NRI taxation · TY 2026-27
NRI Tax in India 2026: The 182-Day Rule, NRE/NRO and DTAA
You are a non-resident (NRI) for Indian tax when you spend fewer than 182 days in India in the tax year, with a stricter 60-day or 120-day test catching some frequent visitors. As an NRI, India taxes only your Indian income: salary for work done in India, rent, capital gains and NRO interest, while your foreign salary and investments stay outside. Bank accounts split the same way: NRE and FCNR interest is exempt, NRO interest is fully taxable with 30%-plus TDS taken at source.
Start here
Am I an NRI this year?
The 182-day rule, the 120-day carve-out and deemed residency, as a six-step decision flow with a checker built in.
AccountsNRE vs NRO vs FCNR
Which account's interest is exempt, which is taxed at slab with 30% TDS, and what changes the year you return.
TreatiesDTAA rates for 6 countries
Treaty ceilings on interest and dividends for the US, UK, UAE, Singapore, Canada and Australia, plus the TRC + Form 10F drill.
Step 1 · residential status
Who counts as a non-resident: the day-count rules
Everything downstream (what India can tax, which TDS rate hits you, whether a treaty helps) hangs off one classification made fresh every tax year. The tests come from Section 6 of the 1961 Act and carry into the Income-tax Act 2025; work through them in order.
- 1
182 days or more in India this tax year
Count every day you were in India during the tax year (1 April to 31 March). Hit 182 and you are a resident, whatever your passport says. Most day-count disputes are about arrival and departure days; the safe convention is to count both as days in India.
Result: Resident (go to the RNOR test in step 5)
Sec 6(1)(a), IT Act 1961 · IT Act 2025: Sec 6 †
- 2
60 days this year plus 365 days across the previous 4 years
Fewer than 182 days can still make you a resident: 60 or more days this year combined with 365 or more days in the four preceding tax years does it. Steps 3 and 4 relax this 60-day limb for two large groups, which is why most NRIs never trip it.
Result: Resident, unless step 3 or 4 lifts the 60-day limb
Sec 6(1)(c), IT Act 1961 · IT Act 2025: Sec 6 †
- 3
Left India for a job abroad, or as crew of an Indian ship: 182 replaces 60
In the year you leave India for employment abroad (or as a member of the crew of an Indian ship), the 60-day limb is replaced by 182 days. Only the simple 182-day test in step 1 can make you a resident that year.
Result: The 60+365 test does not apply; only step 1 counts
Explanation 1(a) to Sec 6(1), IT Act 1961 · IT Act 2025: Sec 6 †
- 4
Visiting NRIs: 182 days normally, 120 days if Indian income tops ₹15 lakh †
An Indian citizen or person of Indian origin who lives abroad and visits India also gets the 182-day substitution, with one carve-out added by the Finance Act 2020: if your India-sourced taxable income exceeds ₹15 lakh, the limb drops to 120 days. Spend 120 to 181 days here with ₹15 lakh+ of Indian income and you become a resident, but automatically an RNOR, so foreign income stays out of reach.
Result: Resident only from 120 days (₹15L+ Indian income), and then RNOR
Explanation 1(b) to Sec 6(1) + Sec 6(6)(c), IT Act 1961 · IT Act 2025: Sec 6 †
- 5
Deemed residency: ₹15 lakh+ Indian income and no tax home anywhere †
An Indian citizen with India-sourced taxable income above ₹15 lakh who is not liable to tax in any other country by reason of residence or domicile is deemed an Indian resident even with zero days in India. The saving grace: a deemed resident is always an RNOR, so genuinely foreign income remains untaxed. Aimed at the stateless-income arrangements some Gulf-based HNIs used.
Result: Deemed resident, always RNOR
Sec 6(1A) + Sec 6(6)(d), IT Act 1961 · IT Act 2025: Sec 6 †
- 6
Resident, but ordinarily so? The 9-of-10 and 729-day tests
A resident is 'not ordinarily resident' (RNOR) if either: they were a non-resident in 9 of the 10 preceding tax years, or they spent 729 days or fewer in India across the 7 preceding tax years. Returning NRIs typically qualify for RNOR status for their first 2 to 3 years back, which keeps foreign income (except from a business controlled in India) out of Indian tax during the transition.
