Comprehensive reference for Non-Resident Indians — Section 6 residency tests, TDS rates by income type, DTAA benefits, NRO vs NRE taxation, capital gains, ITR-2 filing.
Your residential status determines whether your foreign income is taxable in India or not.
FY 2026-27 indicative. DTAA with the NRI's country of residence can reduce most rates significantly with TRC + Form 10F submission.
| Income Type | TDS Rate | Section | Notes |
|---|---|---|---|
| Interest on NRO savings / FD | 30% | Section 195 | DTAA can reduce to 10-15% with TRC + 10F. NRE interest fully exempt for non-residents. |
| Equity LTCG (listed, >12 mo) | 12.5% | Section 196 | Above ₹1.25 lakh exemption per FY. STT-paid trades only. |
| Equity STCG (listed, <12 mo) | 20% | Section 196 | STT-paid only. NO basic exemption for NRIs on STCG. |
| Property sale | 12.5% LTCG / 20% LTCG | Section 195 | 12.5% without indexation (post-Jul 2024). Buyer mandatory TDS at higher rate on consideration > ₹50 lakh; refundable via filing. |
| Mutual fund redemption (equity) | 12.5% / 20% | Section 196 | LTCG 12.5% above ₹1.25L / STCG 20% for equity. Debt MFs at slab rate (Finance Act 2023). |
| Rental income (property in India) | 30% | Section 195 | Tenant deducts. After deductions (24(a) 30% standard + 24(b) home loan interest), file ITR for refund. |
| Dividend (Indian companies) | 20% | Section 196D / 195 | DTAA can reduce to 5-15% based on treaty. Most dividend-paying companies deduct directly. |
| Crypto / VDA gains | 30% | Section 115BBH + 194S | Flat 30% for all + 1% TDS on transfer. No DTAA exemption for VDA-specific tax. |
| Interest on bonds / debentures | 20%-30% | Section 195 | Depends on instrument. Some tax-free bonds exempt. DTAA usually 10-15% if treaty available. |
| Royalty / technical services | 10%-20% | Section 195 | DTAA rates typically 10-15%. Specific treaty for each country. |
NRE (Non-Resident External)
NRO (Non-Resident Ordinary)
India has signed Double Taxation Avoidance Agreements (DTAAs) with 90+ countries— USA, UK, Canada, Australia, UAE, Singapore, Germany, France, Japan, and most major economies.
To claim DTAA benefit (reduced TDS rate), submit to the payer / deductor:
Without TRC: full 30% TDS on NRO interest, 20% on dividends. With TRC + DTAA: typically 10-15%. For US NRIs: India-US DTAA caps interest at 15%, dividends at 15%, royalties at 15%. Tax credit method: tax paid in India is credited against US tax liability (Form 1116).
Richify tracks your portfolio across India + your country of residence (US, UK, Canada, Australia). Felix flags DTAA filing requirements, surfaces TDS refund opportunities, and helps decide RNOR utilisation during return.
Download Richify — FreeSection 6 of the Income Tax Act 1961 sets three residency tests. (1) Stay 182+ days in India during the relevant FY = Resident. OR (2) Stay 60+ days in current FY AND 365+ days cumulatively in the preceding 4 FYs = Resident — with exceptions for Indian citizens leaving for employment abroad (test (2) doesn't apply, only the 182-day test). (3) NRI for Indian citizens / PIOs visiting India whose total India-sourced income exceeds ₹15 lakh: the 60-day threshold in test (2) becomes 120 days from FY 2020-21. If neither test is satisfied = Non-Resident. Resident with stay < 730 days in preceding 7 years + non-resident in 9 out of 10 preceding years = RNOR (Resident but Not Ordinarily Resident) — taxed only on Indian-source income, similar to NRI status. RNOR is a transitional status often used by returning NRIs for 2-3 years.
NRE (Non-Resident External): for Indian income earned abroad and remitted to India. Held in foreign currency or INR. Both PRINCIPAL and INTEREST fully tax-free in India for non-residents. Fully repatriable. Joint with non-resident only. Closed when you become resident again. NRO (Non-Resident Ordinary): for India-source income (rental, dividend, interest, pension). Held in INR only. Interest TAXABLE at 30% TDS under Section 195 — DTAA can reduce to 10-15% with TRC + Form 10F. Principal repatriable up to USD 1 million per FY with proper documentation. Joint with resident allowed. RFC (Resident Foreign Currency): for returning NRIs converting NRE/FCNR balances when becoming resident — interest tax-free if RNOR, taxable when ordinary resident. Most NRIs maintain BOTH NRE (for fresh remittances) and NRO (for Indian income).
When an NRI sells property in India, the BUYER must deduct TDS under Section 195 (different from Section 194-IA which applies to resident sellers). LTCG (property held > 24 months): 12.5% on the entire SALE CONSIDERATION (not just gain) without indexation, post 23 July 2024. Pre-Jul-2024 purchases retain the option of 20% with indexation. STCG: deducted at 30% (highest slab). The TDS is on GROSS SALE VALUE not actual gain — often results in over-deduction. NRI files ITR-2, computes actual gain, claims refund of excess TDS. Common process: NRI obtains Lower Deduction Certificate (Form 13) from IT Department BEFORE the sale, which permits the buyer to deduct TDS at the actual tax rate on actual gain — avoids the cash flow crunch of refunding later. Buyer also files Form 26QB for the TDS deposit and issues Form 16A to the NRI seller.
