NRI taxation in India — the 2026 framework

NRI taxation in India runs on two axes: residential status under Section 6 of the Income Tax Act (which decides what income India can tax) and rate and reporting under the rest of the Act (which decides how much and how). Get the residential status wrong and everything else unravels; get it right and the downstream TDS, DTAA and filing mechanics follow cleanly. This page is the 2026 NRI-taxation guide — who is an NRI for tax, what is taxable, at what rate, with what paperwork.

Residential status — Section 6

Indian tax residency turns on day-count in India in the financial year (April 1 to March 31) and in preceding years. Four possible statuses:

Resident and Ordinarily Resident (ROR)

Taxable in India on worldwide income.

An individual is Resident for an FY if either:

182 or more days in India in the FY, or
60 or more days in the FY AND 365 or more days across the preceding 4 FYs combined.

Further, to be Ordinarily Resident (not RNOR), the person must also satisfy:

Resident in India in at least 2 of the 10 preceding FYs, AND
In India for 730 or more days in the 7 preceding FYs.

Resident but Not Ordinarily Resident (RNOR)

Taxable in India on Indian-source income and on income from a business controlled in or profession set up in India. Foreign income generally outside the net.

An individual is RNOR if they are Resident (either test above) but do not meet the ordinarily-resident conditions — i.e., they were non-resident in 9+ of the preceding 10 FYs, or in India less than 730 days in the preceding 7 FYs.

Non-Resident (NRI)

Taxable in India on Indian-source income only.

An individual is Non-Resident if they fail both resident tests for the FY.

The Indian-citizen / PIO variations — the 120-day

and deemed-resident rules

Two modifications of the basic rules target Indian citizens / PIOs who spend time in India:

120-day rule (FY 2020–21 onwards): for an Indian citizen or PIO visiting India whose Indian-source income exceeds ₹15 lakh in the FY, the 60-day threshold in the second residence test becomes 120 days (tightened from the previous 182-day visitor carve-out). Below ₹15 lakh Indian income, the visitor's threshold remains 182 days.
Deemed resident rule (Section 6(1A), from FY 2020–21): an Indian citizen with Indian- source income > ₹15 lakh who is not tax- resident in any other country is deemed resident in India, regardless of day count. This rule targets "stateless" tax residents who parked themselves in zero-tax jurisdictions. A deemed resident is treated as RNOR.

Visitor thresholds summary

Status of visitor	Day threshold
Indian citizen / PIO visiting, Indian income ≤ ₹15 lakh	182 days
Indian citizen / PIO visiting, Indian income > ₹15 lakh	120 days
Indian citizen / PIO going abroad for employment (emigrating in the FY)	182 days
Ordinary non-resident (other foreigners)	60 days plus 365-in-4-years

For the full residency framework and the returning-NRI RNOR window, see tax residence in India.

What is "Indian-source income"

For NRIs, taxability in India follows the source principle:

Salary earned for services rendered in India.
Salary from Indian government for services performed abroad (Indian government employee abroad).
Rental income from immovable property situated in India.
Capital gains on sale of Indian assets — property, securities, mutual fund units.
Interest on NRO account deposits.
Interest on Indian-domestic securities / bonds / fixed deposits (where applicable).
Dividends from Indian companies.
Income from business controlled in India or profession set up in India.
Royalties / fees for technical services paid by Indian payers.

Specifically not taxable for NRIs:

Interest on NRE account — exempt under Section 10(4)(ii).
Interest on FCNR deposits — exempt under Section 10(15)(iv).
Foreign employment income, foreign rent, foreign capital gains — not Indian-source, not in the NRI tax net.

RNOR gets a slightly broader exemption than ROR (foreign income outside the net) but the Indian-source rules mirror the NRI treatment.

Tax rates for FY 2025–26 (AY 2026–27)

The two-regime choice

India runs two parallel personal-tax regimes:

New tax regime (default from FY 2023–24) — lower slabs, standard deduction but most Chapter VI-A deductions not available.
Old tax regime — higher slabs but full access to Section 80C, 80D, HRA, LTA and other deductions.

NRIs file under whichever regime produces the lower liability; most NRIs without deduction-heavy profiles find the new regime wins.

New regime slabs (FY 2025–26, NRI)

Income	Rate
Up to ₹3,00,000	Nil
₹3,00,001 – ₹7,00,000	5%
₹7,00,001 – ₹10,00,000	10%
₹10,00,001 – ₹12,00,000	15%
₹12,00,001 – ₹15,00,000	20%
Above ₹15,00,000	30%

Standard deduction of ₹75,000 on salary income (new regime, post-2024 Budget).

