NRI Tax Planning In India: A Complete Guide To Filing, Investments & Compliance

Non-Resident Indians (NRIs) are people who live outside of India but still hold financial and investment interests in the country. Even though they live overseas, NRIs often receive income in India in the form of dividends, rental income, or capital gains from stocks and real estate.

Entelyglobal recognizes the importance of NRI tax planning for a number of reasons, including maximizing tax liability, preventing penalties, ensuring compliance with Indian tax laws, and enabling well-informed investment choices. It is explicitly stated in the Income Tax Act of India that non-resident Indians (NRIs) must pay taxes on any income they earn or receive in India. Infractions may result in fines, blocked remittances, and legal issues.

Understanding NRI Taxation

The Income Tax Act provides precise standards for determining if a person is considered a non-resident for tax purposes. If a person satisfies any of the following criteria, they are considered an NRI:

  • They spend 182 days or more outside of India during the fiscal year.
  • They spend 60 days or more during the financial year and 365 days or more in total in the four preceding years.

Since residential status indicates the extent of taxes, exemptions, and obligations, these requirements are essential for NRI tax planning. NRIs only pay taxes on income earned or received within India; they are not taxed on income earned outside of the country.

Criteria For Residential Status

The basis for NRI taxation is residential status. According to the Income Tax Act, people are divided into three categories: residents, non-residents (NRI), and residents but not ordinary residents (RNOR). Unlike residents, who pay taxes on their worldwide income, non-resident individuals (NRIs) only pay taxes on their income that originates in India. Accurate NRI tax planning requires an understanding of these differences, and Entelyglobal assists NRIs in effectively navigating these classifications.

NRE, NRO, And Foreign Accounts

There are several banking and investment options available to NRIs in India, which impact taxes:

  • Non-Resident External (NRE) Account: Interest earned is tax-free, and deposited funds are fully repatriable. For income sent from overseas, NRE accounts are the best option.
  • Non-Resident Ordinary (NRO) Account: Mainly for income received in India, such as pensions, dividends, and rent. TDS is applicable, and interest earned is taxable.
  • Foreign Bank Accounts: Although income received overseas is typically exempt from Indian tax, it may still need to be reported on the ITR.

At Entelyglobal, we help non-resident Indians (NRIs) use these accounts strategically for tax-efficient planning and legal compliance in India.

NRI Income Tax Rules & Slabs

Income Taxable In India For NRIs

Only income earned or received in India is subject to taxation for non-resident individuals. Typical sources of taxable income in India are:

  • Rental income from real estate
  • Interest received from fixed deposits and NRO accounts
  • Pay received in India
  • Profits from the sale of shares or real estate

One important consideration in NRI tax planning is that foreign income, such as salaries or business income, is typically not taxable in India.

Current Income Tax Slabs For NRIs (AY 2025–26) (Old Tax Regime)

  • Exemptions And Deductions

When submitting their Indian income tax returns, NRIs are qualified to claim a number of exemptions and deductions. These not only lower taxable income but also promote compliant, long-term investments. Among the more significant ones are:

Standard Deduction For Salaried Income
 An NRI is eligible to claim a standard deduction of ₹50,000 if they receive a salary in India (for instance, working for an Indian company while spending a portion of the year abroad). This flat deduction lowers total taxable income and can be applied to salaried income.

