NRI Taxation Guide for FY 2024-25: Essential Insights

Introduction

If you’re a Non-Resident Indian (NRI) with financial ties to India, understanding your tax responsibilities is crucial — especially with frequent updates to tax rules. This guide simplifies NRI taxation in India for FY 2024–25 (AY 2025–26) and helps you stay compliant with Indian Income Tax laws.

Who is Considered an NRI?

As per Indian tax law, your residential status is based on your physical presence in India during a financial year. You are classified as an NRI if:

• You were in India less than 182 days during FY 2024–25, and
• You were not in India for 365 days or more in the last 4 years + 60 days in the current year

Exception for point (2)

In the case of an Indian citizen or a person of Indian origin (PIO) whose total income, other than income from foreign sources:

• Exceeds Rs. 15 lakhs during the relevant financial year – 60 days, as mentioned in point (2) above will get substituted with 120 days.
• Indian citizen leaving India for employment outside –  The Indian citizen who leaves India in any year as a crew member or for employment outside India, the period of 60 days in point (2) above will be substituted with 182 days.

Hence, an Indian citizen or PIO earning a total income over Rs 15 lakhs (other than from foreign sources) is deemed a resident in India if they are not taxed in any other country.

What Income is Taxable in India for NRIs?

As an NRI, only income earned or received in India is taxable here. Income earned abroad is not taxed in India.

Taxable Income Sources:

• Interest on NRO account (taxed at 30% TDS)
• Rental income from Indian property
• Capital gains from shares, mutual funds, or real estate
• Dividends from Indian companies
• Income from business/profession (if it arises in India)

Not Taxable in India:

• Salary received abroad
• Income from foreign investments
• Interest on NRE and FCNR accounts (exempt if conditions are met)

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When Should NRIs File Income Tax Returns?

You must file ITR in India if:

• Your total Indian income exceeds ₹2.5 lakhs
• You want to claim a TDS refund (e.g., on property sale or NRO interest)
• You wish to carry forward capital losses

Income Tax Return Due Date:

🗓 July 31, 2025 (for individuals not subject to audit). Currently, it is extended to September 15, 2025.

Which ITR Form Should NRIs Use?

• Use ITR-2 if you have income from capital gains, rental property, etc.
• Use ITR-3 only if you have income from business/profession in India

❌ Do not use ITR-1 (Sahaj) — it’s only for resident individuals.

TDS Rules for NRIs

NRIs face higher TDS rates on certain incomes. Here’s a quick look:

Nature of Income	TDS Rate
Interest/Dividend from investments made by an NRI	20%
Long-Term Capital Gains (LTCG) on: • Shares of an Indian Company • Debentures & Deposits of a Public Co. • Government Securities (as per Sec 115E)	12.5%
LTCG from listed shares & securities under Sec 112A	12.5% (Transfers on or after 23/07/2024 ) 10% (on transfers before 23/07/2024)
Other Long-Term Capital Gains	12.5%
STCG from FII or specified fund (excluding UTI/MF)	20%
Interest on money borrowed in foreign currency (by Govt./Indian co.)	20%
Royalty or technical service fees from Indian concern/Govt.	20%
Winnings from lotteries, games, horse races, online games	30%
Any other income	30%

💡 Note: Applicable surcharge and health & education cess are added over and above these rates.

💡 You can apply for a lower TDS certificate under Section 197 to reduce excess deduction at source.

Tax Deductions Available to NRIs

NRIs are eligible for many deductions available to residents:

✅ Eligible Sections:

• Section 80C – Life insurance premiums, ELSS, PPF (till you become NRI)
• Section 80D – Health insurance premiums
• Section 80E – Interest on education loans
• Section 80G – Donations to eligible trusts or funds

❌ Not Eligible:

• Section 80TTB – Not applicable for NRIs (this is for resident senior citizens)
• Post Office schemes like NSC, SCSS, etc.

Double Taxation Avoidance Agreement (DTAA)

India has signed DTAA with over 90 countries to ensure you don’t pay tax twice on the same income.

To claim DTAA benefits, submit:

• Form 10F
• Tax Residency Certificate (TRC) from your resident country
• Self-declaration of beneficial ownership

DTAA benefits are especially useful for interest, dividends, and capital gains earned in India.

Key Compliance Tips for NRIs

Here are some must-follow tips to stay tax-compliant in India as an NRI:

✅ Apply DTAA provisions if eligible to avoid double taxation

✅ Review and determine your residential status annually

✅ Use the correct ITR form

✅ File ITR even if no tax is due (to claim TDS refund)

✅ Disclose Indian income and foreign assets (if applicable)

Conclusion

NRI taxation in India may seem overwhelming at first, but with the right guidance, it can be managed smoothly. Keep track of your income sources, file your returns timely, and use the benefits offered under law to reduce your tax burden.

📞 Need assistance with NRI tax filing, DTAA application, or TDS refunds? Contact us for expert help.