Result: RNOR if either test passes; otherwise ROR
Sec 6(6), IT Act 1961 · IT Act 2025: Sec 6 †
Estimate your residential status
Estimate, not adviceNon-resident (NR)
As a visiting NRI you stayed under the day limit that applies to you.
What this tool cannot see (read before relying on it)
- Day counting itself gets disputed: the safe convention counts both arrival and departure days as days in India. Borderline counts (within 2-3 days of a limit) need a CA, not a widget.
- The 120-day and deemed-residency rules turn on 'total income other than foreign-source income' exceeding ₹15 lakh, a defined term this tool simplifies to 'Indian income'.
- 'Liable to tax' in the deemed-residency test is a contested phrase; zero-tax countries such as the UAE are exactly where it bites.
- Deemed residency applies to Indian citizens only, not to persons of Indian origin holding foreign passports.
- FEMA residency (which governs your bank accounts) follows different tests and can differ from your income-tax status in the same year.
Step 2 · scope of taxation
What each status pays tax on
Three statuses, three very different tax bases (old Section 5; the 2025 Act keeps the same scope rules). RNOR is the one worth engineering: returning NRIs get 2 to 3 years where foreign income stays out of Indian tax.
| Status | Indian income | Foreign income | Typically |
|---|---|---|---|
| Resident and ordinarily resident (ROR) | Taxable | Taxable: worldwide income, wherever earned or received | People living and working in India |
| Resident but not ordinarily resident (RNOR) | Taxable | Not taxable, except income from a business controlled in India or a profession set up in India | Returning NRIs in their first 2 to 3 years back; deemed residents |
| Non-resident (NR) | Taxable: income received in India, or accruing or arising in India | Not taxable | NRIs settled abroad who keep visits under the day limits |
Source: Income-tax Act, 1961, Section 5 (scope of total income).
Bank accounts
NRE, NRO and FCNR accounts: interest taxability and TDS
The account type decides the tax treatment before any planning starts. The pattern: foreign earnings parked in NRE or FCNR earn exempt interest; Indian earnings must flow through NRO, where interest is taxed at slab and the bank deducts 30%-plus before you see a rupee.
| Account | What it holds | Interest taxable? | TDS | Section |
|---|---|---|---|---|
| NRE (Non-Resident External) † | Rupees, from foreign earnings; principal and interest freely repatriable | Exempt while you qualify as a person resident outside India under FEMA | No TDS | Sec 10(4)(ii), IT Act 1961 · IT Act 2025 exemption schedule † |
| NRO (Non-Resident Ordinary) † | Rupees, from Indian income (rent, dividends, pension); repatriation capped | Fully taxable at slab rates | 30% + surcharge + 4% cess | Sec 195, IT Act 1961 · IT Act 2025: Sec 394 † |
| FCNR(B) (Foreign Currency Non-Resident, Bank) † | Foreign currency term deposits (1 to 5 years); no exchange-rate risk | Exempt while you are a non-resident or RNOR | No TDS | Sec 10(15)(iv)(fa), IT Act 1961 · IT Act 2025 exemption schedule † |
NRE: The exemption follows your FEMA status, not your Income-tax status. Once you return for good, the account must be redesignated and the exemption ends.
NRO: Banks deduct 31.2% (including cess) at the base level, more once surcharge applies; there is no threshold. A DTAA can cut this to 10-15% with a tax residency certificate on file.
FCNR(B): Unusually, the exemption survives into RNOR years, making FCNR deposits a favourite of returning NRIs running out their RNOR window.
