Income Tax for NRI

Indian Income Tax system is designed in a way that it covers all including Non-Residential Indians (NRIs). NRIs have to file income tax as per Indian Income Tax Act, 1961. There are many factors that need to be considered before filing income tax. Let’s take a quick look:


Income Tax for NRI: Who will come under the umbrella of Resident Indians?

A person who stays in India for 182 days or 6 months in a year will be considered an Indian resident for that year.


If a person is staying in India for a period of 60 days or more during the year and 365 days or more during 4 years immediately preceding the previous year then they will be considered an Indian resident.




It should be noted that, if someone is an Indian citizen working abroad or a crew member on an Indian ship, only the first condition is available to them – which means they will be treated as a resident of India when they spend at least 182 days in India.


The same applies to a Person of Indian Origin (PIO) who visits India. The second condition does not apply to these PIOs. A PIO is a person whose parents or any of his grandparents were born in undivided India.


If the above conditions are not met, the person is deemed as NRI.

Income Tax for NRI: What are the new rules?

As per the Finance Act, 2020, citizens of India earning more than Rs 15 lakh from Indian sources shall be deemed a resident of India if they are not liable for payment of taxes in any other country. In this case, the above exception to provide the period of 60 days as mentioned in (2) above shall be substituted with 120 days.


If the person’s total income (other than income from foreign sources) is up to Rs 15 lakh, then the 60 days condition is extended to 182 days. The 60-day condition is extended to 182 days if the individual, being an Indian citizen, is leaving India for employment outside India


Income Tax for NRI: What is taxable?

If the above conditions of being an Indian resident are met, then the person’s global income is taxable in India. But if the status is ‘NRI,’ then only income earned or accrued in India is taxable in India.




-Salary received in India or salary for service provided in India, income from a house property situated in India, capital gains on transfer of asset situated in India, income from fixed deposits or interest on a savings bank account are all examples of income earned or accrued in India. These incomes are taxable for an NRI.


-Income which is earned outside India is not taxable in India.


-Interest earned on a Non-Residential External (NRE) account and Foreign Currency Non-Resident Account (FCNR) account is tax-free.




-Interest on Non-Resident Ordinary (NRO) accounts is taxable in the hands of an NRI.


Note Whether an NRI or a Resident any individual whose income exceeds Rs 2,50,000 has to file an income tax return in India.