Living abroad does not automatically end your tax responsibility in India. Your tax liability depends on two basic factors: your residential status for that tax year and the source of your income.

When you qualify as a non-resident, India taxes income that is received in India or arises from an Indian source. Income earned and first received outside India normally stays outside the scope of Indian tax. However, income from an Indian property, NRO account, investment, business or other Indian source remains taxable according to the applicable rules.

Understanding these basics helps you report your income correctly, claim available deductions and avoid paying tax twice on the same income.

Who is Considered an NRI for Taxation?

For income-tax purposes, the law uses the term “non-resident”. Your citizenship, overseas address or NRI bank account alone does not decide your tax status.

You are treated as a non-resident when you do not meet any of the conditions required to qualify as a resident in India during the relevant tax year. This status is checked separately every year. Therefore, a person can be a non-resident in one tax year and a resident in another.

Your status under income-tax law can also differ from your residential status under the Foreign Exchange Management Act, or FEMA. FEMA status governs matters such as NRE and NRO accounts, while income-tax status decides how your income is taxed.

How is an NRI’s Residential Status Determined?

India now uses the term “tax year” for the period from 1 April to 31 March. Under the Income-tax Act, 2025, you are treated as a resident if you meet either of these conditions:

• You stay in India for 182 days or more during the tax year.
• You stay in India for 60 days or more during the tax year and for at least 365 days in total during the four preceding tax years.

Special rules apply in the following cases:

• For an Indian citizen leaving India for employment abroad or as a crew member of an Indian ship, the 60-day condition does not apply.
• For an Indian citizen or Person of Indian Origin visiting India, the 60-day period is normally replaced by 182 days.
• If such a visitor has India-linked income exceeding ₹15 lakh, excluding income from foreign sources, the 120-day rule applies along with the condition of staying in India for at least 365 days during the preceding four years.
• An Indian citizen with India-linked income above ₹15 lakh who is not liable to tax in any other country can be treated as a deemed resident.

A visitor who stays in India for 120 days or more but less than 182 days under the ₹15 lakh rule is normally treated as a Resident but Not Ordinarily Resident, or RNOR.

Keep a clear record of your arrival and departure dates. Passport stamps, tickets and immigration records help you calculate the exact number of days spent in India.

When Can the Income Tax Department Tax NRIs?

The Income Tax Department can tax an NRI when the income:

• is received or deemed to be received in India
• arises or accrues in India
• is deemed to arise or accrue in India under the tax law

For example, rent from a house in India, interest from an NRO deposit and gains from selling an Indian property are taxable in India.

Income earned and first received abroad does not become taxable in India simply because you transfer the money to an Indian bank account later. However, when income is first received directly in India, the Indian receipt rules apply.

The source and first place of receipt are therefore important. The bank account into which money is credited does not, by itself, decide the final tax treatment.

Types of Income Taxable for NRIs

The following types of India-linked income are commonly taxable for NRIs:

• Salary income: Salary for services performed in India is taxable in India, even when the payment is made outside the country.
• Income from house property: Rent earned from a house, flat or commercial property located in India is taxable after permitted deductions.
• Capital gains: Profit from selling property, shares, mutual funds or other capital assets situated in India is taxable according to the applicable short-term or long-term capital gains rules.
• Business or professional income: Income from a business connection, office, professional setup or other taxable presence in India is taxable here.
• Bank interest: Interest earned on an NRO savings account or NRO fixed deposit is taxable in India. Interest on eligible NRE and FCNR deposits is exempt in India.
• Dividend and investment income: Dividends and other returns from Indian investments are taxable according to the relevant rules.
• Pension and other India-based receipts: Pension, fees, commission and other income sourced from India are taxed according to their nature.

Different rates apply to regular income and special-rate income. Capital gains, lottery winnings, virtual digital assets and certain investments do not always follow the normal slab rates.

Income Tax Slabs & Rates for NRIs

The new tax regime is the default regime. An eligible NRI can choose the old regime by following the prescribed filing process.

For Tax Year 2026–27, the new-regime slabs are:

Under the old tax regime, the slabs for an NRI are:

Under the old regime, NRIs do not receive the higher basic exemption limit available to resident senior citizens. The ₹2.5 lakh basic exemption limit applies regardless of the NRI’s age.

A 4% health and education cess is added to the calculated tax. Surcharge also applies when total income crosses the specified limits.

The rebate that can reduce the tax of a resident individual with income up to ₹12 lakh under the new regime is not available to an NRI. Also, the above slabs do not replace the special rates applicable to capital gains and certain other incomes.

Compare both regimes after considering your income, deductions and special-rate gains. The regime with lower slab rates does not always result in lower final tax.

Tax Exemptions & Deductions Available to NRIs

NRIs can claim several exemptions and deductions, but eligibility depends on the tax regime and type of income.

Important benefits include:

• NRE and FCNR interest: Interest earned on eligible NRE accounts and FCNR deposits is exempt from income tax in India while the prescribed non-resident conditions are met. Interest from an NRO account remains taxable.
• Eligible investments and payments: Under the old regime, deductions are available for specified investments, life insurance premiums, health insurance premiums, home-loan repayments and approved donations, subject to the applicable conditions.
• House-property deductions: An NRI earning rent from an Indian property can claim eligible municipal taxes, the standard deduction on net annual value and qualifying home-loan interest.
• Capital-gains exemptions: Capital-gains relief is available when the sale proceeds or gains are reinvested in specified assets within the required period.
• Salary-related deductions: Eligible salary income can receive the standard deduction and other permitted employment-related benefits.
• Employer contribution to a pension account: Eligible employer contributions to a notified pension scheme remain deductible within the prescribed limit.

