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Home > Income Tax > NRI & Foreign Taxes Last Updated: Nov 19th 2024

NRI Income Tax Help Center

Many countries have complex income tax rules, making it difficult to be familiar with the provisions of multiple countries' tax codes. Many Non-Resident Indians (NRIs) who work overseas, Indians living in India but working abroad, and Foreign Nationals who work in India must be aware of basic regulations affecting their tax compliance and maybe prepare to lower their taxes.

Being a leading provider of tax filing solutions and expert tax services, EZTax.in has always been at the forefront of educating NRIs and foreign nationals. This gateway exists to assist you. Go to the EZTax.in homepage for comprehensive Tax, GST, and Accounting Services provided via Software and Professional Services.

  Updated per latest Union Budget 2024
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This help center covers

  1. NRI Income Tax Hotline
  2. NRI / Foreign Income Tax Basics
  3. Tax Residency Status Calculator
  4. Income Tax Filing Service
  5. FAQs
  6. Important Tax Provisions

1. NRI Income Tax Hotline

IT Hotline
+91 7288 900 900

Any questions or concern on Tax exposure related to, Double Taxation Avoidance Agreement (DTAA), Tax Residency Certificate (TRC), NRE, NRO, FCNR, sale of Property by NRI, foreign tax credit, Overseas citizen of India (OCI), Person of Indian Origin (PIO), ESOPs, RSUs, foreign assets under FEMA, Seafarers, Foreigners working, living in India

2. NRI / Foreign Income Tax Basics

1. Who is non-resident Indian?

'Non-resident Indian' is an individual who is a citizen of India or a person of Indian origin (PIO) and who is not a resident of India. The incidence of tax on any assessee depends upon his residential status. The residential status of an assessee must be ascertained with reference to each year.

An individual is said to be non-resident in India if taxpayer is not a resident in India and an individual is deemed to be resident in India in any previous year if taxpayer satisfies any of the following conditions:

  1. If a taxpayer has been in India for a period of 182 days or more during the previous year; or
  2. If taxpayer has been in India for a period of 60 days or more during the previous year and 365 days or more during 4 years immediately preceding the previous year.

If both the above conditions are not satisfied, the individual is a non resident

Note 1 : Date of Departure and Date of Arrival into India should be considered for computation of number of days of stay in India.
Note 2 : The residency status for Income tax purpose has nothing to do with citizenship, place of birth or domicile.

 Note: Starting from FY 2020-21

An Individual who satisfies below would be considered as Resident but not Ordinarily Resident (RNOR) in all other cases old rules still valid in identifying the residential status.

  1. Who stayed in India for 120 days or more, but less than 182 days
  2. Whose total income (other than income generated from foreign sources) is more than 15 Lakhs
  3. Indian Citizen or PIO should stay in India for 365 days in the 4 years immediately preceding the previous year along with stay in India for 120 days or more and less than 182 days.
  4. In case, if the individual is a resident in both the countries ( / jurisdictions), then the individual may become the resident of a country where he maintains a permanent home and / or where he maintains a major economic activity. If no permanent home and / or major economic activity exists, he is bound to be a resident of a state where his nationality belongs to.
More on NRI Status Tie-Breaker Rules and the Guide
For more comprehensive tie-breaker rules, refer Tie-Breaker rules for determining Residential Status

Exceptions: The following categories of individuals will be treated as residents only if the period of their stay during the relevant previous year amounts to 182 days.

  1. Indian Citizens who leave India in any previous as a member of the crew of an Indian ship (Seafarer) or for purposes of employment outside India.
  2. Indian Citizen or person of Indian origin (PIO) engaged outside India in an employment or a business or profession or in any other vocation, who comes on a visit to India in any previous year.
  3. A person shall be deemed to be of Indian origin if taxpayer, or either of his parents or any of taxpayer grand-parents, was born in undivided India.



Refer    Latest Tax Residency Calculator    with the updated rules for AY 2025-26 (FY 2024-25) & Budget 2024.

2. Resident and Ordinarily Resident (ROR) or Resident but not Ordinarily Resident (RNOR)?

A resident individual will be treated as resident and ordinarily resident in India during the year if taxpayer satisfies both the following conditions:

  1. Taxpayer is resident in India for at least 2 years out of 10 years immediately preceding the relevant year.
  2. Taxpayer stay in India is for 730 days or more during 7 years immediately preceding the relevant year.

