NRI Income Tax in India: NRI Tax Slab 2025-26

India taxes your India-sourced income and leaves your foreign income alone. What matters is the rate per income head — and that NRI income is usually subject to TDS first, refundable on filing. Surcharge and the 4% health & education cess apply on top of every rate below. This is a rates reference; for the ITR form, deadline and e-verification steps see how NRIs file an income tax return.

The reference table below concerns FY 2025-26 / AY 2026-27. Surcharge and 4% cess apply on top. Rates and asset classifications not included in the owner-verified figures, including existing TDS entries, require confirmation against the latest Finance Act/CBDT notification and are confirmed for your facts.

These verified bands apply to FY 2025-26, governed by the Income-tax Act, 1961. They are marginal rates, not a flat rate on all income. Section 87A is for resident individuals only in both regimes; NRIs receive no rebate. FY 2026-27 rates must be confirmed against the applicable Finance Act rather than assumed from this table.

Source: owner-verified FY 2025-26 / AY 2026-27 figures. Standard deduction is for eligible salary income, not rent or interest. Special-rate gains require a separate computation; the resident rebate headline is not a blanket exemption for them. NRIs are ineligible for either rebate.

Which regime suits an NRI is confirmed for your facts, not selected from the rebate headline. Compute both regimes using the same income, then compare deductions actually available and documented. Eligible salary gets a ₹75,000 standard deduction in the new regime or ₹50,000 in the old regime for FY 2025-26; do not apply this salary deduction to rent or interest. Keep Section 111A/112A gains separate and do not use unused basic exemption against them as a non-resident. Business-income elections and switching conditions require review. Neither regime gives NRIs the Section 87A rebate.

Three rules make an NRI's tax different from a resident's even on identical income. First, no Section 87A rebate: a resident under the new regime pays nil tax on total income up to ₹12 lakh because of the enhanced rebate, but a non-resident gets no rebate at all, so a non-resident with ₹10 lakh of slab income pays tax on the portion above ₹4 lakh. Second, the unused basic exemption limit cannot be adjusted against special-rate income: a resident whose slab income is below the exemption limit can use the shortfall to reduce STCG under Section 111A or LTCG under Section 112A, but the law allows that adjustment only to residents, so a non-resident pays the full special rate on those gains even with no other income. Third, no senior-citizen benefit: the higher old-regime exemption limits for those aged 60 and 80 apply only to resident individuals, so every NRI uses the general ₹2,50,000 old-regime limit regardless of age. These carve-outs are the most common reason an NRI return is rejected as wrongly computed.

The verified LTCG changes for eligible transfers on or after 23 July 2024 apply to this FY 2025-26 / AY 2026-27 reference. Later-year rates and the detailed asset classifications below require confirmation against the latest Finance Act. Listed equity shares, equity-oriented mutual funds and business-trust units on which STT is paid: short-term (held 12 months or less) taxed at 20% under Section 111A; long-term (held more than 12 months) taxed at 12.5% under Section 112A on gains above ₹1,25,000 a year. For equity acquired before 1 February 2018, cost is stepped up to the higher of actual cost and fair market value on 31 January 2018 (capped at sale price), so pre-2018 gains remain grandfathered. Immovable property and other long-term capital assets (unlisted shares, gold, physical assets): long-term after 24 months, taxed at 12.5% without indexation under Section 112. Resident individuals and HUFs selling land or buildings acquired before 23 July 2024 can choose the older 20% with indexation if lower — that option is not available to non-residents, who pay 12.5% without indexation. For unlisted shares and debentures, non-residents retain foreign-currency computation protection under the first proviso to Section 48 where applicable. Specified mutual funds and market-linked debentures (debt funds with 65% or less in equity, units bought on or after 1 April 2023) are deemed short-term under Section 50AA and taxed at slab rates regardless of holding period. Short-term gains on non-equity assets are taxed at slab rates. Under the Income-tax Act, 2025 these provisions carry new section numbers; the economic rates above are unchanged unless a later Finance Act says otherwise.

Surcharge is levied on the income-tax amount when total income crosses set thresholds: 10% above ₹50 lakh, 15% above ₹1 crore, 25% above ₹2 crore, and 37% above ₹5 crore under the old regime — the new regime caps the top surcharge at 25%. Surcharge on tax attributable to STCG under Section 111A, LTCG under Sections 112 and 112A, and dividend income is capped at 15%, so a large property or share sale does not push those gains into the 25% or 37% bands. Marginal relief applies so that tax plus surcharge does not exceed the income above the threshold. Health and education cess of 4% is then charged on income tax plus surcharge. TDS under Section 195 on payments to non-residents includes surcharge and cess at these rates, which is why the effective TDS on a large property sale is above 12.5%. Confirm thresholds against the latest Finance Act.

