NRI Tax in India: NRI Income Tax, Capital Gains & Tax Slab Guide

Understanding your residential status is the first step to knowing how your income will be taxed in India. Whether you are working abroad, investing in Indian shares or property, or earning rental income, identifying your NRI (Non-Resident Indian) status can significantly impact your tax liabilities.   

Here is everything you need to know about NRI tax in India and how to determine if you are considered an NRI for income tax purposes. 

How To Determine NRI Status for an Individual?

Tax for NRIs depends on their residential status and accrual of income from India.

An NRI is a person of Indian origin or a citizen who does not reside in India. Hence, the entire residential status depends on how many days the person spends in India during the respective financial year. 

You are considered a resident of India if:

• You spend 182 days or more in India during the financial year, or
• You spend 60 days or more in the financial year and more than 365 days in the previous 4 years.

If you do not meet either of these conditions, you are considered an NRI.

But if you do meet either condition, then check whether you are ‘Resident Ordinarily Resident (ROR)’ or ‘Resident Not Ordinarily Resident (RNOR)’:

If:

• You have been a resident in at least 2 out of the past 10 years and 
• You have stayed in India for 730 days or more in the last 7 years 

Then you are classified as Resident Ordinarily Resident (ROR). Otherwise, you are classified as Resident Not Ordinarily Resident (RNOR).

Special Case for Indian Citizens and Crew Members:

For Indian citizens working overseas or crew members on Indian ships, only the 182-day condition applies. The same condition is valid for Persons of Indian Origin (POI).

Tax for NRIs in India

If you are an NRI, only income earned or received in India is taxable under NRI income tax rules. Foreign-sourced income is not taxed in India.

Here are the examples of taxable NRI income in India:

• Salary earned for services rendered in India
• Salary credited or received in India
• Rental income from property located in India
• Capital gains from the sale of assets situated in India
• Interest earned on fixed deposits
• Interest from savings bank accounts

The NRI tax slab in India is uniform across gender and age groups.

Below are the applicable tax rates for individuals under the old (under 60 years of age) and new tax regimes.

Old Regime		New Regime
Income Tax Slabs (FY 2025-26)	Rate of Tax	Income Tax Slabs (FY 2025-26)	Rate of Tax
₹0 to 2.5 Lakh	Nil	₹ 0 – 4 Lakh	NIL
₹2.5 – 5 Lakh	5%	₹ 4 – 8 Lakh	5%
₹5 – 10 Lakh	20%	₹ 8 – 12 Lakh	10%
Above ₹10 Lakh	30%	₹ 12 – 16 Lakh	15%
		₹ 16 – 20 Lakh	20%
		₹ 20 – 24 Lakh	25%
		Above ₹ 24 Lakh	30%

Capital Gains Tax for NRIs:

Capital gains are taxed at 12.5% (LTCG) or 20% (STCG), plus applicable surcharge and cess. Note that NRIs as well as Indian residents no longer get the benefit of indexation on LTCG, which may increase the taxable amount compared to earlier rules.

Tax Deduction From NRI Income Tax

Just like residents, NRI tax laws allow certain deductions:

1. Section 80C: Premiums on LIC, tuition fees, home loan principal repayment, ULIP, ELSS.
2. Section 80D: Health insurance premiums, preventive health checkups.
3. Section 80E: Repayment of education loans for self, spouse, or dependent children.
4. Section 80G: Donations to eligible charitable institutions.

Disallowed Tax Deduction on Income Tax For NRI

These deductions are not allowed under NRI income tax rules:

• Post office schemes under Section 80C (e.g., PPF, SCSS, NSC, term deposits).
• Section 80DD: Treatment expenses for a disabled dependent.
• Section 80U: If the NRI suffers from a disability.

Exemptions on Income Tax For NRI

The following income is exempted from income tax for NRIs in India:

1. Income on NRE/ FCNR accounts held in India.
2. Income from government savings bonds and securities.
3. Dividend income from shares of domestic companies in India.
4. Long-term capital gains from listed shares and equity-oriented mutual funds up to ₹1.25 lakhs. 
5. Exemption can be claimed u/s Section 54 – if an NRI sells a property that has been owned for three or more years, and proceeds are invested in accordance with the Capital Gains Account Scheme or used to buy another property.
6. Exemption can be claimed if any property other than a house property is sold under section 54F. The NRI must invest the capital gains in buying or constructing a new house property. The exemption is limited to the amount spent on the new house property.

DTAA For Income Tax For NRIs

DTAA (Double Taxation Avoidance Agreement) helps avoid double taxation for NRIs and encourages cross-border economic activity. This provision is vital in NRI tax planning.

Although the DTAA does not allow NRIs to completely avoid tax, it does allow them to avoid paying greater taxes in both nations. 

There are two ways to obtain tax relief under the DTAA: 

1. Exemption method: NRIs are only taxed in one nation and exempt in another.
2. Tax credit method: Taxed in both countries, but credit is given in the resident country.

Conclusion 

Your NRI income tax status is not just about geography. It is about knowing your timelines, income sources, and eligibility for exemptions. 

By understanding the tax for NRI, you can make smarter financial decisions and stay compliant with Indian tax laws. Whether its capital gain tax for NRI, DTAA, or deduction limits, clarity in tax treatment helps you manage your finances efficiently.

Frequently Asked Questions