NRI Taxation 2025-26 in India: Updated Tax Slabs, Exemptions, & Rules

NRI tax, or Non-Resident Indian taxation, indicates the tax rules and provisions in India's Income Tax Act, 1961, that apply to individuals who qualify as Non-Residents for tax purposes in a financial year. An NRI is generally only taxed on income that is earned, accrued, or received in India. This is known as the Source Rule. 

Who Qualifies as an NRI for FY 2025-26?

For tax purposes in India, those who fail to meet the criteria for being classified as a Resident are classified as non-residents. 

An individual will be considered a Resident in India if they satisfy EITHER of the two basic conditions below:

• Stay of 182 Days or More: The individual is in India for a period of 182 days or more during the relevant Financial Year (April 1 to March 31). OR
• The 120-day rule: The previous 60-day limit is relaxed to 182 days for an Indian citizen or a Person of Indian Origin (PIO) who visits India.

The eligibility can be further exceeded in case the individual's Indian-sourced income (excluding foreign income) exceeds INR15 Lakh during the Financial Year. 

An individual who does not satisfy any of the above conditions is classified as a Non-Resident (NR).

Taxation Rules for NRI in India for the FY 2025-26

For NRIs, income tax in India is primarily determined by the nature of their income, without any gender or age distinctions. Tax Deducted at Source (TDS) applies to all NRI incomes, irrespective of a benchmarked value. There are generally no nominal deductions for investment income unless specific situations apply: 

• The New Tax Regime (Section 115BAC) is the default regime for all individuals, including NRIs. However, NRIs can opt for the Old Tax Regime.
• Basic Exemption Limit is now 4,00,000 INR. The new slab rates apply to examples at lower rates at lower income levels. Most deductions (like 80C, 80D, etc.) are not available in the New Regime. 
• Taxed at 12.5% on gains exceeding INR1.25 Lakh (for STT-paid listed equity shares/funds). This is a significant rate increase.
• The provision remains, but there is also relief in TDS/TCS for non-filers (who do not have a permanent establishment in India), which might simplify compliance for some. 
• Taxpayers, including NRIs, can now claim up to two properties as self-occupied, making the notional rent on the second property also exempt. 
• The rule remains: a person with Indian income (other than foreign sources) of over INR15 Lakh who stays in India for 120 days or more is considered a Resident but Not Ordinarily Resident (RNOR). RNOR status makes their foreign passive income taxable in India.

How Can an NRI be Taxed in India? 

NRIs can be taxed based on various types of income earned, including: 

1. Income from Salary

• Salary Received in India: If your salary is directly paid into your account in India, or if it is paid on your behalf in India, it can be fully taxable.
• Salary for Services Rendered in India: Based on where the payment is received, any salary you earn for work or services actually performed while physically present in India is taxable.

2. Income from House Property

• All Indian Property Income is Taxable: Any income derived from residential or commercial property located in India is subject to Indian tax laws. This includes:
• Rental Income: Rent received from letting out the property.
• Deemed Rental Income: If you own a vacant property that is not declared as self-occupied (or one of the two self-occupied properties permitted from FY 2025-26), a notional rent may be calculated and taxed.

3. Income from Other Sources (Interest & Dividends)

• Taxable Interest: Interest earned on funds held in your Non-Resident Ordinary (NRO) bank accounts (savings, fixed deposits, etc.) is fully taxable in India. This interest is also subject to TDS (Tax Deducted at Source).
• Exempt Interest: Interest earned on your Non-Resident External (NRE) accounts and Foreign Currency Non-Resident (FCNR) deposits is fully exempt from tax in India.

4. Income from Capital Gains

• Tax on Indian Assets: Any profit generated from the sale or transfer of a capital asset located in India is taxable. This primarily covers:
• Sale of real estate (land, house property) in India.
• Sale of shares and securities listed or unlisted on Indian stock exchanges.

