NRI tax implications in India: a practical guide
An orientation to how an NRI is taxed in India: what depends on your residential status, which income is taxable here, how rental income and capital gains work, tax deducted at source, and how relief and repatriation fit together. Rates and limits change, so treat this as a map and confirm the current figures with a chartered accountant.
An NRI is generally taxed in India only on income that accrues, arises or is received in India, such as rent from Indian property, capital gains on Indian assets, and interest on certain Indian accounts, not on worldwide income. Much of this income has tax deducted at source, and where more tax is withheld than is due, an NRI can claim it back or obtain a lower-deduction certificate. Inheriting is not taxed in India, but income from inherited assets and gains on a later sale are. Relief for double taxation may be available under a treaty, and repatriation follows the NRO route with the prescribed forms. The exact rates and limits sit in the tax law and change, so verify the current position.
- Your tax depends on your residential status for the year (resident, RNOR or non-resident), which is a tax concept, not the same as domicile or citizenship. [VERIFY status rules.]
- An NRI is generally taxed on India-source income only, not on foreign income. [VERIFY]
- Rental income from Indian property is taxable, and the tenant may have to deduct tax at source. [VERIFY]
- A sale of Indian property or securities attracts capital-gains tax and withholding; a lower or nil TDS certificate can prevent over-deduction. [VERIFY rates.]
- Inheriting is not taxed, but income and later gains are; there is no estate or inheritance tax in India. [VERIFY]
- A tax treaty (DTAA) with your country of residence may reduce or credit double tax; repatriation uses Forms 15CA/15CB. [VERIFY]
Tax rates, holding periods, exemptions and repatriation limits change frequently and depend on your facts. This guide explains how the pieces fit; the current numbers should be confirmed with a qualified chartered accountant. [VERIFY all rates, thresholds and limits against the Income-tax Act, 2025 and current FEMA rules.]
First distinction
Residential status is not the same as domicile
Two different ideas are easy to confuse. Residential status is a tax concept, decided each year mainly by how many days you spend in India, and it determines what income India can tax. Domicile is a succession concept, your permanent home in the eyes of the law, and it helps decide which country's law governs your movable property on death. You can be non-resident for tax while still domiciled in India, or vice versa.
| Residential status | Domicile | |
|---|---|---|
| What it is | A tax classification for the year (resident, RNOR, non-resident) | Your permanent home in law (domicile of origin or of choice) |
| Decided mainly by | Days spent in India in the year [VERIFY] | Where you have settled permanently (Indian Succession Act, 1925, ss.7–11) |
| What it affects | Which income India taxes | Which law governs succession to your movable property |
For how domicile decides succession to movable versus immovable property, see the NRI inheritance guide. This page is about tax.
The scope
What income is taxed for an NRI
Broadly, an NRI is taxed in India on income that has an Indian source, and generally not on foreign income. The common India-source items are below; the exact treatment and rates should be confirmed for the year.
| Income | Generally taxable in India? | Note |
|---|---|---|
| Rent from Indian property | Yes | Tenant may deduct tax at source. [VERIFY] |
| Capital gains on Indian property or shares | Yes | Withholding on sale; lower-TDS certificate possible. [VERIFY] |
| Interest on NRO account / Indian deposits | Yes | Usually subject to TDS. [VERIFY] |
| Interest on NRE / FCNR account | Often exempt, subject to status | Depends on your residential status. [VERIFY] |
| Salary for work done in India | Yes | India-source income. [VERIFY] |
| Foreign income (earned abroad) | Generally no, for an NRI | Subject to residential status. [VERIFY] |
| Inherited assets (the inheritance itself) | No | No estate/inheritance tax; income and later gains are taxable. |
Owning & letting
Rental income
Rent from Indian property is taxable in India and is reported in an Indian return. When a tenant pays rent to an NRI, the tenant may be required to deduct tax at source before paying. Standard deductions and a deduction for home-loan interest may reduce the taxable amount. Where the tax withheld exceeds the actual liability, the excess can be claimed back, or reduced in advance with a lower-deduction certificate. [VERIFY current treatment and rates.]
Selling
Capital gains on a sale
Selling Indian property or securities gives rise to capital gains, taxed differently depending on how long the asset was held (short-term or long-term). Certain reinvestment exemptions may reduce or defer the tax, for example reinvesting the gain from a house into another house or into specified bonds, subject to conditions. Because holding periods, rates and exemption limits change, confirm the current position before you sell. On a sale by an NRI, the buyer is generally required to withhold tax at source, and an NRI can seek a lower or nil withholding certificate so the deduction is closer to the real gain. [VERIFY all holding periods, rates and exemptions against the Income-tax Act, 2025.]
