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Tax Rates for NRI on Indian Income & Investments 2020 – 2021

Let’s check Tax Implications on Different Sources of Income for NRIs in India – also check tax rates for NRIs.

Some NRIs do earn income in India as well.

If this income exceeds the basic exemption limit, NRIs have to file income tax returns. Even if the tax is paid or deducted, tax returns should be filed.

You can also get RNOR Guide from end of this post – which can help NRI reduce tax.

tax rates for nri in indian income

Check – Latest news about NRI tax in India

Tax Rate For NRIs on Indian Income

Income Tax Rate AY 2020-21 | FY 2019-20 – Individuals less than 60 years

Tax Slab 2020

wdt_IDIncome SlabsTax Rate
1₹0 – ₹ 2,50,000No tax
2₹2,50,000 - ₹5,00,0005.00%
3₹5,00,000 - ₹7,50,00010% (20% earlier)
4₹7,50,000 - ₹10,00,00015% (20% earlier)
5₹10,00,000 - ₹12,50,00020% (30% earlier)
6₹12,50,0000 – ₹15,00,00025% (30% earlier)
7> ₹15,00,00030% (same as before)
Income SlabsTax Rate
Note – The above rate is applicable if you don’t use exemptions that are available to reduce tax. You have the option to pay tax as per earlier rates if you think exemptions & tax saving instruments are beneficial for you.
Income Tax Rate AY 2019-20 | FY 2018-19 – Individuals less than 60 years
Taxable incomeTax Rate
Up to Rs. 2,50,000Nil
Rs. 2,50,000 to Rs. 5,00,0005 %
Rs. 5,00,000 to Rs. 10,00,00020%
Above Rs. 10,00,00030%

Let us look at different income avenues for NRIs and the taxation rules regarding the same –

Income from Salary

You might have become an NRI in the middle of a financial year. In such a situation, you might have earned salary in India for part of the financial year. You have to pay income tax as per the income tax slab that is applicable to you for the total income earned in India.

ReadHow Change in Residential Status Impact Different Accounts & Investments

Income from Interest in Resident Accounts

You might have earned interest on amount in savings accounts and fixed deposits before you became an NRI. Under Section 80TTA, deduction up to Rs. 10,000 is allowed on interest income from bank savings accounts.

The interest earned in Fixed deposits is added to the total income and taxed as per income tax slab applicable.

*It is important to close all bank accounts that are residential when you become an NRI.

Income from Interest earned in NRO, NRE and FCNR accounts.

Interest on NRE and FCNR account is tax-free.

Interest on NRO account is taxable. It will be added to the total income and taxed as per income tax slab applicable.

Tax Rates for NRI on Indian Income

Check – Investment Options of NRIs

Income from rent

NRI owns a property and gives it on rent to a tenant.

The tenant deducts TDS at 30% of the rental income before paying the rent to the NRI.

The rent received is added to the total income which is liable to tax as per the applicable slab rates.

The following deductions should be considered –

  • Municipal taxes paid,
  • standard deduction of 30% on taxable value
  • deduction for interest on loan taken for buying, constructing or repair of home
  • Repayment of principal amount of home loan up to Rs. 1,50,000

If you have two properties, one will be considered as deemed let out property and you will have to pay tax on it.

The rent will have to be deposited in NRO account of NRI landlord. This money cannot be credited in NRE account as long as a tenant is also an NRI.

wiseNRI

Income from Real Estate capital gains

An NRI who sells a house property and earns capital gains is liable to pay tax it’s same as resident Indian.

BUT for NRIs Long-term capital gains are subject to a TDS of 20%. Short-term capital gains are subject to a TDS of 30%. (U/S 195) The gains are considered short-term if the house is sold within two years of purchase.

You can get an exemption if

  • You invest in a house property as per Section 54 within one year before the date of transfer or 2 years after the date of transfer or complete construction of a house within 3 years after the date of transfer of the capital asset

OR

  • You invest in capital gain bonds as per Section 54EC within 6 months of date of transfer.

In the case of NRI TDS is deducted on the total Sale Value of the property (not just gains) – even if the property value is less than 50 Lakh. If there’s not gain, NRIs can claim tax refund later.

Read – NRI Mutual Fund Taxation In India

Income from capital gains in other assets

Income from capital gains earned from other assets like stocks, mutual funds will be taxed. Long term – 10% tax, without indexation, is applicable for capital gains from all direct equity and equity mutual funds, if the gains are more than Rs. 1,00,000.

