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Income Tax Rules for NRIs

  • Rajarshi Guha
  • Apr 16, 2024
  • 4 min read

Updated: Sep 2, 2025


It’s common knowledge that the Indian economy relies on taxes gathered from its citizens. Non-Resident Indian (NRI) taxation, as outlined in the Indian Income Tax Act of 1961, pertains to individuals earning income abroad. The regulations and privileges regarding income tax for NRIs differ significantly from those for Indian residents.


What is the residential status of the NRIs ?

For a given financial year, you qualify as an Indian resident if you meet any of the following criteria:

1. Spending 182 days or more in India during the financial year.

2. Being present in India for 60 days or more in the previous year and residing for 365 days or more within the last four years of the previous year.

Note: Indian citizens employed overseas or serving as crew members on Indian vessels are subject only to the first condition. This means they are considered residents if they spend at least 182 days in India.

The same rule applies to Persons of Indian Origin (PIO) who visit India during the previous year and whose total income (excluding foreign earnings) is less than or equal to 15 lakhs. The second condition does not apply to this group. A PIO is an individual whose parents or grandparents were born in undivided India.

If none of the above conditions are met, you are classified as a Non-Resident Indian.


Deemed Residency

The Finance Act of 2020 introduced the notion of “Deemed residency.” As per this provision, Indian citizens earning over Rs 15 lakh from Indian sources will be considered residents of India if they are not obligated to pay taxes in any other nation.

These deemed residents will be categorized as Resident but Not-Ordinary Resident (RNOR) starting from the fiscal year 2020-21. This adjustment was implemented to levy taxes on the incomes of Indian citizens who are exempt from tax liability in any country.

Am I required to pay taxes on income earned overseas?

– An NRI’s tax obligations in India depend on their residential status for the year, as per the aforementioned income tax regulations.

– If categorized as a ‘resident,’ one’s global income becomes taxable in India.

– Conversely, if identified as an ‘NRI,’ only income earned or accrued within India is subject to taxation.

– Examples of taxable income for NRIs include salary received or services provided in India, revenue from property situated in India, capital gains from asset transfers in India, and interest from fixed deposits or savings accounts in India.

– Interest from NRE and FCNR accounts is exempt from taxation, while interest from NRO accounts is taxable for NRIs.


Do I need to submit my income tax return in India?

Individuals with income surpassing Rs 2,50,000 are mandated to file an income tax return in India.

Hence in simple words if your residency status is NRI, it is advisable to file Income tax returns in India every year for the compliance purpose.

The deadline for NRIs to file income tax returns in India is July 31st, unless extended by the government.


Taxable earnings for Non-Resident Indians (NRIs)

Earnings from employmentEarnings from employmentEarnings from employment

Income from employment will be deemed to originate in India if the services are performed within the country. Therefore, regardless of your Non-Resident Indian (NRI) status, income received for services rendered in India will be subject to taxation in India, regardless of where the payment is received.

Earnings from property ownershipEarnings from property ownershipEarnings from property ownership

Revenue generated from a property located in India is subject to taxation for Non-Resident Indians (NRIs). The computation of this income follows the same method applied to residents. The property can be rented out or unoccupied. An NRI is eligible for a standard deduction of 30%, along with deductions for property taxes and interest on a home loan. Additionally, deductions for principal repayment under Section 80C are permissible. Stamp duty and registration charges incurred during property acquisition are also eligible for deduction under Section 80C.

Rent payments to an NRIRent payments to an NRIRent payments to an NRI

When a tenant pays rent to an NRI landlord, it’s essential to note that TDS at a rate of 30% must be deducted at the time of payment. The rent can be deposited into an account in India or directly into the NRI’s account in their country of residence.

Earnings from other sourcesEarnings from other sourcesEarnings from other sources

Interest earned from fixed deposits and savings accounts maintained in Indian banks is subject to taxation in India. However, interest accrued on NRE and FCNR accounts remains exempt from taxes, while interest earned on NRO accounts is fully taxable.

Earnings from business and professional activitiesEarnings from business and professional activitiesEarnings from business and professional activities

Any income acquired by an NRI from a business managed or established in India is subject to taxation for the NRI.

  • Proceeds from capital appreciation

Any profit arising from the sale of a capital asset located in India is subject to taxation in India.

Capital gains from investments in Indian shares and securities are also taxable in India. If you sell a residential property and realize a long-term capital gain, the buyer is required to deduct TDS at a rate of 20%. However, you can avail of capital gains exemption by reinvesting in another residential property under Section 54 or by investing in specified capital gain bonds under Section 54EC.

If you have any queries please feel free to touch base with NRI Assist team here to help you to file your ITR.If you have any queries please feel free to touch base with NRI Assist team here to help you to file your ITR.If you have any queries please feel free to touch base with NRI Assist team here to help you to file your ITR.


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