If you are a Non-Resident Indian (NRI), your tax obligations in India depend on what kind of income you earn here — not your citizenship. This comprehensive guide covers NRI income tax filing for AY 2026–27 (FY 2025–26), including which incomes are taxable, the correct ITR form, DTAA relief, and how to avoid double taxation.
Step 1: Determine Your Residential Status
Residential status is determined each financial year under the Income Tax Act. You are a Resident Indian if: (a) you spent 182+ days in India during the FY, OR (b) spent 60+ days in FY AND 365+ days in the preceding 4 FYs. An NRI is anyone who does not meet the Resident criteria. Special rule: Indian citizens or POIs working in foreign countries are NRI if they were outside India for employment purposes.
What Income is Taxable in India for NRIs?
| Income Source | Taxable in India? | Notes |
|---|---|---|
| Salary earned while in India (physically working in India) | Yes | TDS deducted by employer |
| Salary credited to Indian bank account for work done abroad | No | Not Indian-sourced income |
| Rental income from Indian property | Yes | After 30% standard deduction |
| Capital gains on Indian shares / mutual funds | Yes | LTCG/STCG rates apply; TDS by broker |
| Capital gains on property in India | Yes | TDS of 20% by buyer |
| Interest on NRE (Non-Resident External) accounts | Exempt | Tax-free — no ITR required for this |
| Interest on NRO (Non-Resident Ordinary) accounts | Yes — at 30% flat | TDS of 30% deducted by bank |
| FCNR (B) deposit interest | Exempt | Tax-free under Indian law |
| Dividends from Indian companies | Yes — 20% TDS (may claim DTAA) | Report in ITR if DTAA relief claimed |
| Pension from Indian employer | Yes | Taxed as salary |
Which ITR Form for NRIs?
NRIs cannot file ITR-1 (Sahaj). Correct forms: ITR-2 (for NRIs with capital gains, multiple properties, or foreign assets — most common for NRIs), ITR-3 (if business income or F&O in India), ITR-4 (if presumptive business income in India — rare for NRIs). Most NRIs with Indian income will file ITR-2.
Double Tax Avoidance Agreement (DTAA) Relief
India has DTAA with 90+ countries including USA, UK, UAE, Singapore, Canada, Australia, Germany. Under DTAA, you can avoid paying tax on the same income in both countries. Two methods: Exemption method (income exempt in one country) or Credit method (tax paid in one country credited in the other). To claim DTAA: submit Form 10F on the income tax portal, Tax Residency Certificate (TRC) from your country of residence, and declare the benefit in your ITR.
NRI TDS Rates (Higher Than Resident Rates)
| Income Type | TDS Rate for NRIs | Notes |
|---|---|---|
| Interest on NRO account | 30% + surcharge + cess | Can claim DTAA relief |
| Property sale proceeds | 20% on LTCG / 30% on STCG | Buyer must deduct TDS |
| Dividend from Indian company | 20% (reduced under DTAA) | Lower rates under DTAA available |
| Equity MF capital gains (LTCG) | 12.5% (same as resident) | No DTAA benefit needed |
| Salary in India | As per slab (new/old regime) | Same as resident employee |
NRI ITR Filing Deadline
Same as resident — July 31, 2026 for non-audit cases. However, if your only Indian income is from an NRO account with TDS already deducted at 30%, you technically don't need to file. But filing is recommended if: TDS was deducted at 30% but actual tax is lower (due to DTAA) — you can claim refund only by filing ITR.
NRI Repatriation and Form 15CA/15CB
When an NRI repatriates money from NRO to foreign account exceeding USD 1 million per year, Form 15CA (self-declaration) and Form 15CB (CA certificate) must be filed on the income tax portal. Form 15CB certifies that applicable taxes have been paid/deducted. This is a commonly missed compliance requirement for NRIs repatriating sale proceeds of Indian property.