Short-term capital gains are  taxed at 15%

Long Term Capital Gains on mutual funds other than equity funds are taxed at 20% with indexation for listed funds and 10% without indexation for non-listed funds.

Short Term Capital Gains on non-equity mutual funds are taxed at 30%.

Check – Portfolio Investment Scheme for NRI

Receipt of Gifts

Gifts received from relatives as defined in the Income Tax Regulations are exempt from tax.

Gifts received from non-relatives up to the value of Rs. 50,000 are exempt from tax. Beyond that, the gift value is added to the total income and taxed as per applicable income tax slab. (Check tax & other issues – Gift by NRI to Resident Indian or Vice Versa)

If you are an NRI, calculate the income received in India, and if it is above the exemption limit, do file your tax returns within the due date.

Feel free to ask queries or if you have any practical experience regarding taxation – must share in the comment section.

tax rates for nri in indian income

About the Author

Hemant Beniwal is a CERTIFIED FINANCIAL PLANNER and his Company Ark Primary Advisors Pvt Ltd is registered as an Investment Adviser with SEBI. Hemant is also a member of the Financial Planning Association, U.S.A and registered as a life planner with Kinder Institute of Life Planning, U.S.A. He started his Financial Planning Practice in 2009 & is among the first generation of financial planners in India. He also authored Bestseller book "Financial Life Planning".

  • Seetharama says:

    Explain what is tax implication on gains from INHERITED agricultural land

  • Ralph says:

    Dear Hemant,

    In the following situation NRI does not need to file a return:

    If Indian income is below taxable limit
    and
    If relevant TDS has been done at the applicable rate and assesee is either not eligible or not desirous of applying for a refund

  • Rahul says:

    NRI selling property in India..is TDs rate for NRI 20%? So on 90 lakh proceeds will 18 lakh be TDS?

    • Hi Rahul,

      Yes, Long Term TDS on sale of property 20.6%. NRI in case falls under the lower slab can request and apply for low or no TDS – talk to your CA.
      Buyer should have TAN. Normal transaction not possible when buyer/seller is an NRI.

  • Binayak says:

    From ICICI prulife insurence ( pension schme i invested in 2008 . maturity on 2018, and the pension strated from sept 2018. how much tds % cut

  • Ankur Bansal says:

    You have mentioned that it is important to close all resident accounts when you become nri.

    I have few savings and a pp account in India. I have been living in US for more than a year.

    Do I need to close them? Where should I park the amount available in those accounts? What happens to FDs?

  • Ramesh says:

    NRI person is INCOME TAX PAYEBLE OR NOT

  • Sumit says:

    Can my company transfer a part of my salary to NRE account to avoid high taxation in a foreign country?

  • Kamal says:

    I am a Irish citizen of Indian origin. I am selling property in India for 50 lakh rupees. What will be the capital gain tax

  • Anushree Jain says:

    If my FD savings interest income is less that 2.5l, do I fall in no tax slab?

    • Anuj says:

      Hi Anushree,

      If you fall within 2.5 lac limit, it is not mandatory to file the return.
      But if TDS is deducted on your FD, you can claim refund by filing return. You can also submit 15G form to bank for not deducting TDS on FD interest as your income is within basic exemption limit

  • TukaiN says:

    Hi,
    As a house wife I am staying with my husband in UAE last 6 year, additionally my visa is sponsored (Dependent Visa) on my husband job visa.
    As I know any Indian leaving outside INDIA more than 182 days in financial year become NRI. Now the question is,
    * House wife can able to open a NRE account in INDIA?
    If yes, then please find the below requested question,
    * Currently I am doing some handicraft work and earn some cash money irregular base. Currently I don’t have any bank account In UAE. Now If, I am planning to send money through authorize exchange center in my NRE account, then any income tax risk waiting for me when I will be back to INDIA.
    * Currently my husband have job visa and I have dependent visa. Is it possible in India tax system, my NRI money will start to calculate as my husband income, because of my visa status? Additionally future earned interest will start calculating as a clubbing income of my husband and it increases my husband tax liability.
    Or
    India tax system believe, both party NRE account money is an individual assets and both party are, not able to claim others money.
    Example:-
    (If I am eligible to open a NRE account)
    My INDIA NRE account :- I have 1,000,000 (10 lakhs) and later when comeback to India taxable Interest gain yearly 6% base 60,000 (60 thousand),
    In my husband INDIA NRE account :- have 4,000,000 (40 lakhs) and later when comeback to India taxable Interest gain yearly 6% base 240,000 (2 lakhs 40 thousand)
    Husband Clubbing income :- Any chance India tax system start calculating this money my Husband Clubbing income (240,000+60,000) = 300,000 (3 lakhs)
    Or
    Both party incomes are separate and in my money, there is no legal ownership of my husband. So my taxable income is 60,000 (60 thousand) and my husband taxable income is 240,000 (2 lakhs 40 thousand)

