Non-Resident Indian (NRI)
A Non-Resident Indian (NRI) is an Indian citizen or person of Indian origin who does not meet the criteria of residency in India under the Income Tax Act.
NRI status is determined based on the number of days a person stays in India during a financial year.
1. Residential Status Criteria
An individual is treated as a Non-Resident if:
- They do not satisfy the basic conditions of being a resident in India
- Generally, if stay in India is less than 182 days during the financial year (subject to additional conditions)
Residential status must be evaluated every year.
2. Taxability of NRIs
- NRIs are taxed only on income earned or received in India
- Foreign income is generally not taxable in India
Examples of taxable income in India:
- Salary received in India
- Rental income from property in India
- Interest from Indian bank accounts
- Capital gains from assets in India
3. Special Provisions for NRIs
- Certain incomes are taxed at special rates
- TDS is often deducted at higher rates
- Benefit of Double Taxation Avoidance Agreement (DTAA) can be claimed
4. NRI Bank Accounts
NRIs can maintain:
- NRE Account: Income earned abroad (repatriable, tax-free interest in India)
- NRO Account: Income earned in India (taxable)
5. Return Filing Requirement
NRIs must file an Income Tax Return (ITR) if:
- Income in India exceeds the basic exemption limit
- They want to claim a refund of TDS
- They have capital gains or other taxable income
6. Common Mistakes
- Incorrect determination of residential status
- Not reporting Indian income
- Ignoring DTAA benefits
- Confusing NRE and NRO taxation
Practical Insight
Most NRIs assume:
“If I live abroad, I don’t need to worry about Indian tax.”
That’s not correct.
If you have:
- property
- investments
- income in India
You have tax obligations here.
The real complexity is not tax rates,
it’s residential status and cross-border rules.
How N D Savla & Associates Can Help
At N D Savla & Associates, we help you:
- Determine correct residential status
- Plan tax-efficient structuring of Indian income
- Apply DTAA benefits effectively
- Ensure compliant ITR filing and reporting
