NRI Income Tax Slabs & Mandatory Return Filing (AY 2026-27)
NRIs must file income tax returns in India if their gross Indian-sourced taxable income exceeds the basic exemption limit, or if they wish to claim TDS refunds.
| ITR topic | Tax rules for NRIs | Key requirement |
|---|---|---|
| Basic Exemption Limit | Rs. 2.5 Lakh under the Old regime, and Rs. 3 Lakh under the default New regime. | NRIs must pay tax on any income exceeding this limit. Slabs apply normally. |
| Section 87A Rebate Exclusion | NRIs are NOT eligible for the Section 87A rebate. | The zero-tax result up to Rs. 7 Lakh or Rs. 12 Lakh is only for resident individuals. |
| ITR Form Selection | ITR-2 is standard for NRI salary, property, and capital gains. ITR-3 applies if business/profession income exists. | NRIs are strictly barred from using the simplified ITR-1 form. |
| Taxable Income scope | Includes Indian salary, rent from property in India, NRO interest, and capital gains on Indian assets. | Foreign-sourced income is completely exempt from tax in India. |
Important compliance checks for NRIs
- Physical stay rules: Verify if stay in India was less than 182 days (and does not meet 60 days + 365 days test) to confirm NRI status.
- TDS on NRI Payments: TDS is deducted under Section 195 on all payments to NRIs (rent TDS is 31.2%, property sale TDS is 20.8% LTCG / 30.9% STCG on gross value).
- NRE/NRO Account Setup: Interest on NRE and FCNR accounts is tax-free in India. NRO interest is fully taxable and subject to 30.9% TDS.
- DTAA Claims: NRIs can submit a Tax Residency Certificate (TRC) and file Form 10F online to reduce Indian TDS rates under tax treaties.
Documents to prepare for NRI tax filing
- Passport copy showing all pages with entry/exit stamps.
- NRE and NRO interest certificates and Form 16A TDS certificates.
- Form 16 from Indian employers (if salaried in India).
- Demat capital gains statement and transaction summaries.
- Tax Residency Certificate (TRC) and Form 10F (for DTAA claims).
NRI Taxation India FAQ: year and source check
Last fact-checked: 18 June 2026.
AY 2026-27 means FY 2025-26 income and is filed under the Income-tax Act, 1961. Tax Year 2026-27 means FY 2026-27 income under the Income Tax Act, 2025. Do not mix the two.
Verify stay days, TRC validity, DTAA rates, NRO interest, and Form 15CA/15CB requirements against official CBDT guidelines, notifications, and portal utilities before taking a filing position.
FAQs
Does an NRI get the Section 87A rebate?
No. The Section 87A rebate (which provides zero tax up to Rs. 7 Lakh or Rs. 12 Lakh in the new regime) is only available to resident individuals. NRIs must pay tax if their income exceeds the basic exemption limit.
Which ITR form should an NRI file?
NRIs must use ITR-2 for salary, house property, capital gains, and other sources. If they have business or professional income in India, they must file ITR-3. NRIs cannot use ITR-1.
What are the criteria under which an NRI must file an ITR in India?
An NRI must file an ITR if their total gross income in India (before deductions) exceeds the basic exemption limit (Rs. 2.5 Lakh under the old regime, Rs. 3 Lakh under the default new regime for AY 2026-27), or if they want to claim a refund for excess TDS.
Frequently Asked Questions
1. What is the tax significance of NRI Taxation India FAQ under the Income Tax Act?
NRI Taxation India FAQ represents key provisions under the Income Tax Act governing deductions, exemptions, tax rebates, or notice assessments. In FY 2025-26, all tax computations must follow the default New Tax Regime unless you actively opt for the Old Tax Regime.
2. How does NRI Taxation India FAQ apply under the default New Tax Regime for FY 2025-26?
Under the New Tax Regime, tax slabs are broadened (up to ₹4 lakh is Nil, and ₹4L to ₹8L is 5%, up to a maximum rate of 30% above ₹24 lakh). Standard deduction is enhanced to ₹75,000. Rebate under Section 87A is available up to ₹60,000 for taxable income up to ₹12,00,000, which heavily influences calculations for NRI Taxation India FAQ.
3. Are there specific deductions or exemptions available for NRI Taxation India FAQ?
Deductions or exemptions for NRI Taxation India FAQ depend on the chosen tax regime. Under the Old Tax Regime, deductions like Section 80C, 80D, and home loan interest (Section 24b) can be claimed, but these are generally disallowed under the default New Tax Regime.
4. What is the Section 87A rebate limit for FY 2025-26?
Under the New Tax Regime, resident individuals with taxable income up to ₹12,00,000 get a full rebate up to ₹60,000, making tax liability zero. Under the Old Tax Regime, the rebate is available only for income up to ₹5,00,000 (maximum rebate ₹12,500).
5. What is the LTCG tax rate on equity shares and mutual funds?
Under Section 112A, Long-Term Capital Gains (LTCG) on listed equity shares and equity-oriented mutual funds are taxed at a flat rate of 12.5% on gains exceeding ₹1.25 lakh per financial year.
6. What is the STCG tax rate on equity shares under Section 111A?
Short-Term Capital Gains (STCG) on listed equity shares and equity mutual funds are taxed at a flat rate of 20% under Section 111A if Securities Transaction Tax (STT) is paid.
7. What is the tax treatment of dividend income?
Dividend income is fully taxable in the hands of the receiver at their applicable income tax slab rates. The paying company will deduct TDS at 10% under Section 194 if the dividend exceeds ₹5,000 in a FY.
8. What is Section 80C under the Old Tax Regime?
Section 80C allows deductions up to ₹1,500,000 for investments in PPF, EPF, ELSS, LIC premium, principal repayment of home loan, and school tuition fees. This deduction is NOT available under the New Tax Regime.
9. What is Section 80D medical insurance deduction?
Section 80D allows deduction for health insurance premium: up to ₹25,000 for self, spouse, and children, and an additional ₹25,000 for parents. If parents are senior citizens, the deduction limit increases to ₹50,000. It is only available under the Old Tax Regime.
10. What are the rules for filing a belated return under Section 139(4)?
If you miss the primary ITR due date, you can file a belated return by December 31 of the Assessment Year. It attracts a late fee of ₹5,000 (₹1,000 if income is <= ₹5 lakh) and interest under Section 234A.
11. What is Section 148 of the Income Tax Act?
Section 148 authorizes the Assessing Officer to issue a notice to assess or reassess income that has escaped assessment. A show-cause notice under Section 148A must first be issued to give the taxpayer an opportunity to reply before reopening.
12. What is the tax rate on speculative business income (like intraday equity)?
Speculative business income is taxed at normal slab rates. However, speculative losses can only be set off against speculative profits and can be carried forward for only 4 assessment years.
13. What is the presumptive taxation scheme under Section 44AD?
Small businesses with turnover up to ₹2 crore (or ₹3 crore if receipts are 95% digital) can declare presumptive taxable profits at 8% of turnover (6% for digital receipts) without maintaining books of accounts or undergoing audits.
14. What is presumptive taxation for professionals under Section 44ADA?
Professionals with gross receipts up to ₹50 lakh (or ₹75 lakh if receipts are 95% digital) can declare 50% of receipts as taxable income under Section 44ADA.
15. How is rental income taxed under the head 'Income from House Property'?
Rental income is taxed on its Net Annual Value (Rent received minus Municipal Taxes). A standard deduction of 30% under Section 24(a) is allowed. Home loan interest under Section 24(b) can be deducted up to ₹2,00,000 (only under the Old Regime for self-occupied properties).