🧾 NRI Taxation in India – AY 2025-26: What Every NRI Must Know

Keywords: NRI taxation in India, NRI income tax rules 2025, NRO to NRE transfer, TDS for NRI, ITR filing for NRI, capital gains tax NRI, Indian tax for Dubai salary, Form 15CA 15CB

✅ Introduction

Are you an NRI confused about whether your foreign income, rental income, or capital gains are taxable in India? You're not alone. With the ever-evolving Indian tax laws and global income implications, it’s crucial to stay updated with NRI tax rules for Assessment Year 2025-26.

This guide breaks down everything NRIs need to know—from residential status to mandatory ITR filing and real-life NRO to NRE transfer examples.

👤 Who is an NRI as per Indian Tax Law?

As per Section 6 of the Income Tax Act, 1961, your residential status determines your tax liability:

• Stayed in India < 182 days in FY 2024–25

• OR stayed < 60 days in FY 2024–25 and < 365 days in the last 4 years

• Special rules for:

  • Indian citizens leaving India for employment abroad

  • Crew members on Indian ships

  • Persons of Indian Origin (PIO) visiting India with income under ₹15L

Deemed residents may still be taxed even if they live abroad.

💼 Scope of Taxable Income for NRIs

Here’s what is taxable in India for NRIs:

• Income received or accrued in India

• Examples:

  • Rental income from Indian property

  • Dividends from Indian companies

  • Capital gains on sale of Indian assets

  • Interest on NRO accounts

  • Salary received in India or for services rendered in India

Income earned outside India (e.g., UAE salary) is not taxable if not received in India.

💳 NRO vs NRE Accounts – Tax Implications

• NRE account: Tax-free principal and interest

• NRO account: Fully taxable, 30% TDS on interest

• NRO → NRE fund transfer requires:

  • Form 15CA and 15CB

  • TDS compliance

  • Bank documentation

🧾 Example:
Mr. Kumar, an NRI in Canada, earns ₹40,000/month rent from Indian property. After TDS and CA assistance, he remits ₹6 lakh from NRO to NRE and then abroad legally.

📌 TDS Applicability for NRIs (Sec 195)

Any payment to NRIs is subject to TDS under Section 195:

• Property sale → Buyer must deduct TDS

• Interest, rent, and other Indian income → TDS @ applicable rates

• Non-deduction leads to penalties under Section 201

🧾 ITR Filing Rules for NRIs (AY 2025–26)

• Use ITR-2 (or ITR-3 for business/professional income)

• Mandatory if income > ₹3L (basic exemption limit)

• Due date: 31 July 2025 (extended to 15 Sept in some cases)

• PAN-Aadhaar linking is compulsory

Even if income is below ₹2.5L, filing is mandatory if:

• Deposits in savings a/c > ₹50 lakh

• Current a/c deposits > ₹1 crore

• TDS or TCS > ₹25,000

• Foreign travel expenses from India > ₹2 lakh

🌍 DTAA & Repatriation

India has Double Taxation Avoidance Agreements (DTAA) with over 90 countries including the USA, UAE, UK, Canada, Australia, and Singapore.

• Prevents double taxation on the same income

• Allows you to claim credit for tax paid in India

• Supports smooth repatriation of funds

❌ Common Mistakes by NRIs

• Using resident savings account instead of NRO/NRE

• Not deducting TDS while selling property

• Not filing ITR due to lack of awareness

• Claiming deductions not allowed to NRIs (like 80TTB)

✅ Final Checklist for NRIs

• Check residential status

• Use correct ITR form (usually ITR-2)

• Ensure TDS on all Indian income

• File Form 15CA/15CB for remittance

• Avoid cash deposits beyond limits

• Consult a tax expert before repatriation

📞 Need Help with NRI Tax Filing or Remittance?

At CA MF Khan & Associates, we specialize in:

• NRI ITR Filing

• NRO to NRE Transfers

• Form 15CA/15CB Certification

• TDS Compliance

• DTAA Advisory

• Repatriation Assistance

💻 Visit us at www.camfkhan.com
📧 Email: mfkhan.associates@gmail.com
📞 WhatsApp: +971-524778300