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

By Hemant Beniwal

Why Financial Planning?

Planning is bringing the future into the present so that you can do something about it NOW.

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Check Financial Plan For NRIs
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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_ID Income Slabs Tax Rate
Income Slabs Tax 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 income Tax Rate
Up to Rs. 2,50,000 Nil
Rs. 2,50,000 to Rs. 5,00,000 5 %
Rs. 5,00,000 to Rs. 10,00,000 20%
Above Rs. 10,00,000 30%

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.

[thrive_icon_box color=’blue’ style=’1′ image=’https://wisenri.com/wp-content/uploads/2018/02/NRI.png’]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.[/thrive_icon_box]

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
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Hemant Beniwal


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". 

  • 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

    • 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.

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

  • 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?

  • 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

    • 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

  • 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,

  • 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?

    • 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.

    • Hi. Thyagarajan,

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

  • 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

    • 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.

  • 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?

  • 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?

    • 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.

    • 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.

  • 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?

  • 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.

  • 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?

    • 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.

  • 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

  • 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

    • 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.

  • 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…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.

    • 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.

  • 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?

  • 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?

  • 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.

    • 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,

    • 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.

  • 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?

    • 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.

  • 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

    • Hi Riyaz,
      The basic exemption limit for NRIs is Rs. 2.5Lac. However, This exemption cannot be claimed on the Long term and Short term Capital Gains.

  • 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

    • NRE account is Tax-free for NRIs,
      But interest earned on NRO account is taxable if the interest earned is more than 10000 I guess, and TDS is Deducted on it as well as Cess.

    • The limit after which TDS is deducted is Rs. 2.4 Lacs, the rates for TDS deduction are different. But as per my knowledge, 30% TDS is not applicable in any case. However, a standard deduction of 30% can be claimed on the rental income.

  • 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.

    • Hi Janet, as per my knowledge one has to pay any tax liability that is supposed to be paid out of the redemption amount Received.

    • Hi Prakash,
      as per my knowledge if the shares are traded on daily basis then the income would be business income and the tax would be paid as per the income tax slab.
      If the stocks are held for investment purposes then capital gain taxes and TDS would have to be paid.

  • 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?

  • 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

    • Hi,
      As per my knowledge, TDS is deducted on Dividend Income, If the dividend exceeds 250000 then one would have to file ITR.

  • 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.

  • 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?

    • 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.

  • 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.

  • 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?

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

  • If a NRI from USA invests in India, then is there any tax applicable for that person in USA? If yes, then clarify the details about it.

    • Hi Punit,

      As per my Knowledge, If your stay in India exceeds the 181 days limit or the 120 days limit if your income is more than Rs. 15 lacs in India, then you would be considered as a Resident and your tax liability would be considered as that of a resident.

  • I am working in Germany and planning to shift back to india in October 2020. And now according to new budget one should pay tax on their global income if one lives more than 120 days in India. So my question is how my taxable income will be decided? will they consider my global income or tax and rent i paid in germany will be removed?

  • Hello, I have sold the property in India and incurred a long term gain and have to open capital gain saving account in India. I have SBI account in India but looks like this process needs account holder to visit India and I am stuck in London. Is there a way to open capital gain account without visiting India?

  • *For FY 2019-2020*- stayed in UAE from Aug 1 till March 31 (excluding some vacation days)= around 215 days. For FY 2020-2021- stayed in UAE from April 1, 2020 till Aug 31 2020. So no of days= 153.Before these two years, no history of employment outside india.I need to know if i will have to pay income tax for these two years?

  • I am an NRI, working fulltime in the US. If I work for a freelancing firm online as a parttime job and deposit the pay in my indian NRO account. Is that allowed ? I am willing to pay taxes on that in India.

  • I have an ICIC Pru life surrender in cash that I need to transfer to my NRE or NRO account. ( which one ?) What are the tax implications? What would you advice?

  • For this current financial year 2020-2021 what will be the NRI qualifying criteria. Because of lockdown we are unable to complete 182 days criteria this year.

    • Hi Neha,

      As per my Knowledge, I think there have been some exemptions due to the lockdown, However for the year 2020-2021 120 days, will apply only for NRIs whose total income in India during a financial year is over Rs 15 lakh. So, NRIs on an India visit, whose taxable income in India was up to Rs 15 lakh during a financial year would remain NRIs if their stay doesn’t exceed 181 days.

  • I sold my flat in India on January 31, 2020 – do I need to file capital gains in ay20-21 or can I defer to a later date – I am an NRI – also do I use itr 1 or itr 2?

    • Hi Sarangapani,

      As per my Knowledge, NRIs can remit up to 1 million USD in a financial year, I Think To remit funds from the NRO account, two forms are to be submitted 15CA and 15CB.

  • I have an NRO account in India. If I transfer 25 Lacs (got from my property sale) to this account within India, how much tax will be deducted?

    • Hi Mujib,

      As per my Knowledge, The tax will be deducted as per the capital gain earned on the sale of that property and also from where you would be transferring the money into the NRO account.

  • I am an Australian citizen of Indian origin & would like to sell my property in Mumbai how much tax do I pay on a sale of around 3cr.

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