NRI Taxation India 2026: Residency, Slabs, DTAA & Repatriation

NRI taxation in India is less complicated than its reputation, but it fails in a specific way: almost every expensive mistake traces back to getting residential status wrong, and residential status is decided by a day count that has nothing to do with citizenship, visa type, or where you think of as home.

This guide covers the test that decides everything, what India can actually tax, how TDS works differently for NRIs, and the mechanics of getting money out.

The day-count test that decides everything

Under the Income Tax Act you are a resident for a financial year if either condition is met:

• You were in India for 182 days or more during that financial year; or
• You were in India for 60 days or more in that year and 365 days or more across the four preceding years.

Fail both and you are a non-resident for that year. Note that this is assessed every year, separately — status is not a label you carry, and people who travel to India frequently for work can flip between statuses across consecutive years without realising.

There are relaxations to the 60-day limb for Indian citizens leaving for employment abroad and for those visiting India, and separate provisions for high-income individuals with no tax liability elsewhere. If your day count is anywhere near a threshold, count carefully — including the days of arrival and departure — because a single day can change the entire year's treatment.

RNOR — the transitional status worth planning around

Between non-resident and full resident sits Resident but Not Ordinarily Resident, which you may qualify for in the years immediately after returning to India permanently. During RNOR, foreign income generally stays outside the Indian net.

For someone moving back after years abroad, this is the single highest-value piece of planning available in NRI taxation. Returning in early April rather than late March can extend the benefit by a full year. Model it before you book flights, not after.

What India can and cannot tax

The scope of Indian tax depends entirely on the status above:

Income	Non-resident	Resident
Salary for work done in India	Taxable	Taxable
Salary earned and received abroad	Not taxable	Taxable
Rent from Indian property	Taxable	Taxable
Capital gains on Indian assets	Taxable	Taxable
NRO account interest	Taxable	Taxable
NRE / FCNR interest	Generally exempt	Taxable once resident
Foreign investment income	Not taxable	Taxable

The line is: received in India, or accruing or arising in India. A non-resident is taxed on that and nothing else. A resident is taxed on worldwide income.

That last row is the one that surprises returnees. The year you become resident, your foreign portfolio, foreign rental income and overseas interest all enter the Indian net — and foreign assets carry separate disclosure obligations in the return with serious consequences for omission.

NRE and NRO accounts

Getting these separated properly does more day-to-day work in NRI taxation than any other single decision:

• NRE (Non-Resident External) — for foreign earnings remitted to India. Interest is generally exempt while you are non-resident, and the balance is freely repatriable.
• NRO (Non-Resident Ordinary) — for income arising in India: rent, dividends, pension. Interest is taxable, TDS applies, and repatriation is capped and needs certification.
• FCNR — foreign-currency term deposits, removing rupee exchange risk. Interest treated like NRE.

The practical rule is to keep Indian-source money in NRO and foreign-source money in NRE, and never mix. Mixing does not create a tax charge by itself, but it makes proving the source of funds at repatriation genuinely difficult, and the bank will ask.

TDS is harsher for NRIs

This catches almost every NRI at some point. TDS on payments to non-residents falls under a different section from the resident provisions, and it is applied more aggressively:

• Deduction is often on the gross amount rather than on the estimated income element.
• Thresholds that protect residents frequently do not apply. A resident might have small interest paid without deduction; an NRI generally will not.
• Property sales are the big one. When a buyer purchases property from a non-resident seller, deduction is at a substantially higher rate than the modest rate applying to resident sellers — and it is on the sale consideration, not on the gain.

That property case regularly leaves NRI sellers with a large sum withheld against a much smaller actual liability. Two routes exist: apply for a lower or nil deduction certificate before the transaction, or claim the excess back by filing a return afterwards. The first is far better, because the second means waiting a year for your own money. The TDS guide covers the general mechanism.

Using DTAA relief properly

India has Double Taxation Avoidance Agreements with a long list of countries. They work in one of two ways: the exemption method, where income is taxed in only one country, or the credit method, where both may tax but your home country credits the Indian tax paid.

To claim relief you will generally need:

1. A Tax Residency Certificate from your country of residence for the relevant period.
2. Form 10F, filed electronically on the Indian portal.
3. A declaration of beneficial ownership where the treaty requires it.

Give these to your Indian bank or deductor before the payment. A treaty rate cannot be applied retrospectively by the deductor — after the fact your only route is a refund claim through your return.

When an NRI must file in India

You must file if your Indian income exceeds the basic exemption limit, and you should file even below it when:

• TDS was deducted and you want it back — the return is the only refund mechanism.
• You have capital losses to carry forward. Late filing forfeits them.
• You are claiming treaty relief on income already taxed.

Note that NRIs cannot use certain simplified return forms and are generally excluded from some presumptive schemes. Pick the right form — filing on the wrong one creates a defective return. See the ITR filing guide for the process.

Indian property, rent and the buyer's obligations

Property is where most NRIs have their remaining Indian exposure, and it carries obligations in both directions.

If you own and let property in India, the rent is Indian-source income and taxable here regardless of where it is paid. The standard deduction against annual value, municipal taxes paid, and interest on a home loan are all available in the same way as for a resident. Your tenant, if the rent crosses the threshold, is required to deduct tax before paying you — and a great many individual tenants simply do not know this, which leaves the NRI landlord with an unreported gap.

If you are selling, the buyer's deduction obligation is the thing to plan for. Deduction from a non-resident seller is at a materially higher rate than from a resident, and computed on the sale consideration rather than the gain. On a property where your actual gain is modest — or nil, or a loss — the amount withheld can still be very large.

The fix is a lower or nil deduction certificate obtained before the transaction, which authorises the buyer to deduct at a rate reflecting your real liability. It takes time to obtain, so start it while negotiating rather than at registration. Without it, the money is recoverable only through a return filed after the financial year ends.

Mistakes that recur

• Not converting resident accounts. On becoming an NRI, existing resident savings accounts should be redesignated. Continuing to operate them is a compliance problem quite apart from the tax treatment.
• Assuming citizenship decides status. It does not. Only the day count does.
• Forgetting the year of transition. The year you leave, or return, is frequently a part-resident year with mixed treatment. It needs its own computation, not an assumption carried over from the prior year.
• Not filing because tax was already deducted. If deduction exceeded liability, the only way to recover the difference is to file.
• Missing foreign asset disclosure once resident. The reporting obligation on foreign assets is separate from the tax charge, and the consequences of omission are disproportionate to the amounts often involved.

Getting money out

From an NRE account, freely — principal and interest, no cap.

From an NRO account, up to a prescribed annual limit, and the bank will require certification from a chartered accountant confirming taxes have been paid on the funds. The paperwork is routine but not instant; if you have a deadline, start early and confirm the current limit and forms with your bank rather than relying on a figure you read somewhere.

Sale proceeds of inherited property have their own conditions, and a genuinely large repatriation may need specific approval. That is the point at which NRI taxation stops being a DIY exercise and a professional is worth the fee.