary earned abroad | No | Not taxable in India for NRIs |
| Foreign rental income | No | Not taxable in India for NRIs |
DTAA: Double Taxation Avoidance Agreement
India has signed DTAA with over 90 countries to prevent the same income from being taxed twice. Key points:
- Relief methods: Exemption method (income taxed in only one country) or Credit method (tax paid in one country is credited against tax in the other)
- Lower TDS rates: DTAA often provides lower withholding tax rates compared to domestic rates
- Tax Residency Certificate (TRC): Required to claim DTAA benefits — obtain from your country of residence
- Form 10F: Must be filed along with TRC to claim treaty benefits in India
| Country | Interest Rate (DTAA) | Dividend Rate (DTAA) | Capital Gains |
|---|---|---|---|
| USA | 15% | 25% | As per domestic law |
| UK | 15% | 15% | As per domestic law |
| UAE | 12.5% | 10% | As per domestic law |
| Singapore | 15% | 15% | As per domestic law |
| Canada | 15% | 25% | As per domestic law |
| Australia | 15% | 15% | As per domestic law |
Note: DTAA rates shown are indicative. Always verify the latest treaty provisions with your tax advisor.
TDS Rates for NRIs (FY 2026-27)
TDS rates for NRIs are generally higher than for residents. Key rates:
| Income Type | TDS Rate | Section |
|---|---|---|
| Interest income | 30% | 195 |
| Rental income | 30% | 195 |
| LTCG on property | 12.5% | 195 |
| STCG on equity | 20% | 195 |
| LTCG on equity (above Rs 1.25L) | 12.5% | 195 |
| Professional / technical fees | 10% | 195 |
| Sale of property | 12.5% (LTCG) / 30% (STCG) | 195 |
Important: Surcharge and cess apply in addition to TDS rates. Lower DTAA rates can be claimed with proper documentation.
NRE vs NRO Accounts
Understanding the difference is critical for NRI tax planning:
| Feature | NRE Account | NRO Account |
|---|---|---|
| Purpose | Foreign earnings deposited in India | Indian income (rent, dividends, etc.) |
| Interest taxable in India? | No (exempt) | Yes (TDS applies) |
| Repatriation | Fully repatriable | Up to USD 1 million per FY (with conditions) |
| Currency risk | Yes (INR conversion) | Held in INR |
| Joint holding | Only with another NRI | Can hold jointly with resident Indian |
| On returning to India | Redesignated to resident account | Redesignated to resident account |
Key Filing Requirements for NRIs
- Mandatory filing: If Indian income exceeds the basic exemption limit (Rs 2.5 lakh under old regime, Rs 4 lakh under new regime for FY 2026-27)
- ITR forms: NRIs typically use ITR-2 (no business income) or ITR-3 (with business income)
- Due date: July 31 of the assessment year (unless extended)
- PAN is mandatory: Required for all financial transactions and tax filing in India
- TDS refund: File ITR to claim refund if TDS deducted exceeds actual tax liability
Frequently Asked Questions
Do NRIs get the benefit of tax slabs?
Yes, NRIs can opt for either the old or new tax regime and benefit from applicable slab rates. However, certain deductions like 80C may not apply if the NRI has no Indian income qualifying for those deductions.
Is NRE FD interest taxable?
No, interest earned on NRE fixed deposits is tax-free in India as long as you maintain NRI status. Once you return to India and become a resident, the account is redesignated and interest becomes taxable.
Can NRIs invest in mutual funds in India?
Yes, NRIs can invest in Indian mutual funds (subject to certain restrictions for US/Canada-based NRIs due to FATCA compliance). Capital gains tax rules apply as per Indian tax law.
How do I avoid double taxation?
Obtain a Tax Residency Certificate (TRC) from your country of residence, file Form 10F in India, and claim DTAA benefits while filing your Indian ITR. Keep documentation of taxes paid in both countries.
Use Our NRI Tax Calculator
Don't guess your NRI tax liability — use our NRI Tax Calculator to compute your exact tax on Indian income, including DTAA benefits and TDS credits.
Calculate Your NRI Tax Now
Enter your Indian income details to see your tax liability, TDS credits, and DTAA benefits.
Try NRI Tax Calculator