    Thanks,

  • Qayyum says:

    Helo
    I am NRI, my annual rental income is 480k.
    How much percentage of tax I am liable to pay.
    My tenant is saying he will deduct 30% TDS
    How much I can claim back?

  • Chiman says:

    How the gratuity earned outside India is taxed on return to India

    • Raghav says:

      Hi. Chiman,

      Your retirement money, which is earned and directly received outside India and then subsequently repatriated to India, will not be taxable in India.

  • Thyagarajan says:

    I may return to India in June 2020. In that year, will my foregin salary be treated as resident indian income?

    • Raghav says:

      Hi. Thyagarajan,

      If you qualify as a Non-Resident Status than this Income is taxable globally but can take advantage of DTAA.

  • Tulip says:

    How DTAA apply to NRI

  • Satu says:

    i am NRI having NRI Investment in stocks , once i come to india andd become NRO , will there will be Tax on profit on tax , other than capital gains tax

  • Basti Prabhakar Shenoy says:

    What’s the deduction for seniors

    • Raghav says:

      Hi. Basti,

      For Senior Citizens
      Up to 3 lakhs – Nil.
      3 lakhs to 5 lakhs – 5%.
      5 lakhs to 10 lakhs – 20%
      Above 10 lakhs – 30%.

      for more details, about deduction and all you can visit Income Tax of India Website.

  • Ankur says:

    For NRIs, interest from NRE and FCNR accounts are tax-free, do they have to be declared as exempted income in filing of returns and added to total income. Or they dont have to be included at all? If they have to be part of total income, how do you determine the value of FCNR deposits as the amounts are no in Indian Rupees?

  • Vinod says:

    Whether pension from LIC is taxable???

  • Akshay says:

    Hi. Ankur,

    Yes, you have to declare the Income while filing the ITR and can take the deduction for the same.

  • Prasann says:

    I am NRI planning to return back to India and have a full-time job there. Now when I do return back I would obviously be returning back with my finances, so would there be any taxes levied on me for bringing in these funds?

  • CHANDER SINGH says:

    basic info useful ! Thanks

  • Raman says:

    i would like to know about the income tax deduction

    • Anmol says:

      Hi Raman,

      You avail all the tax deductions available to an individual in India.
      For more information about this please visit to the site of Income-tax department of India.

  • Anil says:

    am an NRI and need to fill ITR in India wanted to know process for the same

  • Sunny says:

    What documents I have to submit with income tax form as Iam NRI

    • Rajat says:

      Hi Sunny
      passport to show the number of days spent outside India to qualify as an NRI.
      Statements for the Demat accounts, for the transactions and bank accounts held in India, as well as the TDS certificates received from other parties.

  • Mohit says:

    i live in bahrain and i deposit my salary in my india account so india govt cut any taxes which i deposit in india

  • P.K.DEY says:

    I am an NRI having earned an below taxable limit interest in my savings account in India where tds has been deducted. To claim that tds if I wish to file ITR which form i should use?

  • kaushik says:

    US citizen residing in India for more than 5 years, what is tax implication in India for income in USA

  • Uday Rodrigues says:

    Sir, Many NRI’s are investing in P2P lending platforms. What about the tax on earned income ?

  • Dr.Maria says:

    Hi, I am a NRI. I would like to sell a property in India purchased 10 yrs ago for 55 lacs I was told about 22% tax. Is the tax recently increased by Govt? If I invest in capital gains can I avoid the tax? How many years the money will be locked in capital gain.

    • Anmol says:

      Hi Maria,

      LTCG Tax rate is 20% with indexation. Yes, you can save tax by investing in Capital gain bonds with a lockin period of 5 years.