Section 87A rebate — residents with income up to ₹7 lakh get rebate effectively making tax nil. Not available to NRIs.

Old regime slabs

Income	Rate
Up to ₹2,50,000	Nil
₹2,50,001 – ₹5,00,000	5%
₹5,00,001 – ₹10,00,000	20%
Above ₹10,00,000	30%

Standard deduction of ₹50,000 on salary (old regime).

Surcharge and cess

On top of base tax:

Income > ₹50 lakh: 10% surcharge.
Income > ₹1 crore: 15% surcharge.
Income > ₹2 crore: 25% surcharge (capped at 15% in new regime).
Income > ₹5 crore: 37% surcharge (old regime); 25% (new regime).
Health and Education Cess: 4% on tax + surcharge, applies uniformly.

Senior and super-senior exemptions — not for NRIs

Residents aged 60+ enjoy a higher basic exemption (₹3 lakh / ₹5 lakh for super-senior 80+). Senior citizens who are non-resident do NOT get this enhancement — the NRI basic exemption remains at ₹2.5 lakh (old regime) / ₹3 lakh (new regime) regardless of age.

Capital gains — the post-July-2024 regime

The Finance (No. 2) Act 2024 made significant changes effective 23 July 2024:

Listed equity (shares, equity MF units, ETFs)

Short-term capital gains (STCG) — held ≤ 12 months. 20% rate (up from 15% pre-Budget 2024) + surcharge + cess.
Long-term capital gains (LTCG) — held > 12 months. 12.5% rate on gains above ₹1.25 lakh per FY (up from 10% and ₹1 lakh respectively) + surcharge + cess. No indexation.

Immovable property (land, flat, house)

STCG — held ≤ 24 months. At slab rates.
LTCG — held > 24 months. Two options for property acquired before 23 July 2024:
- 12.5% without indexation, or
- 20% with indexation (the old regime preserved as an option). Taxpayer picks whichever is lower.
For property acquired on or after 23 July 2024 — 12.5% without indexation only.

Other assets (gold, unlisted shares, debt MF

acquired before 1 April 2023, debt bonds, etc.)

Debt mutual funds acquired on or after 1 April 2023 — no LTCG treatment; all gains are STCG at slab rates regardless of holding period.
**Debt MF acquired before 1 April 2023 and held

24 months** — LTCG at 12.5% without indexation.
Physical gold / listed non-equity assets — LTCG at 12.5% without indexation (post 2024 Budget).
Unlisted shares / other assets — LTCG at 12.5% without indexation.

Section 54 / 54F / 54EC reinvestment exemptions

NRIs get the same reinvestment exemptions as residents on LTCG on property:

Section 54 — purchase/construct a residential property within specified timelines; LTCG deferred/exempted up to invested amount.
Section 54F — sale of any long-term asset (other than residential property) with reinvestment in residential property — similar exemption with proportional rules.
Section 54EC — investment in specified bonds (REC, NHAI, IRFC, PFC) within 6 months of sale; up to ₹50 lakh exempt. 5-year lock-in.

TDS on NRI income — Section 195

Indian payers deducting TDS on payments to NRIs use Section 195, not the resident-TDS sections.

Key rates (2026):

Income	Rate (TDS)
NRO account interest	30% + surcharge + cess
Dividend from Indian company	20% + surcharge + cess (statutory; treaty typically lower)
Rental income to NRI landlord	30% + surcharge + cess (higher rate)
LTCG on listed equity	12.5% + surcharge + cess (post July 2024)
LTCG on other assets incl. property	12.5% (post July 2024) + surcharge + cess
STCG on listed equity	20% + surcharge + cess
STCG on other assets	30% + surcharge + cess (or slab)
Professional fees / technical services	10% or DTAA rate
NRE / FCNR interest	Nil (exempt)

Section 206AA — no PAN, 20% floor

Without a valid PAN on file with the payer, TDS defaults to 20% minimum — eliminating treaty benefits and elevating the rate on low-rate items (10% NRO interest jumps to 20%). See PAN for NRIs and PAN without Aadhaar.

Section 197 — Lower-Deduction Certificate

NRIs whose actual tax liability is lower than the default TDS rate can apply to the jurisdictional Assessing Officer for a Lower-Deduction Certificate. Common use:

Property sale where capital gain is less than consideration (only the gain portion is taxable).
DTAA rate is materially lower than domestic.
NRO interest beneficiary has income below exemption threshold.

The certificate is issued for a specified period and amount; the payer withholds at the reduced rate against it.