  • Deductions Under Section 80C (up to ₹1,50,000)
     NRIs can claim deductions under Section 80C up to ₹1.5 lakh per fiscal year (up to ₹1,50,000). Typical choices include:
    • Indian life insurance premiums
    • Principal repayment of the housing loan taken in India
    • Equity-Linked Savings Scheme (ELSS) investments
    • Indian child education tuition fees
  • NRIs are not eligible for all 80C investments that are accessible to residents, though (for example, PPF and NSC are closed to new NRI investments). At Entely Global, we help NRIs choose 80C-compliant solutions that optimize their gains.
  • Exemption On Long-Term Capital Gains Under Section 10(38)
    In the past, Section 10(38) exempted Long-Term Capital Gains (LTCG) from the sale of listed equity shares or equity-oriented mutual funds. Since April 1, 2018, however, LTCG on such assets that exceed ₹1 lakh annually is subject to 10% taxation without indexation. The ₹1 lakh threshold exemption, which lowers the tax liability of equity investments, is still available to NRIs.
  • Interest Exemption Under Section 10(15)
    According to Section 10(15), interest received on specific bonds and savings plans (like notified government bonds) may be tax-exempt. This means that NRIs do not have to pay Indian income tax on interest earned on eligible tax-free bonds issued by the government. Such instruments are therefore appealing for tax-free income planning.
  • NRIs can drastically reduce their tax obligation in India by understanding and strategically utilizing these exemptions and deductions. Our area of expertise at Entelyglobal is assisting NRIs in determining the most advantageous eligible deductions while steering clear of compliance difficulties.

NRI Tax Filing Requirements

In India, filing income tax returns (ITRs) guarantees that non-resident Indians (NRIs) can claim refunds, modify TDS (tax deducted at source), and maintain a perfect financial record for upcoming real estate transactions, payments, or investments. It’s not just about compliance.

When Does An NRI Need To File ITR?

If an NRI’s total income earned or received in India during a fiscal year surpasses the basic exemption limit of ₹2,50,000 (for those under 60), they must file an income tax return in India. But in the following situations, filing might also become required:

  • Capital gains income, even if total income is less than the exemption threshold.
  • Buying or selling real estate in India
  • If the NRI wishes to request a refund after TDS has been deducted
  • Multiple sources of income, including dividends, rent, and salaries

In addition to avoiding penalties, NRIs who file their ITRs on time establish a verified income record, which is often required for loan applications, visa renewals, and approvals of property repatriation.

Applicable ITR Forms For NRIs

The type of income earned in India determines the ITR form to be used:

  • ITR-2: For non-resident individuals (NRIs) who receive income from capital gains, property, or salaries (most often used).
  • ITR-3: For foreign nationals who work or earn money in India.
  • ITR-4: Rarely used, this form is only relevant when non-resident individuals choose to use presumptive taxation on their professional or small business income.

It is essential to file the correct ITR form because mistakes may result in notices from the Income Tax Department.

Documents Required For NRI ITR Filing

NRIs need to have the following paperwork in hand to file an ITR in India:

  • PAN Card – Mandatory for all taxpayers in India.
  • Passport and Visa – Documentation of travel history and NRI status.
  • Bank Statements – These are particularly useful for tracking taxable income and remittances for NRE and NRO accounts.
  • Form 16 / 16A – These are provided by banks or employers to demonstrate TDS deductions.
  • Property Sale Deeds & Capital Gains Statements – Used to document real estate transactions.
  • Investment Proofs – For Section 80C deductions, insurance, ELSS, etc.

Keeping accurate records helps NRIs in the event of future tax scrutiny in addition to ensuring seamless filing.

Entelyglobal offers comprehensive online NRI tax filing assistance, from form selection to documentation preparation and eligible deduction claims, guaranteeing hassle-free, timely, and secure compliance.

Capital Gains Tax For NRIs

NRIs must pay capital gains tax on their profits when they sell real estate, stock, or other capital assets in India. Accurate reporting and avoiding needless penalties depend on knowing the applicable tax rates and the classification of short-term and long-term gains.

Short-Term Vs. Long-Term Capital Gains

The asset’s holding period determines the classification of capital gains:

  • STCG (Short-Term Capital Gains):
    • Applies when property is held for less than 36 months before sale.
    • The short-term period is less than 12 months for listed shares or equity mutual funds.
    • Taxation: Gains on property are subject to taxation in accordance with the applicable income tax slab for NRIs. STCG is subject to a flat 15% tax on listed shares.
  • LTCG (Long-Term Capital Gains):
    • This is applicable when shares are held for more than 12 months or property for more than 36 months.
    • Indexation, which lowers taxable gains by adjusting the purchase price for inflation, is advantageous to NRIs when it comes to property sales.
    • Taxation: While listed equity shares and mutual funds are subject to 10% LTCG tax on gains exceeding ₹1 lakh annually, property LTCG is taxed at 20% with indexation.