  • Neeraj says:

    I am NRI. I have purchased under construction flat in 2017 Dec construction started in 2015 in Pune. Builder sent demand latter with 12% GST. Should I pay 12% GST?

  • Varsha says:

    How much income for NRI is non taxable in india?

    • Rajat says:

      Hi Varsha,

      Tax slabs and deductions are almost the same as the resident slabs, and it will again depend on what amount of deductions you are claiming.

  • Anil says:

    As I said in my previous chat that the tax deducted in India after the maturity of my UTI policy how do I get my tax back as I have not earned any other income in India.I want to submit my tax return. please advise how should I proceed to get a refund. Thanks

  • Roy says:

    Hi Anil,
    Consult with your CA

  • Dr. Maria says:

    I am a NRI planning to sell a property in India which is above 50 lacs.I have 2 qns:1. To avoid 20% deduction by tax, how should I invest in capital gains? What is the procedure to claim 20% exemption? Will the tax be deducted first and I have to claim letter or can I avoid deduction upfront?>2. In the sale agreement between me and the prospective buyer, can I put a clause of nonrefundable deposit advance if the buyer fails to purchase in 2 months’ time? In this, I want to specifically know if a nonrefundable amount and 2 months period is legally admissible or if I am violating any law. Thank you

    • Prem says:

      Hi Maria,
      1) You can save your 20% Tax, if you invest the sell value in some scheme such as buying a different property or investing into government bonds.

      2) Yes, you can put this clause but advisable to consult a Property consultant or a lawyer for best advise.

  • sanjeev says:

    Does nri has to show his self occupied residence house in usa in any form like 1049,fbar or 8968 or any where else in usa??

  • gues says:

    How long does it typically takes for TDS refund back as an NRI? If I sell my property in Dec19 then by when can I expect the extra TDS refund back? Will govt. pay any interest rate on it for that period?

    • Hi,
      You will file your tax in April – after that another 4-6 months for a refund. Interest – there are many rules but you can consider 6% taxable interest from 1st day of next financial year.

  • Gaurav says:

    how to get tds refund on the resale of property as an NRI

  • Neha Gupta says:

    Hi…I want to know what is the tax regulation for NRI if they want to sell their property and want to take the proceedings to their country of residence.

  • Lokesh Rajan Rao says:

    I was on a ship for 177 days. Got for the 177 days abroad. How to save income tax?

    • Vicky says:

      Hi Lokesh,
      You can Save Tax by investing at certain places such as ELSS, Insurance, PPF, NPS and many more like that, but this all will be determined as per your residential status.

  • GOPAL MAHESHWARI says:

    As per the Income tax laws when an Indian become an NRI he must close all his savings and Fixed deposits accounts in Indian banks. Where can he put or transfer his savings or Fixed deposits in India?

  • Rajesh says:

    If I have exited India on the 2nd of December and entered on the 6th of December. How many days out of the country is this considered?

  • Piyush says:

    I am NRI 77 yrs age residing in the USA. I have nro acct with SBI in India. I earned this year’s interest income of Rs 43200 from nro acct. Rs262500 from rec bond and Rs165800 interest on income tax refund. I earned a dividend of Rs11100 from equity shares and ltcg Rs8700 from the sale of equity shares in India. Please advise how much income tax I shall have to pay in India.

  • JOE says:

    I AM AN NRI AND GETTING PENSION FROM INDIA. WHETHER TDS WILL BE THERE ON PENSION OR I HAVE TO PAY TAX WHILE FILING, IF ANY.

    • Prachi says:

      Hi Joe,
      If you are getting Pension from NPS, then the TDS will be deducted but you can claim it back while filing Tax return in India,

  • Prem says:

    I work overseas need to pay the tax?

  • Nish says:

    Is my income earned from LIC premium maturity taxable in the US? It’s tax-free in India.

  • Elvis says:

    I am an NRI and I have a property to seel in India. How can I avoid the TDS?

    • Aniket says:

      Hi Elvis,
      As per my knowledge, you cannot avoid TDS deduction but you can claim it back if you file you ITR.
      If the sale proceed is less than 50 lakh, then no TDS will be deducted.

  • Mohit says:

    How is NRI status for tax purposes calculated for OCI with British citizenship, if the person plans to settle in India? Will that person always have NRI status or convert to resident status after 180/240 days?