Deductions available to NRIs

Under the old regime

Section 80C (₹1.5 lakh cap) — LIC premiums, ELSS equity mutual funds, tuition fees for children in India, home-loan principal repayment.
- Not available: PPF (new PPF accounts not permitted to NRIs; existing ones continue to maturity), NSC, Sukanya Samriddhi, SCSS, 5-year bank FD, Post Office deposits.
Section 80CCD(1B) — additional ₹50,000 on NPS contribution (NRIs can contribute to NPS).
Section 80D — health insurance premium (₹25,000 for self + family, ₹50,000 for senior parents).
Section 80E — interest on education loan.
Section 80G — donations to approved charities.
Section 80TTA — ₹10,000 deduction on savings bank interest. Available only to residents; not available to NRIs.
Section 80TTB — ₹50,000 deduction on senior citizens' interest income. Not available to NRIs.
Section 24(b) — interest on home loan against rental property (up to ₹2 lakh for self-occupied; unlimited for let-out, with carry-forward of loss).

Under the new regime

Standard deduction ₹75,000 on salary.
Section 80CCD(2) — employer NPS contribution.
Section 87A rebate — residents only; not NRIs.
Most other deductions (80C, 80D, 80G, 80E, HRA, LTA) are unavailable in the new regime.

For property-specific deductions on rental income and capital gains, see US NRI property in India and NRI property and FATCA.

DTAA benefits — the three-document stack

India's Double Taxation Avoidance Agreements with most countries allow NRIs to claim treaty rates on specific income types (typically dividends, interest, royalties, technical fees, pension, capital gains on securities), often lower than domestic rates.

To access the treaty rate, the NRI must provide the Indian payer (or the AO) with:

PAN — operative, with NRI status on record.
Tax Residency Certificate (TRC) from the country of residence for the relevant year.
Form 10F filed electronically on the Income Tax e-Filing portal (mandatory electronic from July 2022).

Add a self-declaration confirming no permanent establishment in India, beneficial ownership of the income, and absence of treaty-shopping structures.

Without the stack, Indian-side TDS defaults to domestic or Section 206AA rates. For the US-India pension specifics see Indian pension and the US DTAA. For the DTAA framework generally, see DTAA and how it works.

Filing obligation — when must an NRI file an

Indian return

An NRI must file if any of:

Gross Indian-source income exceeds the basic exemption (₹2,50,000 old regime / ₹3,00,000 new regime) before claiming any deductions or rebates.
TDS was deducted and the NRI wants a refund of over-withholding.
Capital gains arose on sale of Indian assets, regardless of amount.
Claiming DTAA relief that requires return- filing reconciliation.
Application for Lower-Deduction Certificate under Section 197 requires matching return filing.
Significant foreign-asset disclosure required (applies to ROR, not NRI; RNOR exempt from Schedule FA).

NRI with only NRE / FCNR interest — generally no filing obligation (interest is exempt).

NRI with NRO interest + rental + capital gains — filing usually worthwhile to reconcile TDS against actual liability and claim refunds.

Which ITR form

NRI situation	Form
Only salary / pension / rental / one house property / interest / LTCG up to ₹1.25 lakh on equity	ITR-1 (Sahaj) — not available to NRIs since AY 2018–19
Salary / rent / multiple properties / capital gains / foreign assets	ITR-2
NRI with business income / profession income	ITR-3
Presumptive business income under Section 44AD / 44ADA	ITR-4 (Sugam) — not available to NRIs

Most NRIs use ITR-2. ITR-3 is used by NRIs with Indian business / professional income.

Due dates

For AY 2026–27 (FY 2025–26):

Non-audit returns: 31 July 2026 (historically extended; watch CBDT notifications).
Audit cases: 31 October 2026.
Transfer-pricing cases: 30 November 2026.
Belated return: up to 31 December 2026 with Section 234F penalty.
Updated return (ITR-U): up to 2 years from end of AY, on additional-tax payment.

Section 234F late-filing penalty

₹5,000 if filed after due date but before 31 December of AY.
₹1,000 if gross total income does not exceed ₹5 lakh.

Refund mechanics

Excess TDS / advance tax is refunded by the Income Tax Department after return processing:

Direct credit to the bank account listed in the return — NRO account for NRIs.
Interest on refund — 0.5% per month from 1 April of AY to the date of refund (under Section 244A).
Typical timeline — 2 to 6 months for processed returns.
Pre-validation of the bank account on the e-Filing portal is required before refund issues.

Special-case mechanics

NRI property sale — the common big transaction

Section 195 TDS on full sale consideration at LTCG rate (12.5% post July 2024).
Section 197 certificate to bring TDS to actual tax liability.
Section 54 / 54F / 54EC reinvestment exemptions.
Indian return filing to reconcile TDS and claim refund / excess.
Repatriation via Form 15CA / 15CB within the USD 1 million per FY NRO ceiling. See transferring funds from India.

