Yes, in many cases.
As per Section 139 of the Income-tax Act, an NRI must file an Income Tax Return (ITR) in India if:
✔ Their total taxable income in India exceeds the basic exemption limit, before claiming capital gains exemptions or Chapter VI-A deductions
✔ They want to claim refund of TDS, even if:
Total income is below the exemption limit, or
Income is exempt as per DTAA, but TDS was still deducted
An NRI is not required to file ITR if:
Dividend income
Certain specified interest income such as:
Interest from Govt./Indian company in foreign currency
Infrastructure debt fund income
Interest on foreign currency bonds, long-term infra bonds, rupee-denominated bonds
Interest distributed by Business Trusts
Interest from Mutual Funds/UTI (purchased in foreign currency)
Royalty and Fees for Technical Services (without PE in India)
Shares of Indian companies
Debentures/deposits of Indian companies
Government securities
…provided the asset was purchased in convertible foreign currency and TDS has been fully deducted.
Income from investment in Category-III AIF listed in an IFSC, or
Capital gains u/s 47(viiab)
— and conditions notified via Notification 119/2021 are satisfied.
Q2: What is the TDS rate on fixed deposit interest earned by an NRI?
Banks deduct TDS at 30% + surcharge + cess under Section 195.
However, if DTAA provides a lower rate, the reduced rate applies.
(DTAA benefit can be availed by submitting Tax Residency Certificate & required documents.)
Q3: Is income from NRE and NRO accounts taxable?
| Type of Account | Nature of Income | Taxability |
|---|---|---|
| NRE Account | Interest on foreign remittances parked in India | Fully Exempt under Section 10(4)(ii) |
| NRO Account | Interest on income earned or deposited in India | Taxable for NRI + TDS applicable |
Q4: Is residential status relevant to determine taxability?
✅ Yes. Indian taxation depends on both:
Residential status, and
Nature of income
Q5: What are the categories for individuals?
Resident and Ordinarily Resident (ROR)
Resident but Not Ordinarily Resident (RNOR)
Non-Resident (NR)
Residential status is not permanent and is determined every year.
Q6: Can an Indian citizen be treated as resident even if not living in India?
✔ As per Section 6(1A) – If an Indian citizen earns > ₹15 lakh income (other than foreign source income) AND is not liable to tax in any other country, he will be treated as Resident in India.
If such person meets NO ordinary resident conditions → treated as RNOR.
You are a Resident if:
Stayed in India 182+ days in the year, OR
60+ days in the year AND 365+ days in preceding 4 years
Relaxations:
Indian citizens/PIOs visiting India: 60 days replaced with 182 days
If Indian citizen/PIO earns > ₹15 lakh (other than foreign source income): 60 days becomes 120 days
If none of these conditions are met → Non-Resident
A resident becomes RNOR if ANY of these apply:
Non-resident in 9 out of 10 preceding years
Stayed in India ≤ 729 days in preceding 7 years
Indian citizen/PIO earning > ₹15 lakh and stayed 120–182 days
Indian citizen deemed resident u/s 6(1A)
If none apply → Resident and Ordinarily Resident
| Source of Income | ROR | RNOR | NR |
|---|---|---|---|
| Income earned in India | ✅ Taxed | ✅ Taxed | ✅ Taxed |
| Income deemed to arise in India | ✅ | ✅ | ✅ |
| Global income | ✅ | ❌ | ❌ |
| Foreign income from business controlled from India | ✅ | ✅ | ❌ |
| Foreign income with no link to India | ✅ | ❌ | ❌ |
Covered under Section 9—includes:
Capital gains from Indian property
Business connection in India
Salary for services rendered in India
Indo Govt. salary for service abroad
Income from assets, property or sources in India
Interest, Royalty & FTS from Indian entities
Certain interest/royalty from non-residents used for business in India
Dividend from Indian companies
A non-resident has a business connection in India if a person in India:
Concludes contracts on their behalf, OR
Maintains stock & delivers goods, OR
Habitually secures orders for them
Independent brokers/agents in ordinary course are excluded.
Only income attributable to operations in India is taxable—not entire global income.
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