Deducted upfront
Tax deducted at source (TDS)
Much of an NRI's Indian income has tax deducted at source before it reaches you: on rent, on interest, and on the sale price of property. Because withholding on a property sale is on the whole price rather than only the gain, it can far exceed the tax actually due, locking up cash until you claim it back. To avoid this, an NRI can apply for a lower or nil deduction certificate so tax is withheld closer to the real liability. Filing an Indian return then reconciles what was withheld with what is owed, and any excess is refunded. [VERIFY the current TDS rates and certificate procedure.]
Sending money home
Repatriating funds abroad
Indian income and sale proceeds are usually held in an NRO account and remitted abroad within the annual limit that applies to an NRI, after tax. The bank needs a chartered accountant's certificate and Forms 15CA and 15CB confirming that tax has been dealt with before it processes the remittance. NRE and FCNR balances are generally more freely repatriable, subject to your status. [VERIFY the current annual limit and forms.]
Two countries
Double taxation and DTAA relief
Income taxed in India may also be taxable in your country of residence. India has Double Taxation Avoidance Agreements (DTAAs) with many countries, which can give relief, either an exemption or a credit, so the same income is not taxed twice. Claiming treaty relief usually needs a tax residency certificate from your country of residence and correct reporting in both places. The relief depends on the specific treaty, so take advice in both jurisdictions rather than assuming automatic relief. [VERIFY the treaty position for your country.]
Do it right
Common tax mistakes NRIs make
- Confusing residential status (tax) with domicile (succession), and applying the wrong rule.
- Assuming rental income or a sale is tax-free, or ignoring the tenant's or buyer's TDS duty.
- Letting the buyer withhold TDS on the full sale price without seeking a lower-deduction certificate.
- Not filing an Indian return, and so never reclaiming excess TDS.
- Overlooking the CA certificate and Forms 15CA/15CB for repatriation.
- Assuming automatic DTAA relief without a tax residency certificate and correct reporting.
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Ask about your tax positionAnswers
NRI tax in India: frequently asked questions
Are NRIs taxed on their worldwide income in India?
Generally no. An NRI is usually taxed in India only on income that accrues, arises or is received in India, such as Indian rent, capital gains on Indian assets and certain interest. Foreign income is generally outside the Indian net, subject to your residential status. Verify the current rules.
Is inherited money or property taxed in India?
Inheriting is not taxed, as India has no estate or inheritance tax. However, income from inherited assets and capital gains on a later sale are taxable. See the NRI inheritance guide for the succession side.
Do I pay tax on rent from my Indian flat?
Yes, generally. Rental income from Indian property is taxable in India, and the tenant may be required to deduct tax at source when paying rent to an NRI. Deductions may reduce the taxable amount. Verify the current treatment.
How are capital gains taxed when I sell?
Capital gains on Indian property or securities are taxed depending on the holding period, with certain reinvestment exemptions available. The buyer generally withholds tax on the sale, and an NRI can obtain a lower or nil certificate. Confirm the current rates with a chartered accountant.
What is a lower or nil TDS certificate?
It is a certificate an NRI can obtain so that tax is deducted closer to the actual liability rather than on the full amount, which is especially useful on a property sale where withholding would otherwise be on the whole price.
How do I avoid being taxed twice?
India's DTAAs with many countries can give an exemption or credit so the same income is not taxed in both places. Claiming relief usually needs a tax residency certificate and correct reporting in both countries. Take advice in each.
Is my residential status the same as my domicile?
No. Residential status is a tax classification decided mainly by days spent in India; domicile is your permanent home in law and affects succession to your movable property. They are separate, and can differ.
Next step
Get your India tax position right
The wider guide to holding, inheriting and selling Indian assets.
Read the guideSee India property laws for NRIs, the NRI inheritance guide (including domicile and movable versus immovable property), NRI succession advisory, and make an India Will for your assets.
Reviewed by Dr. Deepak Jain, CTEP, CWM
Founder and Managing Director, NexGen Estate Planning Solutions; Co-founder and Director, AAFM India. Written by the NexGen Content & Research Team and reviewed for legal accuracy. NexGen has helped 3,000+ families, including NRIs, structure and transfer wealth across generations.
- Income-tax Act, 2025 — residential status, scope of income taxable in India, taxation of rental income and capital gains, withholding at source, and lower-deduction certificates. [VERIFY all provisions, rates and thresholds.]
- Double Taxation Avoidance Agreements and the tax-residency-certificate requirement for treaty relief. [VERIFY per country.]
- FEMA — NRO/NRE accounts and repatriation, with a chartered accountant's certificate and Forms 15CA/15CB. [VERIFY the annual limit.]
- Indian Succession Act, 1925, s.5 and ss.7–11 — the separate role of domicile in succession to movable and immovable property (a succession, not a tax, concept).
Content reviewed by Dr. Deepak Jain, CTEP, CWM — 23 July 2026.