An individual is resident in India for a tax year if they stay 182 days or more, or 60 days or more plus 365 days in the four preceding years. For Indian citizens and persons of Indian origin visiting India, the 60-day test is replaced by 182 days, or by 120 days if their Indian income exceeds ₹15 lakh. A non-resident is taxed only on income earned or received in India. Interest on NRE and FCNR deposits is exempt; NRO interest, rent and capital gains are taxable.
- Law
- Income-tax Act 2025, from 1 April 2026
- Main test
- 182 days in the tax year
- Higher-income test
- 120 days if Indian income above ₹15 lakh
- Treaty relief
- TRC plus Form 10F
The Income-tax Act 2025
The Income-tax Act 2025 replaced the Income-tax Act 1961 from 1 April 2026. It simplifies language and replaces the old "previous year" and "assessment year" with a single "tax year". The core rules for NRIs, including the residency tests, the scope of income taxed and treaty relief, have been carried forward in substance, but section numbers have changed. Income earned up to 31 March 2026 is still assessed under the 1961 Act, so returns filed during 2026 for the 2025-26 year follow the old law. We cite the correct provision for the year in every filing and reply.
Working out your residential status
Residency is tested afresh each tax year, and the result decides what India can tax.
| Test | Result |
|---|---|
| In India 182 days or more in the tax year | Resident |
| In India 60 days or more and 365 days or more in the previous four years | Resident, but for Indian citizens and persons of Indian origin visiting India the 60 days becomes 182 |
| Indian citizen or PIO visiting, Indian income above ₹15 lakh, 120 days or more plus 365 days in previous four years | Resident but not ordinarily resident (RNOR) |
| Indian citizen with Indian income above ₹15 lakh, not liable to tax in any other country by residence or domicile | Deemed resident, treated as RNOR |
| None of the above | Non-resident |
Indian citizens who leave India for employment abroad, and crew members of Indian ships, are tested on 182 days in the year they leave. The deemed residency rule mainly affects Indians living in countries without personal income tax, such as the UAE, who have substantial Indian income. Income from foreign sources is not taxed in India for an RNOR unless it comes from a business controlled or profession set up in India, which makes the RNOR years valuable for returning NRIs.
Note that tax residency and FEMA residency are different tests. Your bank accounts are governed by FEMA; see FEMA compliance for NRIs.
What India taxes for a non-resident
- Bank interest. Interest on NRE and FCNR deposits is exempt while you remain a non-resident under FEMA. Interest on NRO accounts is taxable, and banks deduct tax at 30% plus surcharge and cess unless a treaty rate is claimed.
- Rent. Rent from Indian property is taxable after the standard 30% deduction for repairs and municipal taxes paid. A tenant paying rent to an NRI landlord is required to deduct tax at source, which many tenants do not know; we advise both sides on compliance.
- Capital gains. Gains on Indian property, shares and mutual funds are taxable in India. For sales of property, the buyer deducts tax; see TDS on NRI property sale.
- Dividends from Indian companies and units are taxable, with tax deducted at source.
- Salary for services rendered in India is taxable here even if paid abroad.
Non-residents cannot claim the rebate available to resident individuals with lower incomes, and some deductions are restricted, so the tax picture of an NRI with modest Indian income can differ from that of a resident with the same income.
Tax treaty relief: TRC and Form 10F
India has comprehensive double taxation avoidance agreements (DTAAs) with most countries where NRIs live, including the USA, the UK, Canada, Australia, the UAE and Singapore. A treaty can cap the Indian tax on interest or dividends below the domestic rate, decide which country taxes particular income, and resolve dual residency through tie-breaker tests. To claim treaty benefits you need a Tax Residency Certificate (TRC) from your country of residence and Form 10F filed electronically on the Indian e-filing portal, along with a PAN. Give these to your Indian bank or payer to reduce deduction at source, and report the treaty claim in your return.
Your country of residence may also tax the same income, with credit for Indian tax. US citizens and green card holders are taxed in the USA on worldwide income, so Indian tax paid must be documented carefully for the foreign tax credit there.
Filing returns and handling notices
An NRI must file an Indian income tax return if total Indian income exceeds the basic exemption limit, and should file to claim a refund of excess tax deducted, carry forward losses or record capital gains. The return for individuals not requiring audit is generally due on 31 July after the end of the tax year. NRIs cannot use the simplest return form meant for residents and usually file ITR-2, or ITR-3 if they have business income.
Before filing, we reconcile Form 26AS and the Annual Information Statement (AIS), which often show transactions you did not expect, such as a property sale reported by the registrar or high-value deposits. Mismatches trigger notices. Notices are issued and answered through the e-filing portal, and most assessments are faceless, so you rarely need to attend in person. Keep your registered email and Indian mobile number active, as notices go there.
How we work with NRI tax clients
We collect your passport entry and exit stamps or travel history, Indian bank statements and TDS certificates by email, confirm your status for the year on a video call in your time zone, and send the draft return for your approval before filing. Returns are verified electronically through Aadhaar OTP, net banking or a digital signature, or by post to the processing centre. For notices, we draft the reply with supporting documents and file it under your login with your consent.
Documents you need
Most of this can be downloaded or scanned. We will give you a checklist specific to your income.
- PAN card and passport with travel dates for the year
- NRO, NRE and FCNR bank statements and interest certificates
- Form 16A and other TDS certificates, Form 26AS and AIS
- Rent agreements and rent receipts for Indian property
- Purchase and sale deeds for any property or securities sold
- Tax Residency Certificate and Form 10F acknowledgment
- Previous year's Indian return and any notices received
How we handle it for you
Confirm residential status
Day count and Indian income tested against the residency rules for the year.
Collect and reconcile
Bank, TDS and AIS data matched so there are no surprises.
Apply treaty relief
TRC and Form 10F used to claim the lower treaty rate where it helps.
File the return
Draft shared for approval, filed and verified electronically.
Refunds and notices
We track the refund and answer any notice through the portal.
Why clients choose ProudLegal
Built for clients abroadVideo calls in your time zone and documents signed where you live.
Advocates who appear in Indian courtsYour case is drafted and argued by enrolled advocates in India.
Written fee quote firstScope and fees confirmed in writing before any work starts.
Updates after every stepScans of every filing and order on WhatsApp and email.
Frequently asked questions
Is an NRI required to file an income tax return in India?
Yes, if Indian income exceeds the basic exemption limit. Filing is also needed to claim refunds of excess TDS, report capital gains and carry forward losses.
Is interest on an NRE account taxable?
No, while you are a non-resident under FEMA. Interest on NRO accounts is taxable in India, with tax deducted by the bank.
What is the 120-day rule?
An Indian citizen or person of Indian origin visiting India with Indian income above ₹15 lakh becomes resident (as RNOR) if in India 120 days or more in the year and 365 days or more in the previous four years.
What is deemed residency?
An Indian citizen with Indian income above ₹15 lakh who is not liable to tax in any other country by residence or domicile is deemed resident in India, as RNOR.
How do I claim DTAA benefits?
Obtain a Tax Residency Certificate from your country of residence, file Form 10F online on the Indian portal, and give both to your bank or payer and in your return.
Does the Income-tax Act 2025 change NRI taxation?
It replaced the 1961 Act from 1 April 2026 with new structure and section numbers and a single tax year, but the core residency and source rules for NRIs are carried forward in substance.
Do I have to come to India for a tax notice?
Usually not. Most notices are answered online through the e-filing portal and assessments are faceless.
What do you charge for NRI tax returns?
We quote a fixed fee based on the income heads involved, such as rent, capital gains or treaty claims, in writing before we start.