NRI Taxation

India taxes an individual based on residential status determined under Section 6 of the Income-tax Act, 1961, not citizenship or nationality. A Non-Resident (NR) is taxed in India only on India-sourced income and income received or deemed received in India; a Resident and Ordinarily Resident (ROR) is taxed on worldwide income; and a Resident but Not Ordinarily Resident (RNOR) — an intermediate category — is taxed largely like an NR on foreign income while resident-level rules apply to Indian income.

Residency itself turns on physical presence: 182 days or more in India in the financial year, or 60 days or more in the year combined with 365 days or more across the preceding four years, makes a person 'resident'. Two special rules override this for high-income NRIs: Section 6(1A) deems an Indian citizen with India-sourced income above ₹15 lakh a resident if they are not taxable anywhere else by domicile/residence; and for visiting Indian-origin individuals with India income above ₹15 lakh, the 60-day limb above is relaxed to 120 days.

For income also taxed in the country of residence, Double Taxation Avoidance Agreement (DTAA) relief requires a Tax Residency Certificate (TRC) plus Form 10F, the latter mandatorily e-filed from Assessment Year 2023-24 (Finance Act, 2023). Where these are on file with the Indian payer, tax is withheld under Section 195 at the DTAA rate; otherwise the higher of the Act rate or DTAA rate applies.

Our engagement covers annual residential-status classification, income-scope mapping (India vs worldwide), DTAA documentation, and compliant Indian return preparation and filing.

NRI taxation advisory covers the full Indian tax position of a non-resident under the Income-tax Act 1961 — the residency under Section 6, the taxation of the Indian-source income (the rental, the interest, the dividends, the capital gains), the TDS and the tax rates for the non-residents, the treaty benefits, the special provisions for the NRI investments like the NRE and the FCNR (B) accounts with the exempt interest, and the double taxation relief. The advisory is the planning of the NRI's Indian tax across the income, the investments and the years.

The NRI's Indian tax is decided by the residency and the source — the boundary that Section 6 of the Act draws between the resident and the non-resident, and the source rules that decide which income is taxable in India. The planning works across the accounts and the investments whose tax treatment differs — the exempt interest of the NRE and the FCNR (B), the taxable interest of the NRO, the capital gains on the property and the shares — and across the treaties that protect the NRI from the double taxation.

The cost of unplanned NRI taxation is the tax paid twice or paid wrong: the interest taxed where the structure was wrong, the treaty relief never claimed, the capital gains taxed without the exemptions of Sections 54 and 54EC, the years of the TDS that were never reclaimed. Each is a leak in a position that the planning would have closed.

This service is for NRIs planning their Indian tax. We determine the residency under Section 6 and map the Indian income, plan the accounts and the investments for the tax-efficient structure under the Act, apply the treaty and the double taxation relief, manage the TDS and the returns, and plan the capital gains and the exemptions so the NRI's Indian tax is the minimum the law allows.