NRI Taxation

Residential status is determined under Section 6 of the Income Tax Act 1961 based on physical presence in India during the financial year. An individual is Resident if present for 182 days or more in India, or 60 days or more in the current year and 365 days or more in the preceding four years; the 60-day threshold is extended to 120 days for Indian citizens earning above ₹15 lakh from Indian sources under the Finance Act 2020 amendment. If you do not meet either threshold you are a Non-Resident Indian (NRI), and under Section 5(2) only income that accrues or arises in India, or is received in India, is taxable here. Deemed residency rules under Section 6(1A) may also classify you as Resident but Not Ordinarily Resident (RNOR) if your total income from India exceeds ₹15 lakh and you are not liable to tax in any other country.

TDS on payments to NRIs is governed by Section 195 of the Income Tax Act 1961, which requires the payer to deduct tax at rates in force on any sum chargeable to tax in India. The applicable rate is the relevant tax treaty rate (if a DTAA exists between India and your country of residence under Section 90) or the rates specified in the Finance Act — whichever is more beneficial, provided you furnish a Tax Residency Certificate and Form 10F. For salary income, TDS is computed on the estimated tax liability for the year; for interest, the default rate is 20% plus surcharge and cess under Section 115A unless reduced by treaty. You may apply for a lower or nil deduction certificate under Section 197 from your Assessing Officer if your total India-source income does not justify the default rate.

Foreign tax credit (FTC) is available under Section 90/91 of the Income Tax Act 1961 and is governed procedurally by Rule 128 of the Income Tax Rules 1962. Where India has a Double Taxation Avoidance Agreement (DTAA) with your country of residence, credit is allowed under Section 90; where no treaty exists, unilateral relief is available under Section 91. You must file Form 67 on the income tax portal before or along with your return of income for the relevant assessment year — late filing of Form 67 has been held by multiple tribunals to disentitle the credit. The credit is limited to the lower of the foreign tax paid and the Indian tax attributable to that foreign income, computed on a source-by-source and country-by-country basis under Rule 128(4).

Yes. Under Section 5(2)(b) of the Income Tax Act 1961, income that accrues or arises in India is taxable for an NRI regardless of where they reside. Capital gains on Indian immovable property accrue in India and are therefore fully taxable here — Long-Term Capital Gains (LTCA) under Section 112 at 20% with indexation (for assets held over 24 months) and Short-Term Capital Gains under the applicable slab rates. The buyer is obligated to deduct TDS at 20% plus surcharge and cess under Section 195 read with CBDT Circular No. 728; if the actual gain is lower, you should apply for a lower deduction certificate under Section 197. Under the India-USA DTAA (Article 13), gains from immovable property may be taxed in the country where the property is situated, so you may also claim FTC in the USA for tax paid in India via Form 67.

Remittance of funds from an NRO account abroad is permitted up to USD 1 million per financial year under Schedule III of the Foreign Exchange Management (Remittance of Assets) Regulations 2016 and FEMA Notification No. 13(R). The remitting bank requires a CA certificate in Form 15CB under Rule 37BB of the Income Tax Rules 1962 certifying that applicable taxes have been paid or provided for, along with the remitter's self-declaration in Form 15CA (Part C) filed on the income tax portal. Sale proceeds of immovable property can be remitted only after holding the property for the period required under FEMA, and TDS deducted by the buyer should be verified before remittance. The bank will also require proof of source of funds (sale deed, bank credit entries) and your tax return acknowledgement for the year in which the income arose.