Are you an NRI (Non-Resident Indian) wondering how your income is taxed in India? Understanding NRI income tax rules can feel complicated, especially when your income spans multiple countries. This guide by savetaxs will help you clearly understand how NRI income tax in India works, what types of income are taxable, and how you can save tax efficiently.
Who Qualifies as an NRI?
Before diving into tax rules, it’s important to determine your residential status under the Income Tax Act, 1961.
An individual is considered a Non-Resident Indian (NRI) if:
- They have stayed in India for less than 182 days during the financial year, or
- They have stayed in India for less than 60 days in that year and less than 365 days in the preceding four years.
This classification plays a major role in deciding how your income is taxed in India.
Taxable Income for NRIs in India
As per Indian tax laws, NRIs are taxed only on income that is earned or received in India.
Here’s a breakdown of the types of income taxable for NRIs:
1. Income from Salary
If your salary is earned for services rendered in India, it is taxable in India, even if it is credited to a foreign bank account.
For example, if you work for an Indian company while staying abroad, your salary may still be taxable in India.
2. Income from House Property
Any rental income from property located in India is taxable under “Income from House Property.”
You can claim deductions such as:
- Standard deduction (30%)
- Property tax paid
- Interest on home loan
At savetaxs, we help NRIs claim all eligible deductions to minimize their tax liability.
3. Income from Capital Gains
If you sell property, shares, or other assets in India, the capital gains are taxable in India.
- Short-term or long-term capital gains depend on the holding period.
- TDS (Tax Deducted at Source) is usually applicable on these transactions.
4. Income from Investments
Interest earned on NRO accounts, fixed deposits, or bonds in India is taxable.
However, interest from NRE and FCNR accounts is tax-free for NRIs.
Income Exempt from Tax for NRIs
Some income sources are exempt from income tax for NRIs, such as:
- Interest on NRE and FCNR deposits.
- Dividends received from Indian companies (if TDS is already deducted).
- Certain types of government-issued bonds.
The experts at savetaxs can guide you through which income is tax-free and how to structure your finances to maximize exemptions.
Double Taxation Avoidance Agreement (DTAA)
One major concern for NRIs is double taxation — being taxed both in India and in the country of residence.
Thankfully, India has signed DTAA agreements with over 90 countries, including the USA, UK, UAE, Canada, and Australia, to prevent double taxation.
With DTAA, you can:
- Claim tax credit in your resident country for taxes paid in India.
- Opt for tax exemption in one country depending on the agreement.
At savetaxs, we help you understand and apply DTAA benefits so you don’t pay extra tax.
Filing Income Tax Returns (ITR) for NRIs
Even if you live abroad, you may still need to file your ITR in India if:
- Your gross income exceeds ₹2.5 lakh (before deductions).
- You have capital gains or rental income in India.
- You wish to claim a refund for TDS deducted.
Documents Required:
- PAN card
- Passport (for proof of NRI status)
- Bank account details (preferably NRO/NRE)
- Form 16 or Form 26AS
- Investment proofs
The savetaxs team simplifies the entire ITR filing process for NRIs — from calculating taxes to filing returns online — ensuring 100% compliance and accuracy.
TDS (Tax Deducted at Source) for NRIs
Most NRI income in India is subject to TDS deduction at source:
- Rental income: 30%
- Interest on NRO deposits: 30%
- Capital gains on property sale: 20% (long-term) or 30% (short-term)
You can claim refunds if the TDS deducted is higher than your actual tax liability.
With savetaxs, you can track your TDS, claim refunds, and reduce excess deductions.
Tax Saving Tips for NRIs
Here are a few smart ways NRIs can save taxes legally in India:
- Invest in NPS (National Pension System) – eligible for deduction under Section 80C.
- Claim deductions under Section 80C for life insurance, ELSS, or tuition fees.
- Use DTAA benefits to avoid double taxation.
- Repatriate funds through NRE accounts to avoid unnecessary tax.
savetaxs provides expert tax planning and advisory for NRIs to ensure your investments are tax-efficient and fully compliant with Indian laws.
You May Also Like to Read: NRI Income Tax and DTAA: A Comprehensive Guide
Conclusion
Understanding NRI income tax in India is essential to avoid penalties and make informed financial decisions. Whether it’s filing your return, claiming deductions, or applying DTAA benefits, expert assistance can save you time and money.
If you’re looking for professional NRI tax filing services, savetaxs is your trusted partner. From tax consultation to ITR filing, we ensure a seamless experience and maximum savings.
