NRI & FEMA Journey · Step 1 of 6
NRI Tax Filing & Residency Advisory
Income tax return filing for Non-Resident Indians — Section 6 residency determination (182-day and 60-day rules), NRI ITR for NRO interest, rental income, and capital gains, Double Taxation Avoidance Agreement (DTAA) relief claims, Form 13 lower TDS certificate under Section 197, and FEMA-compliant repatriation advisory.
More details are coming soon. Contact us to get started.
Residency Determination — Section 6
Before filing an ITR, the correct residential status must be determined for each financial year — it dictates which income is taxable in India and at what rates. The tests under Section 6(1) of the Income Tax Act, 1961:
Resident and Ordinarily Resident (ROR)
Present in India for ≥182 days in the financial year, OR ≥60 days in the year and ≥365 days in the preceding 4 years
Global income taxable in India
Non-Resident (NR)
Does not satisfy either of the basic Section 6(1) conditions — typically abroad for work/employment for most of the year
Only Indian-sourced income taxable
Resident but Not Ordinarily Resident (RNOR)
NRI returning to India — satisfies the basic stay test but not the additional Section 6(6) conditions (NR in 9 of 10 preceding years, or <729 days in India in 7 preceding years)
Indian income + foreign business income from India operations — NOT pure foreign income
Which Income Is Taxable for NRIs in India?
- Interest income from NRO accounts (taxable at 30% + surcharge + cess; DTAA may reduce this)
- Interest income from NRE accounts and FCNR(B) accounts — exempt under Section 10(4) of the Income Tax Act
- Rental income from property situated in India — taxable at applicable slab rates after standard deduction under Section 24
- Capital gains on sale of property or shares in Indian companies — STCG at 15%/slab rates; LTCG at 12.5% or 20% depending on asset class and holding period
- Dividends from Indian companies — TDS at 20% (or lower DTAA rate), declared as income in ITR
- Income from business or profession exercised in India
- Salary for services rendered in India (even if received abroad)
- Foreign income — NOT taxable for NRIs (unlike ROR); exempt from Indian income tax
When Is ITR Filing Mandatory for NRIs?
Total income exceeds basic exemption limit
₹2.5L (AY 2025-26 under old regime), ₹3L under new regime (Section 115BAC) — mandatory ITR even if TDS was deducted at source.
Claim TDS refund
TDS on NRO interest, NRI property sale, or dividends is often deducted at the maximum applicable rate. An ITR must be filed to claim a refund if the actual tax liability is lower (due to DTAA or lower slab rate).
Capital gains from asset sales
Any capital gain from sale of property, mutual funds, or shares in India — regardless of amount — requires ITR filing for disclosure and tax computation.
High-value transactions
Cash deposits of ₹1 Cr+, electricity bill payments of ₹1L+, or foreign travel spends of ₹2L+ trigger ITR filing even below the basic exemption limit (7th proviso to Section 139(1)).
Carry-forward of capital losses
Capital losses can only be carried forward if an ITR is filed by the due date (31 July or 31 October as applicable). NRIs often miss this — losing the right to set off future gains.
What We Do
- Section 6 residency determination — day-count analysis, travel documentation review, and RNOR eligibility check for returning NRIs
- NRI ITR preparation — income from NRO/NRE accounts, Indian property rental, capital gains on shares and mutual funds, and other India-sourced income
- DTAA treaty analysis — identifying applicable treaty, verifying Tax Residency Certificate (TRC) requirements, and claiming treaty benefits on NRO interest, dividends, or capital gains
- Form 13 application — lower/nil TDS certificate under Section 197 for anticipated NRI income where the actual tax liability will be lower than the TDS deduction rate
- Form 15CA and Form 15CB certification — CA-certified remittance certificate for repatriation of NRO funds or property sale proceeds abroad
- Capital gains computation — indexation benefit eligibility, holding period analysis, Section 54/54F rollover planning for NRIs reinvesting in Indian property
- TDS credit reconciliation — 26AS vs Form 16A vs ITR schedule matching to ensure all TDS deducted is claimed correctly
- Advance tax computation and filing — for NRIs with significant India-sourced income not subject to TDS (e.g., rental income net of municipal tax)
Frequently Asked Questions
Who qualifies as an NRI under Indian income tax law?
Under Section 6(1) of the Income Tax Act, 1961, a person is a Resident if they are present in India for 182 days or more in the financial year, OR for 60 days or more in the year AND 365 days or more in the preceding 4 years. If neither condition is met, the person is a Non-Resident (NR). Indian citizens going abroad for employment and crew members of Indian ships are subject to the 182-day test only (the 60-day test does not apply to them), making it harder to become NR — they must be outside India for more than 182 days.
Is NRO interest income taxable in India?
Yes. Interest earned on NRO accounts is taxable in India at 30% plus applicable surcharge and cess. TDS is typically deducted by the bank at 30.90% (including cess). However, many DTAA treaties reduce this rate — for example, the India-USA DTAA caps NRO interest tax at 15%, the India-UAE DTAA at 12.5%. To claim the DTAA rate, the NRI must furnish a Tax Residency Certificate (TRC) from the country of residence to the Indian bank or payer. An ITR must be filed to claim any refund if TDS was deducted at 30% but the DTAA rate is lower.
What is the RNOR status and why does it matter for returning NRIs?
Resident but Not Ordinarily Resident (RNOR) is a transitional status for NRIs returning to India. An individual is RNOR if they were NR in 9 of the 10 preceding financial years, OR if their total stay in India in the 7 preceding years was 729 days or less. RNOR individuals are taxed like NRIs on foreign income — only Indian-sourced income is taxable. This provides a 2–3 year tax holiday on foreign income for returning NRIs as they transition back. Careful advance planning to use the RNOR window is one of the most impactful tax benefits available to returning NRIs.
Does an NRI need to file an ITR if only NRE/FCNR interest was earned?
NRE account interest and FCNR(B) deposit interest are fully exempt from Indian income tax under Section 10(4) of the Income Tax Act, 1961, as long as the individual qualifies as an NRI under FEMA (which has a different residency test from the income tax test). If the NRI has no other taxable Indian income, they are generally not required to file an ITR. However, filing a nil return is advisable to maintain compliance records and support visa or bank applications that require recent ITRs.
What is Form 13 and how does an NRI apply for it?
Form 13 is an application under Section 197 of the Income Tax Act for a certificate authorising the deductor to deduct TDS at a lower or nil rate. NRIs typically apply for Form 13 when significant income (property sale, NRO interest, professional fees) is expected, and the applicable TDS rate (30% for most NRI income) would exceed the actual tax liability. Form 13 is filed online through the Income Tax e-filing portal with the Jurisdictional Assessing Officer. The certificate, once granted, is valid for the financial year specified and must be provided to each deductor.
What Comes Next
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NRI Property & FEMA Compliance
Buying or selling property in India as an NRI involves Section 195 TDS, FEMA payment channel rules, and Form 15CA/15CB certification — coordinated alongside the NRI ITR filing engagement.
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Section 195 TDS on NRI Payments
When an Indian payer makes payments (rent, professional fees, property purchase price) to an NRI, TDS under Section 195 applies. We advise both sides — the NRI on Form 13 lower TDS applications, and the payer on Form 15CA/15CB requirements.
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International Tax Advisory
NRIs with complex cross-border income — foreign employment, overseas investments, income from multiple countries — need integrated international tax planning beyond NRI ITR filing alone.