# NRI Income Tax in India FY 2026-27: A Plain Guide > How NRIs are taxed in India: residential status day tests, which Indian income is taxable, NRE vs NRO, TDS, no 87A rebate, and how to file. Source: https://trykosh.com/learn/nri-income-tax-india Guide - NRIs # NRI income tax in India: what's taxed and how to file If you live abroad, India taxes only your Indian income, but the rules on who counts as non-resident, which accounts are tax-free and how much TDS is cut are easy to get wrong. This guide sets out the general position; for cross-border complications, a CA who handles NRI cases is worth the fee. Updated 25 October 20266 min readBy the Kosh team On this page[Step 1: work out your residential status](#residential-status)[Step 2: what's taxable in India](#what-is-taxable)[NRE vs NRO: which money goes where](#nre-vs-nro)[Step 3: TDS, and why many NRIs are owed refunds](#tds)[No 87A rebate, and other differences](#differences)[Step 4: filing your return](#filing)[When to get professional help](#professional-help)[FAQs](#faq) ## Step 1: work out your residential status Tax status depends on days spent in India during the tax year (1 April to 31 March), not on your passport or visa. Count arrival and departure days as days in India. - **Resident** if you were in India for **182 days or more** in the year, or for **60 days or more** in the year and 365 days or more in the four years before it. - **For Indian citizens and people of Indian origin visiting India**, the 60-day test is replaced by 182 days, so they stay non-resident below 182 days. But if their Indian income (excluding foreign income) is above INR 15 lakh, the test is **120 days** plus 365 days in the previous four years. - **Indian citizens leaving India for a job abroad** in the year also use 182 days instead of 60. - **Deemed resident:** an Indian citizen with Indian income above INR 15 lakh who isn't liable to tax in any other country because of residence or domicile is treated as resident. - **Non-resident** if none of the tests are met. Residents are further split into **ordinarily resident** and **resident but not ordinarily resident (RNOR)**. Returning NRIs are usually RNOR for a year or more, depending on their past years abroad, and during that time their foreign income generally isn't taxed in India. Deemed residents and those caught by the 120-day test are RNOR too. **Two different rulebooks** Income-tax residence and FEMA status are separate. FEMA decides which bank accounts and investments you can hold; the Income-tax Act decides what's taxed. They usually line up, but not always, especially in the year you move. ## Step 2: what's taxable in India A non-resident is taxed in India only on income **received in India or earned in India**. Salary earned abroad for work done abroad and paid into a foreign account isn't taxed here. Common income for NRIs and how India treats it Income Taxable in India? Usual TDS Interest on NRE savings and FDs No, while you're non-resident None Interest on FCNR deposits No, while you're non-resident None Interest on NRO savings and FDs Yes, at slab rates 30% plus surcharge and cess Rent from property in India Yes, after 30% standard deduction and interest 30% plus cess, deducted by the tenant Capital gains on Indian shares and funds Yes, at the same rates as residents At the applicable capital gains rate Sale of property in India Yes Deducted by the buyer on the gain, at 12.5% plus surcharge and cess for long-term Dividends from Indian companies Yes 20% plus surcharge and cess, or a lower treaty rate Salary for work done in India Yes By the employer ## NRE vs NRO: which money goes where - **NRE account:** for money earned abroad and sent to India. Freely repatriable, held in rupees, and its interest is tax-free in India while you're non-resident. You can't deposit Indian income into it. - **NRO account:** for income earned in India, such as rent, dividends and pension, and for savings you had before becoming an NRI. Interest is taxable, TDS is heavy, and repatriation is limited to a yearly cap with paperwork. - **FCNR deposit:** held in foreign currency, so no exchange-rate risk; interest is tax-free while non-resident. When you become an NRI, your resident savings accounts should be converted to NRO. When you return for good, NRE and FCNR deposits should be redesignated as resident accounts, and their interest becomes taxable from then on. ## Step 3: TDS, and why many NRIs are owed refunds TDS on most payments to non-residents is deducted at **30% plus cess** (31.2%), or the capital gains rate, regardless of your actual tax. Your actual tax may be far lower, because NRIs use the same slabs as residents. Example: Karthik lives in Dubai and has INR 2,00,000 of NRO FD interest as his only Indian income. The bank deducts **INR 62,400** of TDS. His actual tax in the new regime is **nil**, because INR 2 lakh is below the INR 4 lakh basic exemption. He files a return to get the full INR 62,400 back. Two ways to reduce over-deduction: apply on the income-tax portal for a **lower or nil TDS certificate** before payments are made, and, if you live in a country with a tax treaty, give the bank a **tax residency certificate** and the required form to claim the treaty rate on interest or dividends. ## No 87A rebate, and other differences - **No 87A rebate.** The INR 12 lakh tax-free line is for residents only. An NRI with INR 6 lakh of Indian income pays **INR 10,400** in the new regime; a resident with the same income pays nothing. - **No basic-exemption set-off against special-rate gains.