TDS on non-residents
TDS when the payee is an NRI: higher rates, no thresholds
Payments to residents run through the 194-series with generous thresholds (the full resident TDS table). Payments to NRIs run through old Section 195 (Section 394 of the 2025 Act †) instead, and the two differences bite hard: there are no thresholds, so deduction starts from the first rupee, and the rates are the payee's full tax rates, not a token 1% or 10%.
| Payment to an NRI | TDS rate | Threshold | Old → new section | Notes |
|---|---|---|---|---|
| NRO account interest † | 30% + surcharge + cess | None: from the first rupee | 195 → 394 † | 31.2% including cess at the base level; DTAA rates can apply at source with a TRC. |
| Rent paid to an NRI landlord † | 30% + surcharge + cess | None: from the first rupee | 195 → 394 † | Unlike the resident rent sections, there is no ₹50,000-a-month trigger. The tenant needs a TAN and must file Form 27Q. |
| Buying property from an NRI: long-term gains (held over 24 months) † | 12.5% + surcharge + cess | None: any sale value | 195 → 394 † | The post-23-July-2024 LTCG rate. In practice buyers deduct on the full sale price unless the seller obtains a lower-deduction certificate (Form 13) fixing TDS to the actual gain. |
| Buying property from an NRI: short-term (held 24 months or less) † | 30% + surcharge + cess | None: any sale value | 195 → 394 † | Short-term property gains sit at slab rates for the seller; TDS is taken at the top rate. |
| Dividends paid to an NRI shareholder † | 20% + surcharge + cess | None: from the first rupee | 195 / 196A → 394 † | Most treaties cut this to 10-15%; the company applies the treaty rate only with a TRC on file. |
Treaty relief
DTAA relief: treaty rates for six countries
A double taxation avoidance agreement (DTAA) caps what India may withhold on specific income types and lets your home country credit the Indian tax. Relief is not automatic: hand the payer a Tax Residency Certificate (TRC) from your country plus electronic Form 10F before the payment, or the payer must apply the full domestic rate and you chase the refund through a return.
| Country | Interest | Dividends | Notes |
|---|---|---|---|
| United States † | 10% (banks) / 15% | 15% (10%+ voting stake) / 25% | US citizens and green-card holders also owe US tax on the same income; foreign tax credit reconciles. |
| United Kingdom † | 10% (banks) / 15% | 10% / 15% | Rate depends on the recipient and shareholding; check the article conditions. |
| UAE † | 5% (banks) / 12.5% | 10% | The UAE levies no personal income tax, so the deemed-residency rule (step 5 above) matters most here. |
| Singapore † | 10% (banks) / 15% | 10% (25%+ stake) / 15% | Capital-gains articles were reworked by the 2016 protocol; gains on Indian shares are now taxable in India. |
| Canada † | 15% | 15% (10%+ stake) / 25% | Canada taxes residents on worldwide income; treaty credit applies both ways. |
| Australia † | 15% | 15% | Franked Australian dividends interact with Indian tax differently; take advice before relying on credit. |
† Treaty ceilings depend on article conditions, shareholding levels and protocol amendments; every rate above is pending CA verification against the treaty text on the official DTAA page. Where the domestic rate is lower than the treaty rate, the lower one applies.
Property sales
Selling property in India as an NRI: TDS, exemptions, repatriation
Three separate problems, usually confused into one. First, TDS is not your final tax: the buyer deducts at the capital-gains rate on the sale (see the table above), but your actual liability is computed on the gain under the capital gains rules (12.5% long-term after 24 months, slab rates short-term), and the return settles the difference. Second, the reinvestment exemptions below can cut the gain itself, sometimes to zero. Third, moving the money abroad is a FEMA question, separate from both.
Reinvest in a house (sold a house)
Old Sec 54 exemption †
Buy within 2 years (or 1 year before), or build within 3 years; the reinvested gain escapes LTCG tax. Cost cap of ₹10 crore on the new house.
Reinvest in a house (sold any other asset)
Old Sec 54F exemption †
Invest the full sale proceeds (not just the gain) in one residential house in India; proportionate exemption if you invest less.
Reinvest in bonds
Old Sec 54EC: ₹50 lakh cap †
NHAI/REC-class capital-gains bonds within 6 months of sale, locked in for 5 years. Caps at ₹50 lakh per financial year.
Repatriation ceiling from NRO
USD 1 million per financial year †
Sale proceeds sitting in an NRO account can be remitted up to USD 1 million per financial year, with Form 15CA and a CA-certified Form 15CB evidencing that tax was paid.
