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Indian Citizen or person of Indian Origin + Non- Resident
The taxability of a Non-Resident Indian (NRI) is primarily governed by the source-based taxation principle under the Income Tax Act, 1961 and 2025, and the provisions of the Foreign Exchange Management Act (FEMA). Unlike residents, NRIs are liable to pay tax in India only on income that is earned, accrued, or received within the Indian territory, such as rental income from local property, capital gains from Indian assets, or interest on NRO accounts. To determine this liability, one must first establish residential status under Section 6, which depends on the duration of physical stay during the financial year. Furthermore, NRIs can optimize their tax burden by leveraging Double Taxation Avoidance Agreements (DTAA), ensuring they are not taxed twice on the same income across different jurisdictions. This framework aims to balance domestic revenue interests with the global mobility of the Indian diaspora.
To be an NRI for tax purposes in the current year, you must generally Not a resident of India, stay in India for less than 182 days or do not meet other residential criteria defined in the Act.
If you visit India frequently, ensure your stay is less than 60 days (or 120/182 days depending on your income level and citizenship status).
NRI is taxable in India only when the Income is Accrue or arise in India or is received in India or deemed to accrue or arise in India (Includes Salary, House property, capital gain, Interest (NRO Account), dividend)
When Gross Total Income (before any type of deductions) is exceeding the Basic Exemption Limit applicable in that period. As per New Regime (i.e. Default) mandatory threshold limit is ₹4,00,000. In case tax has been deducted at source (TDS) to claim your refund must file your return even if income is below the threshold limit
For A.Y. 2026-27 is 31st July 2026 in case of non- audit return and 31st October 2026 in case of audit (unless extended).
ITR-2 is commonly filed by NRI in case of income is salary income, income from house property, capita gain and ITR-3/ ITR-5 is filed is any income from business or profession in India.
Claim refunds for excess TDS deducted, establish proof of income for visa or bank purposes, avoid penalties and interest under Sections 234A, 234B, and 234C.
| Taxable Income (₹) | Tax Rate |
|---|---|
| Up to ₹4,00,000 | Nil (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% |
On top of the above tax, Health & Education Cess @ 4% is charged on the total tax liability.
Surcharge
New Tax Regime the maximum surcharge is capped at 25%, even if income exceeds ₹5 crore.
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