** A resident with low income can use the unused exemption against equity gains; a non-resident can't. - **The basic exemption doesn't rise with age** in the old regime for NRIs: it's INR 2.5 lakh whatever your age. - **Some deductions still apply** in the old regime: 80C for life insurance, ELSS, tuition fees and home-loan principal, 80D for health insurance, and home-loan interest on Indian property. But NRIs can't open new PPF accounts or invest in NSC, and existing PPF accounts run only to maturity. - **Double taxation:** if India and your country of residence both tax the same income, the treaty between them, and foreign tax credit in your country, usually prevent paying twice. Check before assuming. [Free tool**Income tax calculator**Work out your income tax for FY 2026-27 under both regimes in one go. Kosh applies the current slabs, the INR 75,000 standard deduction, the 87A rebate, surcharge with marginal relief and 4% cess.](/tools/income-tax-calculator)[Free tool**Tax on FD interest calculator**Fixed deposit interest is taxed at your slab rate, and banks deduct TDS above a threshold. See the real tax on your FD, the TDS, and whether you'll owe more or get a refund.](/tools/tax-on-fd-interest-calculator)[Free tool**Capital gains tax calculator**Pick the asset, enter the purchase and sale dates and prices, and Kosh tells you whether the gain is short-term or long-term and works out the tax under the FY 2026-27 rules.](/tools/capital-gains-tax-calculator)[Free tool**TDS on property purchase calculator**Buying a flat, house or plot worth INR 50 lakh or more from a resident seller? You must deduct 1% TDS and deposit it. Here's how much, and how to split it between joint buyers.](/tools/tds-on-property-calculator)[Free tool**Rental yield calculator**Work out what a rented property really earns as a percentage of its value, before and after the costs owners usually forget.](/tools/rental-yield-calculator) ## Step 4: filing your return 1. **You must file** if your Indian income is above the basic exemption (INR 4 lakh in the new regime, INR 2.5 lakh in the old), and you should file whenever you want a TDS refund or to carry forward a loss. 2. **Pick the form.** ITR-1 isn't available to non-residents. Most NRIs file ITR-2; with business or professional income in India, ITR-3. The Income-tax Act, 2025 introduces new form names, so use what the portal offers for the year. 3. **Declare your status** in the return with the days in India, and report only Indian income. 4. **Claim TDS** from Form 26AS and AIS, and give an Indian bank account (NRO or NRE) for the refund. 5. **File by the due date**: 31 July for ITR-2, or 31 August for non-audit business or professional income in ITR-3 after the Finance Act 2026. Belated or revised returns can be filed up to 31 March. Check the notified dates on the [income-tax portal](https://www.incometax.gov.in/). 6. **E-verify within 30 days.** NRIs without Aadhaar can use net banking, a bank or demat EVC, or post the signed ITR-V. ## When to get professional help A general guide can't settle everything. Talk to a CA familiar with NRI cases if you sold Indian property, are returning to India and need to plan RNOR years, receive Indian income above INR 15 lakh, have a treaty question, or received a notice. See [Kosh vs a CA](/compare/kosh-vs-chartered-accountant) for where each fits. ## Frequently asked questions Who is an NRI for income tax purposes? Broadly, someone who was in India for fewer than 182 days in the tax year and doesn't meet the 60-day plus 365-day test. For Indian citizens visiting India, the 60-day test becomes 182 days, or 120 days if Indian income exceeds INR 15 lakh. Status is decided afresh each year. Is NRE interest taxable in India? No. Interest on NRE accounts and FCNR deposits is tax-free in India while you are non-resident. Interest on NRO accounts is taxable at slab rates, with TDS at 30% plus cess. Do NRIs get the 87A rebate? No. The 87A rebate, which makes income up to INR 12 lakh tax-free in the new regime, is only for residents. NRIs pay tax at slab rates on Indian income above the basic exemption of INR 4 lakh in the new regime. Do NRIs need to file an income tax return in India? Yes, if Indian income is above the basic exemption limit. Many NRIs also file to claim refunds, since TDS on NRO interest and rent is deducted at 30% plus cess, often more than the actual tax due. Which ITR form should an NRI file? Usually ITR-2, or ITR-3 if there is business or professional income in India. ITR-1 is not available to non-residents. The Income-tax Act, 2025 brings new form names, so follow what the portal offers for the year. ## Sources - [Income Tax Department](https://www.incometax.gov.in/) - [Reserve Bank of India](https://www.rbi.org.in/) Written by the Kosh team and checked against the rules in force on 25 October 2026. This guide is general information, not tax, legal or investment advice. Kosh is an educational financial planning tool by Primedepth Labs. It is not a SEBI-registered investment adviser and does not offer personalised investment advice, hold your money or execute trades. Markets carry risk; read scheme documents carefully and consult a registered adviser before acting. ## Upload your statement and Kosh does this for you. Kosh reads your bank and card statements, works out your tax under both regimes and turns guides like this one into your own numbers and next steps. [Start free](/signup?via=learn-nri-income-tax-india)