Quick answers
- Do NRIs have to pay tax in India? Yes — but only on Indian income: rent from Indian property, interest on NRO deposits, dividends, and capital gains on Indian shares, funds and property. Salary earned and paid abroad, and other foreign income, is not taxed in India.
- NRI tax slab 2026-27: the same slabs as residents (new regime: nil to ₹4 lakh, then 5% to 30%), but without the rebate that makes ₹12 lakh tax-free for residents.
- Interest on NRE and FCNR deposits is tax-free for NRIs; NRO interest is taxable.
- TDS: Indian payers deduct tax at source on most NRI income, often more than the final tax — file a return to get the excess back.
- Deemed resident: an Indian citizen with Indian income above ₹15 lakh who isn’t taxable in any other country can be treated as resident (RNOR) — check with the residential status calculator.
Who counts as an NRI for tax
For income tax, “NRI” means a non-resident under the day-count tests — it’s not about your passport or visa. You’re resident if you spend 182 days or more in India in the tax year, or 60 days plus 365 days in the previous four years (with relaxations for Indians working abroad or visiting, and a 120-day rule when Indian income exceeds ₹15 lakh). Check yours with the residential status calculator or read residential status and RNOR.
What India taxes
| Income | Taxed in India for an NRI? |
|---|---|
| Salary for work done abroad, foreign rent, foreign interest | No |
| Rent from Indian property | Yes |
| NRO account interest | Yes (TDS at 30% plus surcharge and cess unless a treaty rate applies) |
| NRE and FCNR interest | No, while non-resident |
| Capital gains on Indian property, shares and mutual funds | Yes |
| Dividends from Indian companies | Yes |
NRI income tax slabs 2026-27
| Taxable Indian income (new regime, default) | Rate for NRIs |
|---|---|
| Up to ₹4 lakh | Nil |
| ₹4–8 lakh | 5% |
| ₹8–12 lakh | 10% |
| ₹12–16 lakh | 15% |
| ₹16–20 lakh | 20% |
| ₹20–24 lakh | 25% |
| Above ₹24 lakh | 30% |
- No ₹12 lakh rebate for NRIs — the section 156 (old 87A) rebate is for residents only, so an NRI with ₹10 lakh of Indian income pays tax from ₹4 lakh.
- The old regime (nil to ₹2.5 lakh, 5%, 20%, 30%) is also available; NRIs don’t get the higher senior-citizen exemption limits.
- Plus surcharge above ₹50 lakh and 4% cess. Compare both regimes in the income tax calculator (choose “Non-resident”).
Tax rates for NRIs
- Slab rates are the same as for residents. Under the new regime: nil up to ₹4 lakh, then 5%, 10%, 15%, 20% and 25% in ₹4 lakh steps, and 30% above ₹24 lakh.
- No section 87A rebate: the rebate that makes income up to ₹12 lakh tax-free for residents is not available to NRIs.
- Listed shares and equity funds: long-term gains (held over 12 months) at 12.5% above ₹1.25 lakh a year; short-term gains at 20%.
- Property: long-term gains (held over 24 months) at 12.5% without indexation; the 20%-with-indexation option for pre-July-2024 property is for residents only. Try the capital gains calculator.
- For NRIs, the unused basic exemption can’t be set off against these special-rate capital gains.
TDS: why NRIs usually overpay
- Payments to NRIs carry TDS at full rates — on property sales, rent, NRO interest and capital gains on shares and funds.
- Because TDS ignores your slab and exemptions, it’s often more than your final tax — you recover the excess by filing a return.
- Before a big transaction, a lower-TDS certificate (Form 128) stops over-deduction in the first place.
- Selling property? Read TDS on sale of property by an NRI — including the no-TAN rule for buyers from 1 October 2026.
Double tax relief (DTAA)
India’s tax treaties can cap Indian tax on interest, dividends and royalties below the domestic rate. Give the payer your tax residency certificate and Form 41 (formerly 10F). Treaty rates by country: US · UAE · Gulf · Europe · Canada · Australia.
Bank accounts and repatriation
- NRE (foreign earnings, tax-free interest, freely repatriable) vs NRO (Indian income, taxable interest) — see NRE vs NRO vs FCNR.
- Up to USD 1 million per financial year can be repatriated from NRO balances and sale proceeds, with Forms 145 and 146 (formerly 15CA/15CB) — see repatriation.
Filing your return
File if your Indian income exceeds the basic exemption limit — and whenever you want excess TDS back. Most NRIs use ITR-2. NRIs don’t report foreign assets. Details: NRI income tax return.
Investing in India from abroad
NRIs can invest in Indian startups (with FEMA reporting), SEBI AIFs and GIFT City funds — and since 2026 individuals abroad can hold up to 10% of a listed Indian company through the portfolio route.
NRI tax checklist
- Confirm your residential status for the year.
- Move resident accounts to NRO; keep foreign earnings in NRE/FCNR.
- Give banks your TRC and Form 41 to get treaty rates.
- Get a lower-TDS certificate before selling property or other large receipts.
- File your return to claim refunds; keep Form 146 certificates for repatriation.
Want it handled? See NRI taxation services.
Quick answers: India for NRIs and foreigners — questions answered.
Frequently asked questions
Do NRIs have to pay tax in India?
Yes, on income that arises or is received in India — such as rent, NRO interest, dividends and capital gains on Indian assets. Income earned and received outside India is not taxed in India for a non-resident.
What is the income tax slab for NRIs in India?
For tax year 2026-27 under the default new regime: nil up to ₹4 lakh, 5% to ₹8 lakh, 10% to ₹12 lakh, 15% to ₹16 lakh, 20% to ₹20 lakh, 25% to ₹24 lakh and 30% above, plus surcharge and cess. NRIs don't get the ₹12 lakh rebate available to residents.
Is NRE interest taxable in India?
No. Interest on NRE accounts and FCNR deposits is exempt for NRIs. Interest on NRO accounts is taxable and subject to TDS.
What are the income tax slabs for NRIs in 2026-27?
Under the default new regime: nil up to ₹4 lakh, 5% to ₹8 lakh, 10% to ₹12 lakh, 15% to ₹16 lakh, 20% to ₹20 lakh, 25% to ₹24 lakh and 30% above, plus surcharge and cess. NRIs don't get the rebate that makes income up to ₹12 lakh tax-free for residents.
How is an NRI taxed in India?
An NRI is taxed only on income earned or received in India — such as Indian rent, NRO interest, dividends and capital gains on Indian assets — at the same slab rates as residents but without the section 87A rebate. Foreign income isn't taxed in India.
Is the ₹12 lakh tax-free limit available to NRIs?
No. The section 87A rebate that makes income up to ₹12 lakh tax-free under the new regime applies only to resident individuals. NRIs pay tax from ₹4 lakh under the new regime slabs.
What is the capital gains tax for NRIs on shares?
On listed shares and equity mutual funds, long-term gains (held more than 12 months) are taxed at 12.5% above ₹1.25 lakh a year and short-term gains at 20%, with TDS deducted at source for NRIs.
How can NRIs avoid double taxation?
By claiming the lower rate under India's tax treaty with their country of residence (with a tax residency certificate and Form 41) and claiming credit for Indian tax in their home country.
Do NRIs need to file an income tax return in India?
Yes, if Indian income exceeds the basic exemption limit — and it's usually worth filing anyway to claim refunds of excess TDS.
Please note: this guide is general information based on the rules as they stood on the review date above. Regulations and RBI/CBDT procedures change often — please get advice on your specific facts before acting.