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
'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:
If both the above conditions are not satisfied, the individual is a non resident
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.
Refer Latest Tax Residency Calculator with the updated rules for AY 2025-26 (FY 2024-25) & Budget 2024.
A resident individual will be treated as resident and ordinarily resident in India during the year if taxpayer satisfies both the following conditions:
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.
Nature of income | Residential Status | ||
---|---|---|---|
ROR * | RNOR * | NRI * | |
Income which accrues or arises in India | Taxed | Taxed | Taxed |
Income which is deemed to accrue or arise in India | Taxed | Taxed | Taxed |
Income which is received in India | Taxed | Taxed | Taxed |
Income which is deemed to be received in India | Taxed | Taxed | Taxed |
Income accruing outside India from a business controlled from India or from a profession set up in India | Taxed | Taxed | Not taxed |
Income other than above (i.e., income which has no relation with India) | Taxed | Not taxed | Not taxed |
(*) ROR means resident and ordinarily resident.
RNOR means resident but not ordinarily resident.
NRI means non-resident indian.
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.
Section 10 of the Income Tax Act exempts various incomes from tax in the hands of non-resident.
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
Tax on Long term Capital Gains arising to non-resident Individual
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 @
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
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
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
Category 4: Indian Citizen visiting India having income more than 15 lakhs
Category 5: : Person of Indian Origin visiting India having income less than or equal to 15 lakhs
Category 6: Person of Indian Origin visiting India having income more than 15 lakhs
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
Deductions Allowed
Deductions not allowed to NRIs
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.
The treatment depends on the type of capital gain
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: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.
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.
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).
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.
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:
An example calculation from such method is
Income in Source Country | 1000 |
Income in Resident Country | 1000 |
World Wide (Global) Income | 2000 |
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 country | 200 |
Tax paid in resident country | 400 |
Total tax paid | 600 |
An example calculation from such method is
Income in Source Country | 1000 |
Income in Resident Country | 1000 |
Worldwide Income | 2000 |
Tax paid in source country @20% | 200 |
Tax paid in Resident country @30% | 300 |
Total Tax Paid | 500 |
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
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
Tax provisions that every non-resident Indian or a foreigner living in India must aware in a two part series
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Vijay Krishna V
Oregon Health & Science University, USA
I filed my NRI filing with EZTax.in last year and their support team is the best I experienced so far. Despite I was in USA, they are able to accommodate the communication and coordination.
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.