The new regime restricts most common deductions. The old regime offers a wider set of deductions but uses higher slab rates. Also, several benefits are available only to residents, so check NRI eligibility before claiming any deduction.

Keep your interest certificates, TDS certificates, rent records, home-loan statements and investment proofs ready before filing your return.

TDS on NRI Income

Tax Deducted at Source, or TDS, is tax collected before the income reaches you. Banks, employers, tenants, companies and property buyers deduct TDS when making specified payments to an NRI.

For ordinary taxable income such as interest from an NRO deposit, the domestic TDS rate is generally 30%, plus applicable surcharge and cess. A lower rate applies when a valid tax treaty or lower-deduction certificate allows it.

TDS rates differ for:

• Salary earned in India
• Rent from an Indian property
• Dividends from Indian companies
• Interest from taxable deposits and securities
• Sale of property, shares or mutual funds
• Other taxable payments made to an NRI

TDS is not always your final tax liability. If the amount deducted is higher than your actual tax, you can claim the excess as a refund by filing an income-tax return. If the TDS is lower, you need to pay the balance tax.

Check your Form 26AS, Annual Information Statement and TDS certificates before filing. Also keep your PAN and residential status updated with your bank and other income payers.

How Can NRIs Avoid Double Taxation (DTAA)?

Double taxation happens when India and your country of residence tax the same income. A Double Taxation Avoidance Agreement, or DTAA, provides relief in such cases.

Depending on the agreement and type of income, relief works in one of three ways:

• India charges tax at a lower treaty rate.
• One country exempts the income.
• Your country of residence gives credit for the tax already paid in India.

The provisions of the Income-tax Act or the relevant DTAA apply based on whichever is more beneficial to the taxpayer, subject to treaty conditions.

To claim DTAA benefits:

1. Check whether India has a DTAA with your country of residence.
2. Identify the treaty article covering your income, such as interest, dividend, rent or capital gains.
3. Obtain a valid Tax Residency Certificate from the tax authority of your country of residence.
4. Submit the prescribed information through Form 41 under the current Income-tax Act, along with other documents requested by the payer.
5. Keep the Indian TDS certificate and proof of tax paid for claiming credit in your country of residence.

DTAA relief is not automatic. You must provide the required documents and satisfy the conditions stated in the relevant treaty.

Manage Your NRI Tax Obligations with Confidence

NRI taxation becomes easier when you follow the right order. First, check your residential status. Next, list every source of income connected with India. Then compare the old and new tax regimes, review the TDS already deducted and claim treaty relief wherever applicable.

Using the right NRI account also makes record-keeping easier. An NRE or FCNR account is designed for eligible overseas funds, while an NRO account helps you manage income received in India. The account type does not override tax law, but it helps keep overseas and India-based funds separate.

IndusInd Bank also provides digital banking services for NRI customers, allowing you to access and manage your account while living abroad.

For related information, read:

• How Can NRIs Avoid Tax Troubles by Opening an NRE Savings Account
• The Major Benefits of an NRE Account Deposit

Frequently Asked Questions

Q1. Do NRIs have to pay tax on income earned abroad?

An NRI does not normally pay Indian tax on income that is earned and first received outside India. However, income received in India or income that arises or is deemed to arise in India remains taxable here.

Q2. What is DTAA and how does it help NRIs avoid double taxation?

A DTAA is an agreement between India and another country that prevents the same income from being taxed twice without relief. It provides an exemption, a lower tax rate or credit for tax already paid, depending on the treaty and type of income.

Q3. Is interest earned on NRE and FCNR accounts taxable for NRIs?

Interest earned on eligible NRE and FCNR deposits is exempt from income tax in India while the prescribed non-resident conditions are met. Your country of residence can still tax this interest under its local laws.

CIBIL, Credit Information Bureau India Limited, is an important part of the financial system in India as it provides critical credit information about every individual and rates them based on their creditworthiness. The system has its own way of analysis which results in a credit rating for every individual called the CIBIL score.

The CIBIL score is used by lenders, banks and credit card providers to assess an individual’s credit history, the potential risk associated with the person and to approve their loan applications. The score is calculated using several factors, such as income, age, gender, education and existing bank accounts, and ranges between 300 and 900. Every bank and financial institution has its own benchmark of a good CIBIL score and scrutinizes loan applications based on these numbers.

How Reliable is a CIBIL Score?

CIBIL scores are derived using standardized algorithms without manual intervention. Thus the chances of error or manipulation are minimal. In case of queries, the individual can always approach CIBIL for clarifications.

Why is a CIBIL Score Important?

A good CIBIL score plays a significant role in the economic journey of an individual. The CIBIL score influences several financial facets for an individual such as:

Approval of Loans: Housing loans, vehicle loans and medical loans are some of the most commonly availed favours from a financial institution. Almost every Indian citizen avails a bank loan at least once in his lifetime. A good CIBIL score ensures easier and quicker approval of loans. In general, most banks consider it safe to sanction loans to individuals with a CIBIL score of 700 or more.

Better Interest Rates: CIBIL scores have a directly proportional relationship with bank interest rates. The better the score, the higher is the power to negotiate the rate of interest. In some cases, banks may also lower the processing fees for those candidates with a good CIBIL score.

Easier Credit Card Approvals: Credit cards have become an important part of today’s lifestyle. Paying through credit cards offers a number of benefits like customer rewards, money-back offers and special discounts in the consumption of essential entities like fuel. The CIBIL score is used to determine your eligibility for credit card approvals and the granted credit limit on the card. A good CIBIL score offers several credit card options to choose from and makes the entire process hassle-free. It is important to remember that balance transfers to a new card or closing your existing credit cards impacts the credit utilization and may be reflected through the CIBIL score.