Check the income tax slabs for NRIs to compute the tax liability and file returns seamlessly.
Filing your Income Tax Return (ITR) is a crucial financial and legal responsibility. It applies not only to residents of the country but also to Non-resident Indians (NRIs) generating their income in India.
The Income Tax Act of 1961 has laid down specific rules and procedures for filing ITR for NRIs. It enables them to claim tax refunds, carry forward losses, and get documentation for visa and loan applications.
Like other taxpayers, comprehending the structure of taxation is crucial for Non-Resident Indians. Check out the income tax slab rates for ITR filing for NRI under the old tax regime-
Income Tax Slab |
Income Tax Rate |
Up to ₹2.5 Lakhs |
Nil |
From ₹2,50,001 to ₹5 Lakhs |
5% above ₹2.5 Lakhs |
From ₹5,00,001 to ₹10 Lakhs |
₹12,500 + 20% above ₹5 Lakhs |
Above ₹10 Lakhs |
₹1,12,500 + 30% above ₹10 Lakhs |
The following are the tax slab rates under the new tax regime for NRIs-
Income Tax Slab |
Income Tax Rate |
Up to ₹3 Lakhs |
Nil |
From ₹3,00,001 to ₹6 Lakhs |
5% |
From ₹6,00,001 to ₹9 Lakhs |
10% |
From ₹9,00,001 to ₹12 Lakhs |
15% |
From ₹12,00,001 to ₹15 Lakhs |
20% |
Above ₹15 Lakhs |
30% |
It is crucial to understand the types of income that are subject to Indian tax regulations. This will enable you to make informed decisions regarding your tax obligations. Check out the taxable income sources for NRIs below-
Income from Salary
Salary received for services provided in India or if you get salary directly in a bank account held in India.
Income from Capital Gains
Any income that is received on transferring capital assets located in India.
Income from House Property
Any income earned from residential property located in India.
Income from Business and Profession
Any income earned from a business or professional set-up in India.
Income from Other Sources
Income earned from fixed deposits, savings accounts, or other sources.
Optimising their investment portfolio for tax benefits could be a significant driver of financial growth for NRIs. The following investments qualify for special treatment when filing Income Tax Returns for NRIs-
Shares of public or private companies in India
Debentures issued by publicly listed companies in the country
Deposits held in banks or public companies in India
Securities issued by the Government of India
Other assets of the central government mentioned in the official gazette for this purpose
Tax benefits available under the Income Tax Act of 1961 can significantly reduce your tax liabilities. Check out the following table to learn about the deductions and exemptions available when filing ITR for NRIs-
Exemptions |
Deductions |
Long-term Capital Gains (LTCG) from the sale of house property in the country under Section 54 |
Investments in Unit-linked Insurance Plans (ULIPs), Equity-linked Savings Scheme (ELSS), and more under Section 80C |
LTCG from equity shares and equity mutual funds in India |
A deduction of up to ₹10,000 on interest earned from NRO savings account under Section 80TTA |
LTCG from the sale of any capital asset other than a house property under Section 54F |
Donations made to social services under Section 80G |
Any interest earned from NRE or FCNR accounts |
Interest on education loan under Section 80E |
Bonds issued by the Rural Electrification Corporation (REC) or the National Highway Authority of India (NHAI) |
Premiums paid for health insurance under Section 80D |
As mentioned earlier, Non-resident Indians enjoy certain tax exemptions in India. However, they cannot claim the following deductions-
Investments in PPF accounts, National Savings Certificates (NSCs), post office 5-year deposit scheme, and Senior Citizen Savings Scheme (SCSS) under Section 80C
Deductions for the differently-abled under Sections 80U and 80DDB
The specific manner in which tax liabilities of various entities are calculated can vary considerably. Check out how the tax liabilities of different entities are computed below-
Resident Individual on a Temporary Foreign Assignment
The income of such a resident will be taxed in India provided that-
They have not spent more than 182 days abroad
The income was directly credited to their account in India
Resident Individual Who Recently Moved to a Foreign Country
Such an individual will pay taxes in India if they receive or collect income in India from FD investment or any other source.
Living Abroad
Such an individual has to pay taxes in India only if their gross income from investment, house property, and other sources exceeds the exemption limit.
NRI Who Recently Moved Back to India
Non-resident Indians can get RNOR (Resident, Non-Ordinary Resident) status if-
They have been an NRI for 9 out of the last 10 financial years
They have resided in India for 2 years or less in the past 7 financial years
Resident with Global Income
If you are a resident of India, your global income will be taxed in the country.
Frequently Asked Questions
How can NRIs avoid double taxation?
You can avoid double taxation by taking the benefit of the Double Tax Avoidance Agreement (DTAA) when filing ITR for NRIs.
How do I determine my residential status?
You will be considered a resident of India if you have spent 182 days in the country in the year before. You will also be considered a resident if you have spent 60 days in India in the year before and 365 days in the last 4 years.
Is my income earned abroad taxable?
As per a ruling of the Income Tax Appellate Tribunal (ITAT), income earned by NRI for services rendered abroad cannot be subjected to taxation in India.
Am I required to file my income tax return in India?
If you generate any income in India, you will have to file an ITR for NRIs.
Do NRIs have to pay advance tax?
Yes, they have to pay advance tax if their tax liabilities exceed ₹10,000 in a financial year.
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