Tax Deductions Available for NRIs in India

NRIs can claim various deductions under Chapter VI-A of the Income Tax Act, 1961, to reduce their taxable income in India. Here are the tax deductions available for NRIs in India: 

1. Deduction under Section 80C

Note: An NRI is generally not eligible to open a new Public Provident Fund (PPF) account. However, a PPF account opened while the individual was a resident can usually be maintained until maturity, and contributions to it may be eligible for the 80C deduction.

2. Deduction under Section 80D (Health Insurance Premium) 

3. Deduction under Section 80E (Education Loan Interest)

Updated Income Tax Slab for NRIs for the FY 2025-26? 

To fall under an income tax regime is the choice of the NRI. The Old Tax Regime or the New Tax Regime (under Section 115BAC).

For NRIs, the benefit of higher basic exemption limits for senior and super senior citizens is not applicable. 

Here are the tax slabs for NRIs for FY 2025-26:

New Tax Regime (Default Regime)

Old Tax Regime (Option for NRIs) 

How Do I File Income Tax Returns in India as an NRI? 

To file an Income Tax Return in India as an NRI, follow the following steps: 

1. Determine Your Residential Status 

Whether you are liable to pay tax in India depends on your residential status, which is based on the number of days you spend in India during a financial year (April 1st to March 31st). Generally, you are considered an NRI if you are in India for less than 182 days in that financial year. 

2. You Must Fall Under the Taxable Income Category 

NRIs are only taxed on income earned, accrued, or received in India. This includes:

• Salary for services rendered in India.
• Rental income from property located in India.
• Capital gains from the sale of assets in India (e.g., property, shares).
• Interest earned on NRO (Non-Resident Ordinary) accounts and other Indian investments.
• Exempt Income for NRIs: Interest from NRE (Non-Resident External) and FCNR accounts is tax-exempt in India.

3. Collect All Necessary Documents 

• PAN card (mandatory).
• Passport (for proof of NRI status).
• Form 26AS and AIS (Annual Information Statement) to check TDS (Tax Deducted at Source) details.
• Bank statements for NRO and NRE accounts.
• TDS certificates (Form 16/16A).
• Property documents, rent receipts, and home loan interest certificates (if applicable).
• Investment proofs for claiming deductions.
• Tax Residency Certificate (TRC) and Form 10F (if claiming Double Taxation Avoidance Agreement (DTAA) benefits). 

4. Register or Log in to the e-Filing Portal

Visit the official Income Tax Department website (incometax.gov.in) and register using your PAN. If already registered, log in to your account. 

5. Choose the Correct ITR Form 

• ITR-2: For NRIs with income from salary, house property, capital gains, or other sources, but no business or professional income.
• ITR-3: For NRIs who have income from a business or profession in India (along with other income sources).

6. Fill the Form: 

• Enter your Personal Information and ensure your residential status is correctly marked as NRI.
• Report all your income accrued or received in India (e.g., Indian salary, rental income, capital gains, NRO interest).
• Fill in details of TDS and taxes paid (matching Form 26AS/AIS).
• If claiming DTAA relief, ensure you have submitted Form 67 before or along with filing the ITR.
• Report your Indian bank account (preferably NRO account) for any tax refund.\

7. Compute Tax and Pay: Review the tax computation. If there is any balance of tax payable, pay it online. 
8. Submit and E-Verify: Submit the return. ITR filing is incomplete without verification. You can e-Verify the return using methods like:

• Aadhaar OTP (if your Aadhaar is linked to PAN and an Indian mobile number)
• Net Banking
• Electronic Verification Code (EVC) generated through your pre-validated Indian bank/Demat account

Navigate NRI Taxation in India Confidently with GetGIS

Understanding India’s updated NRI tax rules and filing requirements for FY 2025–26 can be complex. From residential status determination to income classification, compliance, and deductions—each step demands precision and clarity. Whether you’re managing dual income sources or filing from abroad, GetGIS tax and immigration experts help streamline your obligations with expert-backed guidance and hassle-free filing support.