    • Sanjeev says:

      As per my research, as soon as you step down in India and fulfill the conditions of Income Tax. Your residential will change according to that.

  • Nagesh Dwivedi says:

    I am working in International and getting salary at International only , if I take my salary direct into my Saving account then in which slab I have to pay income tax in india

  • Riyaz says:

    Is the basic exemption limit applicable to NRI for computing Tax?

  • Elizabeth says:

    does NRI have to pay income tax on principal amount in fixed deposits when they return back?

  • Balasubramani says:

    Been an NRI since 1999 and never filled income tax. What can you advise me?

  • Jaishiv says:

    I am professional and NRI since 2014 onwards. Till 2017 I was based in the gulf and working full time. Since 2018 I am a consultant / advisor to the company and spend about 7 months in the gulf and draw a salary there. The last financial year I have stayed about 210 days abroad but if you take in the last 4 years it may come to a little more then 390 days. What will be my status? Will I be considered NRI? Please clarify. Thanks

  • Jaydevprasad says:

    NRI’s interest in Bank accounts is taxable?

  • raj says:

    is there any specific limit after which the tenant is required to deduct 30% from the rent or for all amount of rent.

  • Mohinder says:

    Interest income exemption for NRI financial year 2019-20.

  • Janet says:

    I am the Executor of my friends Will and when she died, she held several Mutual funds in India and I am in the process of trying to redeem the funds. To do this, I had to open an Indian Bank account for those funds to go in it. My question is, do I have to pay tax on this money? I live in the UK.

  • Prakash says:

    What type of Taxes to be paid by NRI for income received from Shares in a repatriable account?

  • Aesther says:

    Do I need to pay income tax as an NRI on the LIC maturity amount?

  • Kamal says:

    I am a french citizen but origin Indian, now I want to invest some money in India in the stock market for long term gain and some short term gain as well. How much tax do I need to pay? Are there any slabs for these incomes in Indian tax système? Is it possible to get déduction for the gain?

  • Atul kumar says:

    Hi my father (Retired pension) holding OCI Card with foreign nationality ……he is receiving rent on property which is around 18 lacs per annum and he Stayed in india for 165 days during last financial year…..but during last 4 years he stayed more than 365 days
    My question is that what will be his residential status during this financial year
    He has no other income from India or abroad
    Does he has to pay tax on nre fixed deposit
    Thanks for help

  • Devi Prasad says:

    What are the current criteria as per the Indian budget for calling someones as NRI?

  • Ravikiran says:

    Is Dividend income taxable for NRI?

  • Kaushik Ghosh says:

    Hi I am an NRI living in UK. My ICICI Prudential Life Insurance policy is getting matured in August. Assured amount is less than 2.5L. Will there be any tax deducted on that amount? If yes, then if I file tax return shall I get back the full refund of the taxable amount? I do not have any other income in India at the moment. Please confirm.

  • Kirtee says:

    I want to know what are the income Tax Rates for NRIs for the current year (2021-22)?

  • Jitender says:

    I will be returning to India in Aug. Currently, My status is NRI. How much tax I have to pay on my salary in India after returning?

  • Deepak says:

    How does NRI claim back TDS deducted by Companies on Dividend paid to shareholders?

  • raja says:

    For non equity mutual funds, can the capital gains be adjusted against basic excemption?

    • Yash says:

      Hi Raja,
      There is no such thing.
      The short term capital gains are added to one’s income and are taxable as per the income slab.

  • Pramod Kumar says:

    Hi! On becoming resident after finishing my NROR status, I recently changed my NRE FD to resident FD as bank will not allow me to change status only in NRE savings account. It was a 10 year FD which bank converted to resident FD at same old FD rate till it’s balance maturity period after calculating the interest till date and adding it to principal amount for new resident FD. It was very quick and easily done. Now they will start deducting TDS @7.5% which will result in some loss in maturity amount as reinvested interest will reduce after TDS deduction.

  • Deepak says:

    Do I have to file tax, I am NRI.

  • Vris says:

    what would be the tax on dividend to be paid by nri in fy20-21? Would the tax rate be as per the taxable income in india or is there any fixed rate?

  • Ashwin says:

    If an NRI receives Receipts from Endowment plans like monthly pension to his NRE account, does that make the income received exempt?

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