A resident individual who does not satisfy any of the above-mentioned conditions or satisfies only one of the above-mentioned conditions will be treated as Resident but Not Ordinarily Resident.

  1. If the individual satisfies any one or both the conditions specified at step 1 and satisfy none or one condition specified at step 2, then he will become resident but not ordinarily resident in India.
  2. If the individual satisfies none of the conditions specified at step one, then he will become non-resident.

Incomes which are charged to tax in India:
Nature of incomeResidential Status
ROR *RNOR *NRI *
Income which accrues or arises in IndiaTaxedTaxedTaxed
Income which is deemed to accrue or arise in IndiaTaxedTaxedTaxed
Income which is received in IndiaTaxedTaxedTaxed
Income which is deemed to be received in IndiaTaxedTaxedTaxed
Income accruing outside India from a business controlled from India or from a profession set up in IndiaTaxedTaxedNot taxed
Income other than above (i.e., income which has no relation with India)TaxedNot taxedNot taxed

(*) ROR means resident and ordinarily resident.
RNOR means resident but not ordinarily resident.
NRI means non-resident indian.

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3. Incomes which are deemed to be received in India
  1. Interest credited to recognised provident fund account of an employee in excess of 9.5% per annum.
  2. Employer’s contribution to recognised provident fund in excess of 12%.
  3. Transferred balance in case of reorganisation of unrecognised provident fund.
  4. Contribution by the Central Government or other employer to the account of the employee in case of notified pension scheme referred to in section 80CCD.
4. Incomes which are deemed to accrue or arise in India
  1. Capital gain arising on transfer of property situated in India.
  2. Income from business connection in India.
  3. Income from salary in respect of services rendered in India.
  4. Salary received by an Indian national from Government of India in respect of service rendered outside India. However, allowances and perquisites are exempt in this case.
  5. Income from any property, asset or other source of income located in India.
  6. Dividend paid by an Indian company.
  7. Interest received from Government of India.
  8. Interest received from a resident is treated as income deemed to accrue or arise in India in all cases, except where such interest is earned in respect of funds borrowed by the resident and is used for carrying on business/profession outside India or is in respect of funds borrowed by the resident and is used for earning income from any source outside India.
  9. Interest received from a non-resident is treated as income deemed to accrue or arise in India if such interest is earned in respect of funds borrowed by the non- resident for carrying on any business/profession in India.
  10. Royalty/fees for technical services received from Government of India.
  11. Royalty/fees for technical services received from resident is treated as income deemed to accrue or arise in India in all cases, except where such royalty/fees relates to business/profession/other source of income carried on by the payer outside India.
  12. Royalty/fees for technical services received from non-resident is treated as income deemed to accrue or arise in India if such royalty/fees is received for business/profession/other source of income carried on by the payer in India.

In case of non-resident, being a person engaged in business of banking any interest payable by the permanent establishment in India of such non-resident to the head- office or any permanent establishment or any other part of such non-resident outside India shall be deemed to accrue or arise in India.

5. Exempt Income of Non-Residents

Section 10 of the Income Tax Act exempts various incomes from tax in the hands of non-resident.

  1. Interest on notified securities and bonds issued to non-residents
  2. Interest on specified savings certificates to non-residents
  3. Remuneration received by officials of Embassies etc of foreign states

    Example: Mr Frank, an Irish citizen but currently the resident of USA was appointed as a senior official of the US Embassy in India. He earned a remuneration of Rs 10 lakhs in the current FY. Such remuneration is exempt in the hands of Mr Frank in India

  4. The remuneration received for services rendered in India by a foreign national employed by foreign enterprise is exempt from tax
  5. Salary received by a non-citizen for services rendered in connection with employment in foreign ship
  6. Remuneration received by foreign government employees during their stay in India for specified training



Tax on Long term Capital Gains arising to non-resident Individual

  • Long term capital gains arising from the transfer of a capital asset being unlisted shares of a company in which public are not substantially interested is taxed @ 10% without indexation
  • In respect of other long term capital gains, the applicable rate of tax is 20%

6. Can the NRI's invest in Public Provident Fund?
  1. Non Resident Indians (NRI's) cannot open an new Public Provident Fund (PPF) account
  2. If the PPF account was opened during the resident period, NRI can invest money in PPF until its maturity on Non-repatriation basis
  3. NRI's cannot extend the PPF account after its maturity

3. Tax Residency Status Calculator

Your Legal nationality is different from your Tax Residence Status. Tax Residence status vary every financial year based on your stay (number of days & few other rules) in India.