NRI pension / rent / interest

TDS under Section 195 at applicable rate.
Return filing optional if TDS equals final liability.
Return-filing practical for reconciliation.
For Indian pensions paid to NRIs, see receiving an Indian pension abroad.

NRI with Indian employment

Employer applies Section 192 TDS (same as resident employees — slab rates after standard deduction).
NRI files return to reconcile.
If NRI qualifies as ordinarily resident after the FY — reclassification may affect the liability.

Significant Economic Presence (SEP)

Non-residents with substantial Indian business footprint (revenue > ₹2 crore from Indian transactions in goods / services / property, OR systematic interaction with > 3 lakh Indian users) are deemed to have a business connection in India under Section 9(1)(i). Relevant for e-commerce / digital services companies, not typically for individual NRIs.

Common pitfalls

Assuming "NRI" is one thing. It's not — residential status for FEMA and Income Tax Act diverge. A 182-day Indian-tax-resident can still be FEMA-non-resident, or vice versa. See tax residence in India for the separate rules.
Forgetting the 120-day tightening for Indian citizens with Indian income > ₹15 lakh visiting India. The old 182-day visitor carve-out is narrower.
Claiming Section 87A rebate or senior citizen exemption as an NRI. Neither is available.
Filing ITR-1 / ITR-4 — not available to NRIs since AY 2018–19.
Forgetting NRE interest exemption. Many NRIs include NRE interest in taxable income and pay unnecessary tax.
Taxing foreign income as an NRI. NRI status specifically excludes foreign income. Confusion is usually because the person was actually RNOR or ROR.
Missing DTAA paperwork. PAN + TRC + Form 10F all three required; missing any one defaults to domestic rate.
Section 206AA 20% floor without PAN — common on property sales and NRO interest.
No return filing when TDS is higher than actual liability. Refunds do not issue automatically; filing is required.
Filing late without belated-return allowance — Section 234F penalty applies.
Assuming senior residents' 80TTB bank-interest deduction applies to NRI senior citizens. It does not.
Mixing up calendar year and financial year. India's FY is April–March; January calendar arithmetic doesn't translate directly.
Ignoring Schedule FA on transition to ROR. On becoming ordinarily resident, foreign assets become reportable on the Indian return.

Checklist — an NRI's Indian tax year

Track day count in India and preceding four years; know your residential status for the FY early.
Check Indian-income threshold — crossing ₹15 lakh tightens the visitor rule.
Confirm PAN is operative — NRI status on record; no Aadhaar-linkage-inoperative flag.
Reconcile all TDS — Form 26AS and AIS downloads on incometax.gov.in.
For DTAA-rate income, obtain TRC for the year and file Form 10F electronically.
Identify the right ITR form — ITR-2 for most; ITR-3 if Indian business / professional income.
Choose old vs new regime by comparing projected liabilities.
Claim applicable deductions (old regime) — Section 80C / 80D / 80E / 80G / 80CCD(1B).
File by 31 July of the AY (watch for extensions).
Pre-validate NRO account for refund.
Issue Form 16A / Form 26QB / Form 27Q downloads for third-party verification.
On sale of property, plan Section 197 certificate in advance and Section 54 / 54F / 54EC reinvestment if relevant.
On transition to ROR (typically Year 3 of India return), begin Schedule FA foreign- asset disclosure.

Summary

Residential status under Section 6 decides what is taxable — NRI pays on Indian-source income only; ROR on worldwide income; RNOR somewhere in between.
The 120-day rule and deemed-resident rule tighten the position for Indian citizens / PIOs with Indian-source income above ₹15 lakh.
NRE and FCNR interest is exempt; NRO interest, rent, capital gains, Indian business are taxable.
Post-July-2024 capital gains — 12.5% LTCG on listed equity (above ₹1.25 lakh) and on other assets; 20% STCG on listed equity.
Two parallel regimes — new regime (default, fewer deductions) vs old regime (traditional, 80C / 80D available). Pick the lower-liability one.
Section 87A rebate and senior citizen exemptions — residents only, not NRIs.
TDS under Section 195 — Section 206AA 20% floor applies without PAN, eliminating treaty benefits.
DTAA benefits require PAN + TRC + Form 10F (electronic).
ITR-2 is the standard NRI form; ITR-1 and ITR-4 are not available.
Due date 31 July of AY; belated by 31 December with penalty.

For the residential-status detail, see tax residence in India. For DTAA mechanics, see DTAA and how it works. For Indian property tax, see NRI property and FATCA. For TDS on specific NRI income types, see TDS on NRI income. For the PAN basics, see PAN for NRIs. For NRO-to-abroad repatriation, see transferring funds from India.