Buying rather than selling? Stamp duty and registration charges apply the same to NRIs as to residents; the state-wise stamp duty table has every major state.
Filing
ITR essentials for NRIs: which form, when, and when it's mandatory
Which form
ITR-2 (ITR-3 with business income)
ITR-1 Sahaj is for residents only; an NRI cannot use it even for pure salary income. ITR-2 covers salary, house property and capital gains; business or professional income moves you to ITR-3.
Due date
31 July (non-audit) / 31 October (audit)
Same calendar as residents. A belated return stays possible until 31 December with a late fee.
Filing is mandatory when
Income above the basic exemption
Gross total income above ₹2,50,000 (old regime) or ₹4,00,000 (new regime first slab) requires a return. NRIs do not get the higher senior-citizen exemption limits under the old regime.
Mandatory even below the threshold
High-value transaction triggers †
Deposits of ₹1 crore+ in current accounts, foreign travel spend above ₹2 lakh, or electricity bills above ₹1 lakh in a year force a return regardless of income. Filing is also the only way to claim back excess 30% TDS on NRO interest.
The full deadline calendar, including advance tax instalments that apply to NRIs with Indian income, is on the due dates page. Not sure which form fits? The ITR form finder asks two questions and answers it.
Common NRI tax questions
Do I pay Indian tax on my US or Gulf salary?
Not if you are a non-resident and the work is done abroad: foreign salary for services rendered outside India is outside Indian tax for an NR. It changes when you become ROR (worldwide income becomes taxable) or if the salary is received directly into an Indian account for services rendered in India.
Is interest on my NRE account taxable in India?
No, NRE interest is exempt (old Section 10(4)(ii)) for as long as you qualify as a person resident outside India under FEMA, and banks deduct no TDS on it. NRO interest is the opposite: fully taxable with 30%-plus TDS at source.
What happens in the year I return to India for good?
Your status for that year still follows the day counts: return after 2 October (fewer than 182 days left in the tax year) and you usually stay NR for one more year. After that, the RNOR tests (non-resident in 9 of the previous 10 years, or 729 days or fewer in the previous 7) typically shelter your foreign income for 2 to 3 transition years. Redesignate NRE/NRO accounts once FEMA residency changes.
Does the ₹12 lakh zero-tax rebate apply to NRIs?
No. The Section 156 rebate (old 87A) is for resident individuals only. An NRI starts paying tax from the first slab above ₹4,00,000 under the new regime, even when a resident with identical income would pay nothing.
The bank already cut 30% TDS on my NRO interest. Do I still file a return?
Usually yes, and usually to your benefit. TDS at 31.2% is rarely your true liability; if your total Indian income is modest, filing is the only way to get the excess refunded. Filing is mandatory anyway once income crosses the basic exemption.
Can NRIs claim Section 80C deductions?
Yes, under the old regime: life insurance premiums, ELSS mutual funds, home-loan principal and children's tuition in India all count within the ₹1.5 lakh cap. NRIs cannot open new PPF or Senior Citizens Savings Scheme accounts, though an existing PPF can run to maturity.
I am buying a flat from an NRI seller. The seller says deduct 1% like normal. Who is right?
You are not: the resident 1% rule (old Section 194-IA) does not apply when the seller is an NRI. You must obtain a TAN and deduct under old Section 195 at the capital-gains rate (12.5% plus surcharge and cess for long-term holdings) on the full sale price, unless the seller hands you a lower-deduction certificate (Form 13) that fixes a smaller amount. Getting this wrong makes you, the buyer, liable for the shortfall.
How do I actually claim a DTAA rate?
Two documents before the payment: a Tax Residency Certificate (TRC) from your country of residence, plus electronic Form 10F on the Indian portal. Without them the payer must deduct at the full domestic rate and you are left claiming the difference through a return.
† Pending CA verification against the primary source (treaty texts, Finance Act rate schedules and the Income-tax Act 2025 section mapping). Figures so marked follow the widely applied reading of the law but have not yet been signed off by our chartered accountant reviewer. How verification works.