NRI Taxation in India — Residential Status, NRE/NRO & DTAA

Step 1: Are You a Resident or an NRI?

You are a Resident if either condition is met in the Tax Year:

• You stay in India for 182 days or more, OR
• You stay 60 days in the current year + 365 days across the previous 4 years

Key relaxations — the "60 days" test becomes 182 days for: (a) Indian citizens leaving India for employment/crew, and (b) Indian citizens/PIOs visiting India when their Indian income is ≤ ₹15 lakh. If that income exceeds ₹15 lakh, the "60 days" becomes 120 days (with the 365-day lookback). Fail all tests → NRI.

Step 2: RNOR — the Transition Status

Returning NRIs often become Resident but Not Ordinarily Resident (RNOR) for 2–3 years (e.g., NRIs for 9 of the last 10 years, or ≤729 days in India over the last 7 years). During RNOR, most foreign income stays outside Indian tax — a valuable window to restructure assets before becoming fully ROR (Resident & Ordinarily Resident, worldwide income taxable).

NRE vs NRO Accounts — the Tax Difference

DTAA — Don't Get Taxed Twice

• India has Double Taxation Avoidance Agreements with 90+ countries (US, UK, UAE, Singapore...)
• Treaty TDS rates are often lower than the domestic 30% (e.g. US treaty: 25% on interest)
• Claim relief using the tax credit method (India taxes, foreign country credits) or exemption method, as per the treaty
• You need a Tax Residency Certificate (TRC) + Form 10F to claim treaty benefits

Selling Property in India as an NRI

When an NRI sells Indian property, the buyer must deduct TDS on the full sale value — about 20%+ for long-term gains (unlike 1% on gains for residents). If the calculated tax on the actual gain is much lower, apply for a lower-deduction certificate (Form 13) before the sale.

• NRIs must file an Indian ITR if India-sourced income exceeds the basic exemption — or to claim refunds of excess TDS
• Capital gains on Indian shares/property remain taxable in India regardless of where you live
• Gifts from India to NRI relatives are fine; gifts received by NRIs from non-relatives above ₹50k are taxable here
• On returning permanently, plan your RNOR window — NRE interest becomes taxable once you turn ROR (FCNR stays exempt till maturity under RNOR)