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NRI Income Tax Planning & Filing - A Complete Guide by Calzone
Non-Resident Indians (NRIs) primarily earn income outside India. While they are taxed under the laws of their resident country, certain situations bring them under Indian tax laws, making it essential to plan and file their income tax correctly.
At Calzone, we provide expert NRI tax planning & filing services to help you minimize tax liabilities, comply with Indian tax regulations, and maximize deductions.
Who is a Non-Resident Indian (NRI)?
An NRI is an Indian citizen residing outside India, but for taxation purposes, the Income Tax Act, 1961 defines an NRI based on residential status under Section 6.
When is an Individual Considered an NRI for Tax Purposes?
A person is considered an NRI for tax purposes if:
- They reside in India for less than 182 days in the relevant financial year (FY)
- They reside in India for less than 60 days in the relevant FY AND less than 365 days in the last 4 years
Special Cases:
- Indian Citizens or Persons of Indian Origin (PIO) visiting India - The 60-day rule extends to 182 days
- If their Indian income exceeds 15 lakhs, the 182-day rule reduces to 120 days
- If an Indian citizen is not taxable in any other country but earns 15 lakhs or more in India, they are considered Resident but Not Ordinarily Resident (RNOR
What Income is Taxable for NRIs in India?
NRIs are taxed in India only on income received or accrued in India.
Type of Income |
Taxable for NRIs? |
Salary received in India |
Yes |
Salary received abroad |
No |
Rental income from property in India |
Yes |
Capital gains on sale of property in India |
Yes |
Interest on NRO Account |
Yes |
Interest on NRE & FCNR Accounts |
No (Exempt from tax) |
Dividends from Indian companies |
Yes |
Income from mutual funds in India |
Yes |
Foreign income |
No |
What is the Tax-Free Income for NRIs?
- Interest earned on NRE & FCNR accounts is 100% tax-free
- Foreign income is not taxable in India
- Dividend income from foreign investments is not taxable in India
However, any income generated in India is subject to taxation.
NRI Income Tax Planning - How to Reduce Tax Liability?
To minimize tax liability, NRIs can take advantage of several tax deductions and exemptions:
House Property Income
- Standard deduction of 30% on rental income
- Deduction on home loan principal (Section 80C) & interest (Section 24)
Salary Income
- NRIs earning salary outside India should ensure it is credited abroad to avoid Indian taxation
- Standard deduction of 50,000 (not available under new tax regime)
Tax Deductions Available to NRIs
Section |
Deductions Allowed |
Deductions Not Allowed |
80C |
LIC Premium, Tuition Fees, ELSS, ULIPs, Home Loan Principal |
PPF, NSC, Post Office 5-year Deposit, Senior Citizen Savings Scheme |
80D |
Medical insurance premium |
Higher deduction (50,000) for senior citizens |
80E |
Interest on Education Loan |
- |
80G |
Donations to eligible institutions |
- |
80TTA |
Savings account interest (up to 10,000) |
- |
NRI Income Tax Slab Rates
Income Slabs () |
Tax Rate (%) |
0 - 2,50,000 |
NIL |
2,50,001 - 5,00,000 |
5% |
5,00,001 - 10,00,000 |
20% |
Above 10,00,000 |
30% |
NRIs do not get the benefits of a higher exemption limit available to senior citizens & super senior citizens.
Section 115BAC - Optional New Tax Regime for NRIs
NRIs can opt for the new tax regime with lower tax rates, but they must forego exemptions & deductions.
Income Slabs () |
Tax Rate (%) |
0 – 2,50,000 |
NIL |
2,50,000 – 5,00,000 |
5% |
5,00,000 – 7,50,000 |
10% |
7,50,000 – 10,00,000 |
15% |
10,00,000 – 12,50,000 |
20% |
12,50,000 – 15,00,000 |
25% |
Above 15,00,000 |
30% |
- Surcharge (10%–37%) applies for higher income brackets
- Health & Education Cess @ 4%
Does an NRI Need to File an Income Tax Return?
YES, an NRI must file an ITR in India if:
- Total Indian income exceeds 2,50,000
- TDS was deducted and a refund is required
- Tax has been deducted at source (TDS) but not adjusted properly
- Income from capital gains, rental property, or business in India
An NRI is NOT required to file ITR if:
- They only earn tax-deducted investment income or long-term capital gains
Step-by-Step Guide for NRI Income Tax Filing
-
Step 1: Determine Your Residential Status
- Check if you qualify as NRI, Resident but Not Ordinarily Resident (RNOR), or Resident
-
Step 2: Gather Required Documents
- Form 26AS, AIS & TIS for tax details
- Bank statements, salary slips, rental agreements
- Capital gains statements (if applicable)
-
Step 3: Choose the Applicable ITR Form
- ITR-2 for NRI individuals with salary, house property & capital gains
- ITR-3 for NRIs with business income or partnership in a firm
-
Step 4: File Your Return Online
- Log in to www.incometax.gov.in
- Fill in the applicable ITR form
- Claim deductions & exemptions
- E-Verify the return using OTP, Aadhaar, or DSC
-
Step 5: Track Refunds & Notices
-
After filing, track your refund status & check for any tax notices
Why Choose Calzone for NRI Income Tax Planning & Filing?
- Expert NRI Tax Consultants - Dedicated tax professionals for error-free filing
- Maximize Tax Benefits - Claim all eligible deductions & DTAA benefits
- Quick & Hassle-Free Filing - 100% online, secure, and seamless process
- Advisory on NRI Investments & Wealth Management
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