NRI Income Tax
A concise tax note covering residency, India-sourced income, treaty relief, and regime selection.
Key takeaways
The article in five quick points
A faster scan before you go into the detailed sections below.
Residential status depends first on days spent in India during the year and across prior years.
For NRIs, Indian tax usually applies to India-sourced income rather than global income.
Where Indian taxable income exceeds Rs 15 lakh, a stricter 120-day test can become relevant.
The new regime begins with a wider nil-tax band, but the Section 87A rebate is not available to NRIs.
DTAA relief matters when the same income is taxed both in India and in the country of residence.
Residency Rules
The three tests that matter most
01
182-day test
Presence in India for 182 days or more generally results in resident classification.
02
60 + 365 test
A shorter stay in the current year can still trigger resident status when paired with sufficient presence over the prior four years.
03
2020 amendment
Where taxable Indian income exceeds Rs 15 lakh, the 120-day threshold becomes relevant alongside the four-year lookback.
Taxability
Resident and NRI treatment differ materially
Resident
Global income can enter the Indian tax net
Salary, investments, rental income, and other earnings may be considered on a worldwide basis.
NRI
The focus shifts to Indian source income
Typical items include rent, capital gains, dividends, and remuneration linked to services rendered in India.
Regime Comparison
Old and new regime ranges at a glance
Old regime
New regime
Cess
Health and education cess of 4% applies on tax plus surcharge.
Section 87A
The resident rebate is not available to NRIs.
Salary deduction
Rs 75,000 standard deduction can apply where salary is taxable in India.
Treaty Relief
DTAA claims are process-driven
Step 1
Confirm whether the same income is taxable in India and in the country of residence.
Step 2
Review the applicable DTAA article and determine whether exemption or tax credit is available.
Step 3
Support the claim with the required documentation before filing or responding to withholding mismatches.
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