Get to know your residential tax status ROR / RNOR / NRI or a Resident by visiting Residential Status Calculator or Contact us @

residential status calculator to know ROR / RNOR / NR

4. NRI / Resident with Foreign Income Tax Filing Service

Service
  • Expert assisted Income tax filing for individuals with Foreign Income or Foreign Assets along with other Income such as Share trading Income or Loss, and/or Sale of properties, along with single or multiple house properties, single or multiple Form-16s, and interest income.
  • Expert support through Email, phone & chat during the business hours.

Who should buy?
  • Resident Individuals with Foreign Income or Foreign Assets and Indian Income
  • Applicable for NRIs, Seafarers
  • Who may have Capital gains, frequent trading, Futures & Options with losses or gains

Process
  • Upon receiving the documents, our expert will call you before starting the process.
  • Expert team will exchange the information through email and phone calls, if necessary.
  • Team will send you the Draft Computation Sheet for further review.
  • Once confirmed, team will e-File your return, and send you the ITR-V acknowledgement.
  • Estimated Processing Time: 2 Days

Documents to be Submitted
  • IT Department Portal PAN and Password OR Your PAN and Date of Birth to pull your information using OTP authorisation.
  • If you are filing for the 1st time, Create an account @ ITD Govt Portal and share above information.
  • If you do not have a PAN card yet, refer apply for new PAN Card for NRIs
  • e-mail ID & Mobile Number.
  • Stock market CG / Trading statements.
  • If it is a sale of property, below details required.
    1. Sale value, purchase value, sale price, purchase price.
    2. Any cost of improvements
    3. Any reinvestments
  • Any other incomes, Investments or Savings details.
  • Foreign Income details (TRC, IT Return, exemption Certificate) (if applicable). Sample TRC can be found @ Sample US TRC; format is country specific.
  • Foreign Assets details (if applicable)

Other Income Tax Service Plans & Pricing   Plans & Pricing
NRI / Foreign Income
from Rs.1950 /- after discount
Indian living abroad with an Income from India.
  1. NRI (Rental + Interest Income in India + Salary) - from Rs. 1950
  2. NRI (any other Income other than above) - from Rs. 2999
  3. Resident with Global / Foreign Income - from Rs. 4960
—22% Discount included
Refer Resident with Foreign IT Filing & NRI with Indian Income IT Filing Service Plans
Sign up now
Need a different Plan ?
Income Tax Filing Service Plans

More ways to get help

5. Summary of Different categories of Individuals


Category 1: Indian Citizen having income less than or equal to 15 lakhs leaving India for the purpose of employment outside India or as a member of the crew of an Indian ship

  1. When treated as resident : If his period of stay in India during the current year is 182 days or more
  2. When treated as RNOR : If the period of stay in India is 729 days or less in past 7 years; or such individual is a non-resident in 9 out of 10 preceding years.

Category 2: : Indian Citizen having income more than 15 lakhs leaving India for the purpose of employment outside India or as a member of the crew of an Indian ship

  1. When treated as resident : If his period of stay in India during the current year is 182 days or more
  2. When treated as RNOR : If the period of stay in India is 729 days or less in past 7 years; or such individual is a non-resident in 9 out of 10 preceding years

Note: If such individual is not liable to tax in any other country due to his domicile or residence or any other criteria of similar nature, he will always deemed as RNOR


Category 3: Indian Citizen visiting India having income less than 15 lakhs

  1. When treated as resident: If his period of stay in India during the current year is 182 days or more
  2. When treated as RNOR: If the period of stay in India is 729 days or less in past 7 years; or such individual is a non-resident in 9 out of 10 preceding years.

Category 4: Indian Citizen visiting India having income more than 15 lakhs

  1. When treated as resident: If his period of stay in India during the current year is 182 days or more
  2. When treated as RNOR: If the period of stay in India is 729 days or less in past 7 years; or such individual is a non-resident in 9 out of 10 preceding years
Note 1 : If the Indian citizen visiting India having income more than 15 lakhs becomes resident by virtue of condition if the period of stay in India is 120 days or more but less than 182 days in current year and 365 days or more in last 4 years, he will always deemed to be a RNOR
Note 2 : If such individual is not liable to tax in any other country due to his domicile or residence or any other criteria of similar nature, he will always deemed as RNOR

Category 5: : Person of Indian Origin visiting India having income less than or equal to 15 lakhs

  1. When treated as resident: If his period of stay in India during the current year is 182 days or more
  2. When treated as RNOR: If the period of stay in India is 729 days or less in past 7 years; or such individual is a non-resident in 9 out of 10 preceding years.

