NRI Tax Calculator

NRI Tax Rules in India

Non-Resident Indians (NRIs) are taxed differently from resident Indians under the Income Tax Act, 1961. An individual's residential status is determined based on the number of days spent in India during a financial year. If you stay in India for less than 182 days in a financial year, you qualify as an NRI for tax purposes.

NRIs are taxed only on income that is earned in or received in India. This includes salary for services rendered in India, rental income from Indian property, capital gains from sale of Indian assets, and interest from NRO (Non-Resident Ordinary) deposits. Income earned abroad and remitted to India is generally not taxable for NRIs.

Unlike resident Indians, NRIs do not get the benefit of basic exemption limit of ₹2.5 lakh for certain incomes like capital gains. The entire income is taxed at the applicable slab rate. However, NRIs can claim deductions under Chapter VI-A (like Section 80C, 80D) for investments made in India.

DTAA — Double Taxation Avoidance Agreement

India has signed DTAA treaties with over 90 countries to prevent double taxation of income. Under DTAA, NRIs can avail of either the Exemption Method (income taxed only in one country) or the Tax Credit Method (tax paid in one country is credited against tax liability in the other).

To claim DTAA benefits, NRIs must provide a Tax Residency Certificate (TRC) issued by the tax authorities of their country of residence. They also need to submit Form 10F and a self-declaration. DTAA typically reduces TDS rates on interest, dividends, royalties, and fees for technical services.

Section 195 — TDS on Payments to NRIs

Section 195 of the Income Tax Act mandates that any person making a payment to an NRI (which is chargeable to tax in India) must deduct TDS at the applicable rate before making the payment. This applies to salary, rent, capital gains, interest, and other income types.

The payer is responsible for deducting TDS and depositing it with the government. The NRI can then claim credit for the TDS deducted while filing their Income Tax Return (ITR). If excess TDS has been deducted, the NRI can claim a refund.

NRI ITR Filing

NRIs must file ITR in India if their total income (before deductions) exceeds ₹2.5 lakh in a financial year. The ITR filing deadline is typically July 31 for NRIs who don't need audit. NRIs should use ITR-2 (for salary, capital gains, rental income) or ITR-3 (for business income).

NRIs can file ITR online on the Income Tax e-Filing portal (incometax.gov.in). They need a PAN (Permanent Account Number) and must report all Indian income, claim DTAA relief, and report TDS credits. Filing ITR is also necessary to claim refund of excess TDS deducted.