TDS On Sale Of Property

The buyer must deduct TDS (Tax Deducted at Source) before making payment when an NRI sells real estate in India.

  • There is a 20% TDS charge for LTCG on property.
     • TDS is deducted for STCG on property based on the NRI’s applicable income tax slab rate.
     • The seller (NRI) must obtain the TDS certificate (Form 16B) for filing returns, and the buyer must deposit this TDS using Form 26QB.

If an NRI’s actual tax liability is expected to be less than the standard deduction, they can use Form 13 to apply for a lower or nil TDS certificate from the Income Tax Department, as TDS amounts are often significant.

At Entely Global, we help non-resident Indians (NRIs) with capital gains computations, indexation benefit applications, and property sale compliance management, making sure they only pay what is required by law and avoiding tax authorities’ disputes.

 

Double Taxation & Relief

Being taxed twice—once in India and once in their home country is one of the main worries for many NRIs. If not handled appropriately, this circumstance, also referred to as double taxation, can greatly raise tax obligations. Fortunately, India has measures in place to guarantee that non-resident Indians (NRIs) are not subjected to an unjust burden through Double Taxation Avoidance Agreements (DTAA).

What Is Double Taxation?

When the same income is taxed in both India, the source country, and the NRI’s home country, this is known as double taxation. For instance, rental income earned by an NRI in India is subject to Indian taxation. Unless DTAA benefits are claimed, the same rental income may be taxed again if their home country also requires them to declare and pay taxes on worldwide income.

DTAA (Double Taxation Avoidance Agreement)

India has DTAA treaties with over 90 nations, including the USA, UK, Canada, UAE, Australia, and Singapore, to avoid such circumstances. Two primary forms of relief are offered by these agreements:

  • Tax Credit Method: Taxes paid in one nation can be claimed as credits in another.
  • Exemption Method: Depending on the terms of the treaty, some income is only subject to taxation in one of the two nations.

NRIs can lessen or completely avoid their double tax burden while maintaining compliance by appropriately utilizing the DTAA provisions.




How NRIs Can Avoid Double Taxation

  • Submit Form 67: To receive a foreign tax credit for taxes paid overseas, non-resident individuals (NRIs) must submit Form 67 online before the ITR filing deadline.
  • Invest Through DTAA-Compliant Channels: Eligibility for DTAA relief is guaranteed when income is transferred through approved banking and investment channels.
  • Engage NRI Tax Professionals: Cross-border taxation is subject to intricate regulations that differ between nations. Expert advice guarantees accurate and correct claim of treaty benefits.

We at Entely Global are experts at assisting non-resident Indians (NRIs) in taking advantage of the DTAA benefits by completing the appropriate paperwork, figuring out tax credits, and making sure that both Indian and foreign tax laws are followed, so that their income is never taxed twice needlessly.

 

NRI Investments & Tax Planning

For NRIs, making investments in India is important for financial security and tax planning in addition to generating wealth. NRIs can legally lower their tax obligations while maintaining compliance with Indian tax laws by selecting the appropriate instruments.

Tax-Free Investments For NRIs

Certain investments are especially appealing to NRIs because they provide tax-free returns:

  • NRE Fixed Deposits: The money in NRE FDs is fully repatriable, and interest earned on these accounts is entirely tax-free in India. For NRIs who want to park their foreign income in India without worrying about taxes, this makes them perfect.
  • Tax-Free Bonds: These bonds, which are issued by government-backed companies, are regarded as one of the safest investment options because they offer consistent, tax-free income.
  • Government Savings Schemes: Some schemes allow exemptions under Sections 10(15) and 80C, offering a mix of tax relief and security.