Category 6: Person of Indian Origin visiting India having income more than 15 lakhs

  1. When treated as resident: If his period of stay in India during the current year is 182 days or more
  2. When treated as RNOR: If the period of stay in India is 729 days or less in past 7 years; or such individual is a non-resident in 9 out of 10 preceding years.

Note: If the person of Indian origin visiting India having income more than 15 lakhs becomes resident by virtue of condition if the period of stay in India is 120 days or more but less than 182 days in current year and 365 days or more in last 4 years, he will always deemed to be a RNOR


Category 7: Any other Individual

  1. When treated as resident
    • If his period of stay in India during the current year is 182 days or more (or)
    • If his period of stay in India is 60 days or more but less than 182 days in the current year and 365 days or more in the last 4 years
  2. When treated as RNOR : If the period of stay in India is 729 days or less in past 7 years; or such individual is a non-resident in 9 out of 10 preceding years.
Note 1 : An individual is considered as a non-resident in India if any of the conditions required to be fulfilled to become a resident are not satisfied.
Note 2 : Income means total income except the income from foreign sources

6. FAQs

1.What are the deductions allowed and not allowed to NRI?

Deductions Allowed

  1. Life insurance premium payment
  2. Tuition fee payment
  3. Principal repayments on loan for purchase of house property
  4. ULIPS or unit linked insurance plan
  5. Home Loan Interest
  6. Deduction under Section 80D
  7. Deduction under Section 80E
  8. Deduction under Section 80G
  9. Deduction under Section 80TTA

Deductions not allowed to NRIs

  1. Investment in PPF
  2. Investments made in NSCs
  3. Post Office 5 Year Deposit Scheme
  4. Senior Citizen Savings Scheme
  5. Section 80CCG, 80DD, 80DDB, 80U
2.What is tax consideration of NRE/NRO Account?

Considering the interest income in NRE / NRO Account, NRI can file their return in India. Income of NRE Account shall be exempt whereas, Income in NRO Account shall be taxable.

3.Why ITR should be filed by NRI?
  1. If the Tax deducted at source (TDS) is greater than the NRI's real tax burden, the NRI can only claim a refund after filing a tax return with interest.
  2. If the NRI has suffered a loss on the sale of investments (short-term or long-term), the losses might be carried forward to future years.
  3. When the NRI returns to India, having documentation of all income and assets in India and abroad would assist them comply with the Repatriation Regulations.
  4. Due to a lack of tax education in India, many tax compliance errors are made (such as purchase of assets under family name without clubbing of requirements being adequately addressed); completing your ITR makes you compliant and/or allows you to cross-check them annually.
  5. If in doubt, EZTax.in recommends filing your Taxes in India.
Learn More
It is usual for non-resident Indians to receive money from resident Indians for a variety of reasons (such as rent). Learn more at TDS on Payments to Non-Resident Indians
4.What are the tax exemptions incomes for NRIs?
  1. Interest on NRE & FCNR (Foreign Currency Non-Repatriable) account
  2. Interest on government issued savings certificates, notified bonds
  3. Dividends from shares of domestic companies
  4. Long term capital gains from listed equity shares and equity- oriented mutual funds
5.What is tax treatment to NRI on capital gains and setoff capital gains against the basic exemption limit?

The treatment depends on the type of capital gain

  1. Short-Term Capital Gains on sale of equity/equity mutual funds:

    Set off against the basic tax exemption limit is NOT available to NRIs for short-term capital gains of equity shares/equity mutual funds

    Example:
    If taxpayer (NRI) made short term capital gains of Rs.2, 00,000 on the sale of equity shares and have other income of Rs.1, 00,000 in India; taxpayer will have to pay tax at 15% on gain of Rs.2, 00,000. Taxpayer tax liability will be Rs.30, 000 (before surcharge and cess).

  2. Long Term Capital Gains(LTCG) on sale of equity/equity mutual funds:

    LTCG in excess of Rs.1, 00,000 per financial year is taxed at 10% (According to the budget 2018)

    Residents can set-off LTCG against basic tax exemption limit but non-resident can’t avail the basic limit.


