NRI Taxation in India: Income, Property & Investments

Who Is an NRI for Tax Purposes?

Under the Income Tax Act, your residential status determines your tax liability in India. You are a Non-Resident Indian (NRI) if you spend fewer than 182 days in India during a financial year (or fewer than 60 days + 365 days in the prior 4 years in certain cases).

NRIs are taxed only on income earned or received in India — not on their global income.

Taxable Income for NRIs

The following Indian-source incomes are taxable:

1. 1Salary received in India or for services rendered in India
2. 2Rental income from Indian property
3. 3Capital gains on sale of Indian assets (property, shares, mutual funds)
4. 4Interest on NRO accounts, fixed deposits
5. 5Dividends from Indian companies

TDS on NRI Transactions

NRIs face higher TDS rates:

• Property sale: 20% TDS on capital gains (can apply for lower deduction certificate)
• NRO account interest: 30% TDS
• Equity mutual fund LTCG: 10% TDS

If your total income is below the basic exemption limit, file an ITR to claim a full refund of TDS deducted.

Double Taxation Avoidance Agreement (DTAA)

India has DTAA with 90+ countries. Key benefits:

• Tax credit in your country of residence for taxes paid in India
• Reduced withholding rates on interest and dividends
• Exemptions on specific income types

To claim DTAA benefits, submit a Tax Residency Certificate (TRC) from your country of residence and Form 10F to Indian payers.

Repatriation Rules

• NRE accounts: Freely repatriable (principal + interest)
• NRO accounts: Up to USD 1 million per year (after taxes), with Form 15CA/CB
• Property sale proceeds: Repatriable subject to RBI regulations and tax compliance

Filing Requirements

NRIs must file an ITR in India if:

• Total taxable income in India exceeds ₹2,50,000
• They have capital gains (irrespective of amount)
• They want to claim a TDS refund

Conclusion

NRI taxation is nuanced and country-specific. Proactive planning — especially around TDS refunds, DTAA claims, and repatriation — can significantly reduce your tax burden. Our cross-border tax specialists are here to help.