NRIs generating revenue in India must obey the country's tax guidelines. As per the Income Tax Act of 1961, an NRI is defined by how his income would be liable to taxation and what deductions or exemptions are available. The Indian government has introduced several changes in Budget 2025 to ease the NRI capital gains tax on shares and curb tax evasion.
Knowing your Tax slab for NRI, tax responsibilities, and obligations ensures that you do not incur penalties while maximising the benefits granted to you in terms of exemptions and deductions.
Learn New rules for NRI in India, how to determine your NRI status, Documents required for NRI income tax return, understand what income is taxable in India, explore available deductions, and see an example of an NRI Income Tax Calculator for better clarity.
Overview Table
This table gives a clear snapshot of NRI income tax rules for FY 2024-25, covering definitions, tax slabs, exemptions, deductions, and filing procedures. It also highlights DTAA benefits and includes a real-life tax calculation example for better understanding.
| Topic | Details |
|---|
| Definition of NRI | Based on the duration of stay in India (60/365 or 182 days rule) |
| Residential Status Types | NRI, Resident, RNOR |
| Taxable Income for NRIs | Only income earned or accrued in India |
| Exemptions | NRE/FCNR interest, income from foreign employment |
| Deductions | 80C, 80D, 80E, 80G, 80TTA |
| Avoiding Double Taxation | DTAA - Exemption or Tax Credit methods |
| Tax Rates FY 2024-25 | Old & New Regime Comparison |
| Real-life Tax Calculation | Example of rental & interest income |
| Filing ITR | Online through the Income Tax Portal with the ITR-2 form |
Read More: New Income Tax Bill 2025 Vs. Old Income Tax Act 1961
Who Is An NRI?
An Indian national who doesn't live in India permanently is termed as a Non-Resident Indian or the commonly used phrase NRI. The NRI’s residential status depends upon the total number of days spent in India during the Financial Year.
How to Determine Residential Status?
One is classified as a Resident Indian if one submits the following Documents required for NRI income tax return and also meets any of the following criteria:
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You spend at least 182 days in India during a given financial year from April 1 to March 31 of the following year.
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You remain in India for at least 60 days within a particular fiscal year and a minimum of 365 days during the preceding four fiscal years.
For Indian citizens employed overseas or some Indian crew members of ships, only the first restriction will count. Failure to satisfy these conditions shifts your classification to NRI.
An individual qualifies as RNOR if:
Update on the 2025 budget:
- They will be exempted from the penalty of 10 lakh if the assets declared by them are less than 20 lakh under the black money act.
Read More: Decoding Income Tax Act 1961 Section 44 AD!
Taxable Income For NRIs
NRIs are only taxed on income earned or accrued in India. The following types of income are taxable in India, or you can also check for the NRI Income Tax Calculator:
| Taxable Income in India | Exemptions for NRIs |
|---|
| Salary received in India or for services rendered in India | Salary earned abroad |
| Rental income from property in India | Interest from NRE & FCNR accounts |
| Capital gains from the sale of property or investments in India | Capital gains from assets outside India |
| Interest on NRO accounts, FDs, and other deposits | Income earned or accrued outside India |
How Are NRIs Taxed In India?
NRIs are taxed differently from resident Indians after the New rules for NRIs in India. Below is a comparison of tax rates:
New vs. Old Tax Regime for NRIs (FY 2024-25)
| Income Slab (₹) | Old Tax Regime Rate | New Tax Regime Rate |
|---|
| Up to 3,00,000 | Nil | Nil |
| 3,00,001 - 7,00,000 | 5% | 5% |
| 7,00,001 - 10,00,000 | 20% | 10% |
| 10,00,001 - 12,00,000 | 30% | 15% |
| 12,00,001 - 15,00,000 | 30% | 20% |
| Above 15,00,000 | 30% | 30% |
Surcharge Rates for NRIs:
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10% on income exceeding ₹50 lakh
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15% on income above ₹1 crore
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25% on income above ₹2 crore
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37% on income above ₹5 crore
Read More: Understanding The New Income Tax Bill 2025
How To Avoid Double Taxation?
NRIs can overlook the possibility of paying taxes twice, according to the Double Taxation Avoidance Agreement (DTAA). You can prevent double taxation by:
Income Tax Exemptions & Deductions For NRIs
NRIs can reduce their tax liability in India through exemptions and deductions. Knowing these benefits helps in better tax planning and saving money on NRI capital gains tax on shares.
Exemptions Available:
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Interest earned on NRE & FCNR deposits
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Long-term capital gains on certain investments
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Income from foreign employment
Deductions Available:
| Section | Deduction Type | Eligibility |
|---|
| 80C | Life Insurance, ELSS, Home Loan Principal | Up to ₹1.5 lakh |
| 80D | Health Insurance Premium | Up to ₹50,000 for senior citizens |
| 80E | Education Loan Interest | No limit |
| 80G | Donations to charities | As per limits |
| 80TTA | Interest on Savings A/c | Up to ₹10,000 |
Real-Life Example Of NRI Tax Calculation
Recognising how the Tax slab for NRI is calculated can be confusing, but a case study makes it easier to understand. We'll elaborate on Rohan’s example, an NRI receiving rental and interest income from India.
Case Study: Income Tax Calculation for an NRI
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Rohan is an NRI living in Dubai, but he has rented a house in India with a monthly rent of ₹35,000.
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His NRO fixed deposit earns ₹1,00,000 per year.
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His total Indian income:
- Rental Income: ₹4,20,000
- NRO Interest: ₹1,00,000
- Total: ₹5,20,000
Tax Calculation (New Regime FY 2024-25)
- Standard Deduction (30% on rental income): ₹1,26,000
- Taxable Income: ₹3,94,000
- Tax Payable: ₹9,700 (after slab-wise calculation)
Read More: Explaining The Tax Year In The New Income Tax Bill 2025
How to File Tax Returns for NRIs?
Even though filing taxes as an NRI can be complicated, it can be easily accomplished with a few straightforward actions. You need to fill out an Income Tax Return (ITR) if your overall earnings in India are more than ₹2.5 lakh.
Steps To File An ITR
Step 1: Log in to the Income Tax Portal.
Step 2: Select ITR-2 Form (for NRIs).
Step 3: Enter Income Details (Salary, Property, FD Interest, etc.).
Step 4: Claim Deductions & Exemptions.
Step 5: Verify Tax Liability.
Step 6: Submit and E-Verify.
Conclusion
To maximise savings and avoid penalties, NRIs must pay attention to changing tax laws. With the current tax slabs, exemptions, and DTAA provisions, an NRI can effectively plan tax liabilities and the Tax slab for NRI. NRIs can comply with Indian tax rules by filing ITRs on time and understanding deductions.
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