  3. Short Term Capital Gains on the sale of Debt/Gold/Real Estate etc.:

    Short term Capital Gains income will be taxed as per income tax slab rates Set off against basic tax exemption limit short term capital gains of any capital asset (other than equity) is permitted for both resident and non-residents.


    Example:

    Short term capital gains on the sale of debt funds/property Rs.3, 50,000 and other income of Rs.50, 000 and total income for the year is Rs.4, 00,000(including short term capital gains). The entire income will be taxed as per income tax slab. Then taxpayer has to pay tax of Rs.7, 500 (irrespective of residential status).


  4. Long Term Capital Gains on sale of Debt/Gold/Estate etc.

    Rate of taxation is 20% after indexation or 10% without indexation depending upon the type of asset.

    Residents can set-off LTCG against basic tax exemption limit but non-resident can’t avail the basic limit.



Learn More
Read more on Set-Off Rules and Carry forward Losses @ How to Carry Forward Capital Losses, Set Off Rules

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6.What is DTAA and how to apply DTAA?

Non-Resident Indians (NRI) are Indians who reside overseas yet also earn a living in India. In this instance, it is possible that the income earned in India would be subject to taxation in both India and the NRI's country of residence. This would require the taxpayer to pay tax twice on the same income. To avoid this double taxation, a Double Tax Avoidance Agreement is used (DTAA).

The advantages of DTAA are a lower withholding tax (tax deducted at source or TDS), exemption from tax, and redeemable credits for taxes paid on doubly-taxed income.

India has DTAAs with more than 80 nations. United States of America (USA), United Kingdom (UK), United Arab Emirates (UAE), Canada, Australia, Austria, Belgium, Colombia, Denmark, Finland, France, Germany, Hong Kong, Iceland, Ireland, Italy, Israel, Japan, Korea, Malaysia, Netherlands, New Zealand, Norway, Philippines, Poland, Qatar, Saudi Arabia, Singapore, Spain, Sri Lanka, Sweden, Switzerland, and Thailand, to name a few, are among the major countries with which it has signed the DTAA.

DTAA is calculated under 2 methods:

  1. TAX CREDIT METHOD
  2. EXEMPTION METHOD

1. TAX CREDIT METHOD:

An example calculation from such method is

Income in Source Country1000
Income in Resident Country1000
World Wide (Global) Income2000
Tax paid in source country @20%200
Tax paid in Resident country on worldwide income @30%600
Less: Tax credit on Tax paid in source country200
Tax paid in resident country400
Total tax paid600

2. EXEMPTION METHOD:

An example calculation from such method is

Income in Source Country1000
Income in Resident Country1000
Worldwide Income2000
Tax paid in source country @20%200
Tax paid in Resident country @30%300
Total Tax Paid500
7.Tax Residency certificate (TRC) ?

TRC means proof of residency of a taxpayer in a country and enables such taxpayer to claim relief under DTAA

The taxpayer has to obtain TRC from the Government of the country or the specified territory in which the taxpayer is resident

8.What is Form 10F?

Form 10F is a income tax form which gives the benefit of lower rate of TDS or nil tax for Non Resident taxpayers in India

Form 10F is a online form which needs to be filed in Income Tax Portal

TRC from the country of residence is must to file form 10F

Form 10F can be filed manually by NRI Taxpayers who don’t have PAN upto 31st March 2023

More on DTAA
A comprehensive document on DTAA can be found @ DTAA Explained for NRIs.

7. Important Tax Provisions

Tax provisions that every non-resident Indian or a foreigner living in India must aware in a two part series

Part-1 : Important NRI Tax Provisions  
  1. Determination of their residential status in India
  2. Changes to Quoting of Aadhaar number
  3. Reconciliation with Form 26AS
  4. Capital gains tax treatment
Part-2 : Important NRI Tax Provisions  
  1. Benefit under the Double Tax Avoidance Agreement (DTAA)
  2. NRE /NRO account and their taxability
  3. Disclosure of Foreign Assets
  4. Tax Planning for NRIs returning to India
  5. Presumptive Taxation for Non-Residents

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Disclaimer: This article provides an overview and general guidance, not exhaustive for brevity. Please refer Income Tax Act, GST Act, Companies Act and other tax compliance acts, Rules, and Notifications for details.