India has signed DTAAs with 90+ countries (USA, UK, Canada, Australia, UAE, Singapore, Germany, etc.). DTAA prevents the same income from being taxed twice — once in India (source country) and once in the resident country. Two methods of relief: (1) Exemption method — income is taxed only in one country. (2) Tax Credit method (more common) — income is taxed in source country (India), then the resident country gives credit for the Indian tax paid. To claim DTAA benefits, NRI must provide: (a) TRC (Tax Residency Certificate) from the resident country, (b) Form 10F (self-declaration), (c) PAN in India. DTAA can reduce TDS rates significantly: NRO interest 30% → 10-15%, dividends 20% → 5-15%, capital gains often fully taxable only in source country. USA-India DTAA is particularly favourable on interest (15%) and dividends (15%). Singapore-India DTAA (post-2017 amendment) has limited capital gains exemption.
ITR filing is MANDATORY for NRIs if: (1) Total Indian income exceeds basic exemption (₹3 lakh old regime / ₹4 lakh new regime). (2) Holding foreign assets (financial holdings beyond ₹2 lakh value) — disclosure mandatory under Black Money Act 2015. (3) TDS deducted at source — even if total income is below exemption, refund claim requires ITR filing. (4) Capital gains transactions in India. NRIs CANNOT file ITR-1 (Sahaj) — must file ITR-2 (no business income) or ITR-3 (with business income). Section 87A rebate (₹60K new regime up to ₹12L income, ₹12.5K old up to ₹5L) is NOT available to NRIs. Standard deduction ₹75K new / ₹50K old IS available on salary income. Tax-free thresholds: ₹3L old regime, ₹4L new regime — NRIs cannot claim higher senior citizen / super senior citizen thresholds. Filing deadline: 31 July (non-audit), 31 October (audit). Late filing penalty ₹1,000-5,000 (Section 234F) + 1% per month interest unpaid tax.
Indian rental income for NRIs is taxable under 'Income from House Property'. Tenant must deduct TDS at 30% under Section 195 BEFORE remitting rent. After year-end, NRI can compute actual liability and file ITR-2 for refund of excess TDS. Available deductions: (a) Section 24(a) standard deduction — 30% of net annual value (gross rent − municipal taxes paid by landlord). (b) Section 24(b) — interest on home loan (no cap for let-out property, unlike ₹2 lakh cap on self-occupied). (c) Repairs and maintenance NOT separately deductible (covered by 30% standard deduction). Tax rate: applied at NRI's slab rate (old regime: 0/5/20/30%; new regime: 0/5/10/15/20/25/30%). Effectively, after ₹2L+ rental, NRI usually has actual tax close to 20-30% slab — TDS at 30% often results in some refund. Form 15CA/15CB required for repatriation of post-tax rental abroad.
Partial yes — NRIs can claim some Chapter VI-A deductions but NOT all. ALLOWED: Section 80C up to ₹1.5 lakh (LIC premium, ELSS, EPF, NSC, home loan principal — note NRIs cannot open new PPF accounts but existing ones continue till maturity). Section 80D health insurance (₹25K self/family, ₹50K senior parents). Section 80E education loan interest (no cap). Section 80G donations to specified charities. NOT ALLOWED: Section 80TTA (interest on savings — NRIs taxed on NRO interest at 30%). Section 80TTB (senior citizen interest deduction). HRA exemption Section 10(13A) — only for salaried in India with employer-paid HRA. Section 87A rebate. NRIs typically use old tax regime to claim 80C/80D + Section 24(b) interest deduction — new regime favourable only when total deductions < ₹4-5 lakh.
Equity mutual funds (held > 12 months): LTCG 12.5% on gains above ₹1.25 lakh per FY — same as residents, but TDS deducted by AMC at 12.5% (or 20% if Form W-8BEN type process unclear), refundable via ITR if excess. Held < 12 months: STCG 20% TDS at source. Debt mutual funds (post-April 2023): all gains taxed at NRI's slab rate (no LTCG benefit, no indexation), TDS deducted at 30%. International funds / Nasdaq 100 FoFs: debt-style taxation, slab rate. ELSS: 3-year lock-in + 80C deduction eligible + same equity LTCG after 3 years. Important: NRIs cannot invest in some specific products (Sukanya Samriddhi, Senior Citizen Savings Scheme, new PPF). Most platforms (Groww, Coin, Kuvera) support NRI KYC with separate NRE/NRO bank linking. NRI dividends from MFs: 20% TDS, reducible via DTAA.
NRIs CAN purchase residential or commercial property in India (Foreign Exchange Management Act / FEMA permits). CANNOT purchase agricultural land, plantation property, or farmhouse — only inherit or receive as gift. Payments must come from NRE / NRO / FCNR accounts or via normal banking channels (no cash transactions allowed). Selling: NRI can sell to a resident, NRI, or PIO. Property held > 24 months = LTCG (12.5% post-Jul-2024 without indexation). Buyer must deduct TDS at 12.5% LTCG / 30% STCG under Section 195 — different from Section 194-IA for resident sellers. Form 26QB filing by buyer + Form 16A to NRI seller. Repatriation rules: sale proceeds from up to 2 residential properties per lifetime can be repatriated to NRE account (with FIRC + Form 15CA/15CB). Excess proceeds + commercial property go to NRO + need RBI approval for repatriation above USD 1 million per FY.