NRI Income Tax & Compliance

Which Income Is Taxable for NRIs in India?

May 26, 2026
6 mins
8.6K Views

Under the Income Tax Act, NRIs, PIOs, and Overseas Citizens of India (OCIs) are liable to file an income tax return if they earn taxable income in India. The Act states that if the total annual income of NRIs in India exceeds Rs 2.5 lakhs under the old tax regime and Rs 4 lakhs under the new tax regime, NRIs must file an income tax return in India.

However, for NRIs, only income earned in or from India is taxable; income earned abroad is not taxable in India.

In this blog, we will understand the types of taxable income in India for NRIs.

Key Takeaways

For NRIs, only Indian source income is taxed. Meaning the income earned from or in India is taxable for NRIs.
For NRIs, the types of income taxable in India include salary and professional income, house property income, capital gains on Indian assets, interest, and dividend income.
Income earned outside India and received outside India is not taxable for NRIs.

What Types Of Income Are Taxable For NRIs In India?

For NRIs, India taxes only income received in India or arising from sources within India. The following are the types of income that are taxable for NRIs in India.

Salary and Professional Income: NRIs receiving a salary for work performed in India are taxable even if the salary is paid abroad. In addition to the TDS, it may be applicable under Section 195 at the prevailing rates. However, services provided outside India are not taxable.

House Property Income: Rental income from a house or commercial property in India is taxable for NRIs. NRIs can claim the usual deductions available under the Indian tax law, including the standard deduction and interest on a home loan, subject to certain provisions.

Capital Gains On Indian Assets: Any income earned by selling Indian shares, property, securities is taxable in India. The taxability of capital gains is determined by the asset's holding period: short-term or long-term. However, the buyers must deduct TDS on NRI property sales under Section 195, with a treaty reliance possible in some cases.

Interest & Dividend Income: Interest earned on NRO account and other Indian securities is taxable for NRIs, subject to applicable TDS. However, certain bonds are liable for concessional rates.

Similarly, dividends received from shares are taxable to the shareholder and subject to applicable TDS for NRIs.

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Which NRI Income Is Tax Free In India?

Foreign income earned is not taxable for NRIs in India. Meaning, if the income is earned outside India and not received in India, it remains outside the Indian taxation system.

Another important point is that interest on NRE and FCNR accounts is typically tax-free in India, which makes them a popular choice for NRIs. However, NRIs must ensure that this tax exemption does not extend to all types of deposits or every transaction; the account structure must be reviewed carefully.

Furthermore, NRIs are eligible for the basic exemption limit under Indian tax law, depending on the type of income and the chosen taxation regime. Meaning the tax might not apply if the income in India remains below the threshold.

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The Bottom Line

In a nutshell, all non-resident Indians (NRIs) shall file an income tax return in India if they have taxable income in India. NRIs are taxed on income earned in India, including salary earned in India, any income received in India, revenue from the sale or rent of property in India, other capital gains, and income earned outside India but received in India.

As an NRI, if you are planning to file your ITR in India and are seeking professional assistance, Savetaxs is the name to trust. Our CAs provide end-to-end consultation on ITR preparation and filing, tax compliance, advisory services, TDS, refund management, Repatriation Regulatory Support, Notices management, PAN documentation, and more. Experts at Savetaxs help NRIs navigate Indian tax laws, DTAA, and FEMA laws smoothly and ensure everything happens with 100% compliance.

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Glossary

House Property Income Tax: House Property Income Tax, Imposed on Housing Properties, on Income Earned From Renting Them.
Income Tax: Income Tax, a Type of Direct Tax, is Imposed by the Government on the Income of Individuals or Organisations.
Income Tax Act: Income Tax Act, an Act to Manage and Govern the Direct Taxes, by Levying, Collecting, and Administering.
Income Tax Return: Income Tax Return, Filed by Taxpayers, Contains a Formal Record of the Collected Tax by the Government.
ITR Form: Income Tax Return form, a form to report annual income and taxes, used by taxpayers.
Revenue: Revenue, Income Comes From a Company, Collected by the Government, Income From Investments, Etc.
Basic Exemption Limit: Basic Exemption Limit, Minimum Income Threshold to File the Income Tax Return.

Disclaimer

Note: This guide is for information purposes only. The views expressed in this guide are personal and do not constitute the views of Savetaxs. Savetaxs or the author will not be responsible for any direct or indirect loss incurred by the reader for taking any decision based on the information or the contents. It is advisable to consult either a CA, CS, CPA or a professional tax expert from the Savetaxs team, as they are familiar with the current regulations and help you make accurate decisions and maintain accuracy throughout the whole process.

Pankaj Shaw(Tax Expert)

Mr Shaw brings 8 years of experience in auditing and taxation. He has a deep understanding of disciplinary regulations and delivers comprehensive auditing services to businesses and individuals. From financial auditing to tax planning, risk assessment, and financial reporting. Mr Shaw's expertise is impeccable.

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