NRI tax questions, answered
NRI tax India depends first on your residential status and the source of each income stream. These NRI tax questions bring together the existing guidance on RNOR, DTAA, Schedule FA and cross-border assets; each answer links to its full guide, with fact-specific qualifications retained.
Last reviewed: 19 October 2026 · FY 2025-26 figures where stated
Am I an NRI, RNOR or resident this year?
Your status is decided under Section 6 using days in India, the applicable citizenship/visit or employment exceptions, and the income-based overrides—not your passport alone. The basic resident tests are 182 days in the financial year, or 60 days plus 365 days across the preceding four years; the guide explains when the 60-day limb becomes 182 or 120 days and when deemed residence applies. A resident is then RNOR or ROR under Section 6(6), including the nine-of-ten non-resident-years or 729-days-in-seven-years tests; confirm your own day-count and income position before acting.
How long does RNOR status last, and what tax does it save?
RNOR typically lasts two financial years, sometimes three, depending on travel history; it is not a guaranteed three-year exemption. Indian-source income remains taxable normally, while foreign-source income is outside Indian tax except income from a business controlled in, or a profession set up in, India. Calculate the window from your actual travel history before sequencing foreign income.
What income tax do NRIs pay in India (2025-26)?
For FY 2025-26 / AY 2026-27, NRI income tax in India uses the applicable income-head rates: the new regime has a ₹4 lakh basic exemption and the old regime ₹2.5 lakh, with eligible deductions and special-rate gains checked separately. NRIs are not eligible for the residents-only Section 87A rebate, so the ₹12 lakh zero-tax headline does not apply to non-residents. The unused basic exemption cannot be set off against Section 111A STCG or Section 112A LTCG for non-residents in the usual resident way; later-year rates require separate confirmation.
How does the India-US DTAA prevent double taxation, and what is a TRC?
A DTAA allocates taxing rights for each income type and provides exemption or tax-credit relief under the applicable article; it does not automatically exempt income from tax. A Tax Residency Certificate (TRC) is evidence of tax residence issued by the relevant country's tax authority and is required for an eligible non-resident to claim Indian treaty relief under Section 90(4). Form 10F supplies prescribed particulars where required, without duplicating particulars already contained in the TRC; treaty eligibility and the income article must be confirmed for your facts.
NRE vs NRO vs FCNR — which account do I need?
Use an NRE account for eligible overseas earnings held in rupees, an NRO account for India-source income, and an FCNR(B) account for an eligible foreign-currency term deposit. Match the account to the money and your FEMA status first; interest exemption, withholding and return-to-India changes are separate checks, confirmed for your facts. RNOR alone does not preserve NRE interest exemption, while qualifying FCNR(B) interest is exempt for NR/RNOR subject to conditions; NRO interest is taxable.
Do NRIs have to report foreign assets in India (Schedule FA)?
Schedule FA applies to Residents and Ordinarily Residents (ROR) for the relevant previous year; non-residents and RNORs are outside the worldwide-asset reporting net. It uses a calendar-year basis—1 January to 31 December—not the Indian April–March financial year. Confirm residential status first, then collect the relevant foreign-account and asset statements before preparing the return.
How is my US 401(k) taxed when I return to India?
During RNOR, foreign-source 401(k)/IRA distributions are generally not taxable in India; worldwide taxation begins on becoming ROR, so timing is fact-specific and the US tax position still matters. Section 89A, Rule 21AAA and Form 10-EE provide a deferral mechanism for a resident's income accruing in a qualifying notified-country retirement account until withdrawal; the USA is a notified country. Whether a lump-sum 401(k) distribution qualifies under Article 20 of the India-US treaty is unsettled, and treaty relief is not automatic—confirm before relying on it.
How are US RSUs taxed when I move to India?
RSUs have two independent taxable events: vesting is a salary perquisite, and sale is capital gains using the INR cost base fixed at vesting; cross-border workday/source apportionment is fact-specific. The guide treats US-listed shares as foreign securities using a 24-month long-term holding test from vesting, with LTCG at 12.5% without indexation under the change effective 23 July 2024. Only US federal income tax is creditable under the India-US DTAA via Form 67 under Rule 128—not US state tax or FICA; check the applicable credit and filing requirements.
Can my Indian mutual funds be a US PFIC problem?
Yes, potentially: PFIC is a US tax concept applying to US persons—US citizens, green-card holders and US tax residents—holding non-US pooled investments, and Indian mutual funds are commonly classified as PFICs. If you are not a US person, the PFIC rules do not apply to you; retaining a green card or citizenship after returning to India can preserve the exposure. US-domiciled mutual funds and ETFs are not PFICs, although Indian Schedule FA duties arise once the returning person is ROR.
How is a property sale by an NRI taxed, and can TDS be reduced?
An NRI property sale requires separate checks of the actual capital gain, the buyer's withholding under Section 195, and the repatriation route. Buyer TDS can exceed the final tax liability; Section 197 (Form 13) is the application route for a lower-deduction certificate based on the real gain. Review eligibility, documents and timing before completion rather than assuming lower deduction will be approved.
How is crypto / VDA taxed for NRIs?
For FY 2025-26, India-taxable VDA transfer income is taxed under Section 115BBH at 30% plus applicable surcharge and 4% cess; only acquisition cost is deductible and VDA losses cannot offset income or be carried forward. Indian source and treaty treatment are confirmed for your facts, not assumed from NRI status or an exchange deduction. Section 194S has a resident-payee scope, so its headline 1% cannot automatically be applied to a non-resident seller; Section 195 or other applicable withholding must be confirmed for your facts.
Will my family face estate or inheritance tax across borders?
India currently has no inheritance or estate tax, but inherited-asset income and later gains remain subject to applicable income-tax rules and non-resident holdings/remittances to FEMA. A non-US-citizen not US-domiciled for estate-tax purposes is generally exposed on US-situs assets with a USD 60,000 unified-credit-equivalent exemption and graduated rates up to 40%; there is no US-India estate-tax treaty or India-treaty uplift. Since 6 April 2025, UK worldwide IHT reach depends on long-term residence, generally 10 of the previous 20 tax years, with transitional rules; confirm the position for your facts with the relevant specialists.
What changed for NRIs in 2025-26?
The verified FY 2025-26 / AY 2026-27 reference includes revised new-regime slabs without the residents-only Section 87A rebate, and an LRS/TCS threshold raised to ₹10 lakh from 1 April 2025; LRS is a resident-individual framework, not ordinary NRI NRO repatriation. Eligible LTCG is 12.5% without indexation under the change effective 23 July 2024, subject to asset/provision conditions, and ITR-U extends to 48 months from assessment-year end subject to eligibility—it cannot create or increase a refund. The 1961 Act governs FY 2025-26; the Income-tax Act, 2025 applies from 1 April 2026, and later-year rates require separate confirmation.
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