Best Tax-Saving Investment Options

By making investments in instruments that qualify under the Income Tax Act, NRIs can also reduce their taxes:

  • Equity-Linked Savings Schemes (ELSS): These equity mutual funds are eligible for Section 80C deductions (up to ₹1.5 lakh annually) in addition to offering long-term capital growth.
  • Life Insurance Policies: In India, life insurance premiums are deductible under Section 80C, which makes them a two-pronged choice for tax savings and financial stability.
  • Pension Plans: Contributions to authorized pension plans provide deductions and long-term retirement benefits, ensuring future financial planning.

Mutual Funds & Other Strategies

  • Equity Mutual Funds: These are still among the best investment options for building long-term wealth, but gains over ₹1 lakh annually are subject to 10% LTCG tax.
  • Debt Mutual Funds: Taxed as per the NRI’s income slab rates, but still suitable for stable and moderate returns.
  • Strategic Portfolio Planning: NRIs can reduce their taxable income while preserving steady financial growth by spreading their investments across tax-free securities, equity funds, and safe debt options.

Entely Global creates tailored NRI investment plans that maximize profits, take advantage of exemptions, and guarantee adherence to all Indian tax laws—all of which allow NRIs to increase their wealth without imposing needless tax obligations.

 

Forms & Compliance For NRIs

Key Forms

  • Form 15CA & 15CB: Required for overseas remittances that surpass certain thresholds.
  • Form 13: To request a reduction in TDS on the proceeds of a real estate sale.
  • Form 26AS, 16, 16A: Monitor taxable income and TDS to ensure seamless compliance.

NRIs can transfer money overseas and claim benefits without incurring penalties if these forms are properly submitted.

NRI Accounts & Taxation

Since bank accounts control how income is received, taxed, and repatriated overseas, they form the foundation of an NRI’s financial management in India. For compliance and tax optimization, it is essential to choose between NRE and NRO accounts and comprehend the tax implications of each.

Tax On NRE And NRO Accounts

NRE Accounts

  • Intended for the transfer of foreign earnings into India.
  • Both principal and interest are fully repatriable, meaning they can be transferred overseas.
  • NRE accounts are very appealing to NRIs who wish to invest their foreign earnings in India without tax deductions because interest earned is tax-free in India.

NRO Accounts

  • Intended for income received in India, such as dividends, rent, or pensions.
  • Interest earned is subject to 30% TDS, though the total amount owed may differ depending on the applicable tax rate for the NRI.
  • Subject to documentation and compliance, funds may be partially repatriated.

Repatriation Rules

  • NRE Accounts: Perfect for NRIs who desire complete financial flexibility because they allow funds, both principal and interest, to be repatriated freely and without restrictions.

  • NRO Accounts: Repatriation is limited to USD 1 million per fiscal year, and only after compliance procedures are finished and applicable taxes (TDS) have been deducted. Form 15CA/15CB and other supporting documentation are often required.

Interest Income Taxation

  • In India, interest from NRE accounts is tax-free.
  • NRO account interest is fully taxable and subject to 30% TDS at the source. However, if their actual tax liability is less, NRIs can request a credit or refund when they file their ITR.
  • Advantages of DTAA: The effective TDS rate on NRO account interest can frequently be lowered by DTAA provisions (for instance, reduced to 10–15% for residents of specific countries).

NRIs can ensure seamless international fund transfers and significantly reduce their tax burden by effectively managing their NRE and NRO accounts. In order to maintain compliance with Indian regulations, we at Entely Global assist NRIs in structuring their banking effectively, maximizing account usage, and claiming DTAA benefits when appropriate.

Gifts, Lottery & Special Cases

NRIs may receive gifts, lottery winnings, or windfall gains in India in addition to their regular sources of income. These are governed by particular tax laws that are often ignored but that, if not managed appropriately, can cause issues. NRIs can stay in compliance and avoid needless fines by being aware of how such income is taxed.

