Quick Answer: NRIs are taxed in India only on income earned or received in India — rental income from Indian property, capital gains on Indian assets, interest from NRO accounts (30% TDS), and salary for services in India. NRE account interest is fully exempt. DTAA (Double Taxation Avoidance Agreement) may reduce tax if the NRI's country of residence has a treaty with India.
NRI Taxation in India — What You Need to Know
As an NRI, you are taxed in India only on income that accrues or arises in India. Income from foreign employment, foreign bank accounts, and overseas investments is generally not taxable in India. The key is determining your residential status correctly, as it determines your tax scope.
Residential Status Under Income Tax Act
| Status | Condition | India Tax Scope |
|---|---|---|
| Resident (ROR) | ≥182 days in India, or ≥60 days + 365 days in last 4 years | Global income taxable |
| RNOR | Returning NRI (NR in 9 of 10 preceding years) | Only India-sourced income |
| Non-Resident (NR) | Less than above thresholds | Only India-sourced income |
Frequently Asked Questions
NRIs must file ITR in India if their total India-sourced income exceeds ₹2.5 lakh, or if they want to claim a refund of TDS deducted in excess (e.g., on NRO account interest at 30%). Also required if capital gains arise on India assets.
India has DTAA with 90+ countries. Under DTAA, NRIs may pay a reduced tax rate on specific income (usually 10–15% on interest instead of 30%) or claim credit for taxes paid abroad. A Tax Residency Certificate (TRC) from your country of residence is required to claim DTAA benefits.