Last updated on June 9th, 2025 at 05:29 pm
Who Qualifies as an NRI for Tax Purposes?
An individual is classified as a Non-Resident Indian (NRI) under Indian tax law if they:
- Spent less than 182 days in India during the financial year, or
- Spent less than 60 days in India in that year and less than 365 days in the preceding four years.
Only the income earned or accrued in India is taxable for NRIs. Foreign earnings are not subject to Indian tax.
Income Tax Regimes: Choose Wisely
As an NRI, you can opt between two tax regimes:
- New Regime (with lower tax rates but fewer deductions)
- Old Regime (with higher rates but allows for various exemptions and deductions)
New Tax Regime for FY 2025–26
| Annual Income (₹) | Tax Rate |
| Up to ₹4,00,000 | Nil |
| ₹4,00,001 – ₹8,00,000 | 5% |
| ₹8,00,001 – ₹12,00,000 | 10% |
| ₹12,00,001 – ₹16,00,000 | 15% |
| ₹16,00,001 – ₹20,00,000 | 20% |
| ₹20,00,001 – ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
Notes for NRIs:
- Rebate under Section 87A is not applicable.
- Standard deduction of ₹75,000 for salaried individuals.
- Family pension deduction of up to ₹25,000.
- NPS employer contribution up to 14% is deductible.
- Maximum surcharge capped at 25% (lower than the old regime).
Old Tax Regime for FY 2025–26
| Annual Income (₹) | Tax Rate |
| Up to ₹2,50,000 | Nil |
| ₹2,50,001 – ₹5,00,000 | 5% |
| ₹5,00,001 – ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
Note: Senior citizen benefits are not available to NRIs regardless of age.
Surcharge and Cess
Surcharge:
- 10% on income ₹50 lakh – ₹1 crore
- 15% on ₹1 crore – ₹2 crore
- 25% on ₹2 crore – ₹5 crore
- 37% on income over ₹5 crore (only in Old Regime)
Health & Education Cess: 4% on total tax (including surcharge)
Which Regime Should NRIs Choose?
| If you… | Then consider… |
| Have minimal deductions | New Regime |
| Invest in ELSS, PPF, life insurance, etc. | Old Regime |
| Want a simpler, flat structure | New Regime |
| Can optimize deductions and exemptions | Old Regime |
Special Considerations for NRIs
- Rebate under 87A not applicable.
- Interest from NRE/FCNR accounts is tax-free.
- Interest from NRO accounts is fully taxable.
- Rental income in India is taxable after standard deduction.
- Capital gains on Indian assets are taxable.
Conclusion
NRIs must stay informed about India’s evolving tax rules to manage their finances wisely. Choosing the right regime—old or new—depends on your personal income sources and financial strategy. Consult a tax advisor to make the most tax-efficient choice and remain compliant with Indian tax laws.
Need help with your NRI tax filing? Reach out to a certified tax professional or contact us for a personalized consultation.