4% health & education cess applies on tax plus surcharge. Confirm against the latest Finance Act/CBDT notification.

Payments to a non-resident are deducted at source mainly under Section 195, at the rate in force for that income plus surcharge and cess, unless a lower-deduction certificate under Section 197 or a DTAA rate (with TRC and Form 10F) applies. On a property sale by an NRI, the buyer deducts on the capital gain at the applicable capital-gains rate — 12.5% for long-term, slab-equivalent (commonly 30%) for short-term, plus surcharge and cess — under Section 195; the 1% rate under Section 194-IA applies only when the seller is resident, and buyers who wrongly apply 1% to an NRI seller face default consequences. Rent paid to an NRI landlord is deducted under Section 195, commonly at 30% plus surcharge and cess on the rent. NRO interest is deducted at 30% plus cess. Dividends from Indian companies are deducted at 20% plus surcharge and cess under Section 195, reducible to the treaty rate. Mutual fund redemptions by NRIs are subject to TDS at the capital-gains rate on the gain. Concessional rates under Sections 194LC (interest on certain foreign-currency borrowings and specified bonds) and 194LD have time limits and conditions that have been narrowed or withdrawn in recent Finance Acts; confirm applicability against the latest Finance Act/CBDT notification before relying on them.

Lower or nil deduction possible with a Section 197 certificate or a DTAA rate. Confirm against the latest Finance Act/CBDT notification.

An NRI living in Dubai, new regime, FY 2025-26. Indian flat let at ₹50,000 a month: annual value ₹6,00,000, less 30% standard deduction, gives house-property income of ₹4,20,000. NRO interest ₹50,000. Slab income: ₹4,70,000. Tax on slab income: nil on the first ₹4,00,000 and 5% on ₹70,000 = ₹3,500; no Section 87A rebate. Listed-equity LTCG of ₹3,00,000: taxable above ₹1,25,000, so ₹1,75,000 at 12.5% = ₹21,875. Listed-equity STCG of ₹1,00,000 at 20% = ₹20,000. Total tax ₹45,375, plus 4% cess of ₹1,815, gives ₹47,190. Had she been resident, the ₹12 lakh rebate would have wiped out the slab tax. TDS on her rent (30%) and NRO interest (30%) will far exceed ₹3,500 of slab tax, so she files ITR-2 to claim the refund. The UAE treaty does not reduce Indian tax on Indian rent.

An NRI in London sells a flat bought in 2015 for ₹40 lakh, for ₹1 crore in FY 2025-26. As a non-resident he cannot choose indexation, so the long-term gain is ₹60 lakh, taxed at 12.5% = ₹7,50,000. Total income exceeds ₹50 lakh, so surcharge at 10% = ₹75,000 (within the 15% cap on capital gains). Cess at 4% on ₹8,25,000 = ₹33,000. Total ₹8,58,000 — an effective 14.3% on the gain. Without a Section 197 certificate, a buyer cautious about the cost figure may deduct on a much larger amount; the certificate, or a refund via the return, recovers the excess. Reinvestment exemptions under Sections 54 and 54EC can reduce the gain, subject to their limits.

Almost every payment to an NRI is covered by Section 195 and deducted at source — often more than the real liability. Reduce it upfront with a DTAA rate (TRC + Form 10F) or reclaim the excess by filing a return. The filing walkthrough — form, deadline, e-verification — is in how NRIs file an income tax return, and a full advisory engagement sits with our NRI tax advisory services. For property sales specifically, see TDS on property sale by an NRI and ways to reduce TDS on an NRI property sale; for how investments are taxed, see NRI investment taxation in India.

A treaty may allocate taxing rights or limit Indian withholding for an eligible non-resident. Obtain a current Tax Residency Certificate (TRC), supply Form 10F particulars as required, and check the applicable article, beneficial ownership, income source and domestic-law comparison before the payer applies relief. Form 67 serves a different purpose: eligible Indian residents claiming credit for foreign tax paid on income also taxed in India; it is not the form for an NRI’s Indian excess-TDS refund. Confirm the current filing requirements for the relevant year. See DTAA relief and Indian TDS refunds.

No country-specific withholding percentages are asserted here. A corridor label is not a treaty article; each country and income stream needs separate confirmation.

An NRI tax consultant can check income classification, eligible deductions and treaty documents before you select a regime. Read NRI tax changes 2025-26 and Tax Residency Certificate (TRC) and DTAA relief for NRIs, and distinguish RNOR from non-resident status after a return. The USA NRI tax corridor provides country context; nominee vs legal heir in NRI estate planning covers succession, not income-tax slabs.