Gifts

Gift From NRI Son To Father: No matter the value, gifts from close family members—parents, kids, siblings, spouses, etc.—are completely tax-exempt. As a result, an NRI son can send money to his father in India without incurring gift tax.

  • Gift to NRI by Resident Indian: The tax treatment varies based on the amount and relationship.

     

  • Regardless of their value, gifts from close relatives are exempt.
  • Non-family gifts that total more than ₹50,000 during a fiscal year are subject to taxes.

     

  • To prove the exempt status during assessments, NRIs should also make sure that the right paperwork is in place, such as gift deeds or transfer proofs.

     

Lottery & Other Windfalls

  • Lottery Winnings: There are no exemptions or deductions permitted for NRIs, and lottery or game show winnings are subject to a flat tax rate of 30% plus cess. The same is true for Indian residents.

     

  • Other Windfalls: Income from game shows, horse racing, and other unforeseen windfall gains is subject to the same tax treatment.
  • Compliance Tip: The NRI must report such income in their ITR, and the payer must deduct TDS at the source. To prevent disagreements with the tax department, proper documentation is necessary, including proof of winnings and TDS certificates.

     

NRIs can ensure clean compliance and prevent unforeseen tax burdens by proactively addressing these special income categories. At Entely Global, we offer comprehensive help with windfall income reporting, gift tax regulations, and, if necessary, refund or relief claims.

 

GST For NRIs

Understanding the effects of the Goods and Services Tax (GST) on Indian services and transactions is just as crucial as understanding income tax, which is the main topic of discussion when it comes to NRI taxation. NRIs may be subject to GST on certain services or financial products they use in India, but they are not directly responsible for paying GST on their foreign income.

GST Implications

  • Insurance Premiums: Unless otherwise specified, premiums paid by an NRI who owns insurance policies in India may be subject to GST (such as certain life insurance schemes).

     

  • Consulting & Professional Services: Depending on whether the provider is registered under GST, any professional or consulting services received in India may be liable to GST.

     

  • Digital Services & Subscriptions: In India, GST may also be applied to payments for online or digital services (like software, cloud storage, or digital platforms).

     

  • Real Estate Transactions: NRIs’ purchases of under-construction real estate may occasionally be subject to GST, which raises the investment’s cost.

     

Why GST Awareness Matters

Although NRI income earned overseas is exempt from GST, NRIs must comply when they conduct business or use services in India. NRIs can make better plans, prevent double payments, and claim benefits when they are available if they are aware of the GST regulations.

In order to facilitate seamless financial planning and adherence to India’s direct and indirect tax laws, Entely Global offers advice on GST applicability for non-resident Indians.

 

Popular Services & Consultants

Why Hire An NRI Tax Consultant?

Due to dual residency, DTAA provisions, capital gains, and remittances, NRI taxation is complicated. A professional consultant can help you:

  • Make the most of tax-saving opportunities
  • Ensure that all forms and filings are completed
  • Effectively navigate cross-border taxation

     

Entely Global streamlines NRI compliance by offering specialized NRI taxation services, such as capital gains calculations, investment optimization, and return filing.

 

Clear Tax For NRIs

Specialized NRI taxation services from ClearTax include capital gains calculations, return filing, and investment optimization. Their platform guarantees that NRIs can concentrate on efficiently managing their finances by streamlining the compliance process.

Conclusion

Staying compliant, optimizing returns, and avoiding penalties all depend on effective NRI tax planning. By being aware of capital gains, filing requirements, tax slabs, and DTAA benefits, NRIs can reduce risks and save a significant amount of money. It is strongly advised to consult an NRI tax expert in complex cases involving investments, real estate sales, or cross-border remittances. Get individualized advice from our team of experts at Entely Global to make sure your finances are set up effectively, in accordance with Indian regulations, and maximized for tax advantages.