Answers to the most common NRI tax questions by CA Thakkar & Associates. Serving NRI clients across USA, UK, UAE, Canada, Singapore and Australia.
Do I need to file an ITR in India as an NRI under the Income Tax Act, 2025?
Yes. Under the Income Tax Act, 2025 (effective FY 2025-26), an NRI must file a Return of Income (ROI) in India if total India-sourced income exceeds the basic exemption threshold. The new Act consolidates filing obligations under simplified provisions, retaining taxability of rental income, interest, capital gains, and Indian-sourced dividends for non-residents.
How is NRI residential status determined under the Income Tax Act, 2025?
The Income Tax Act, 2025 retains the residency test based on physical presence in India. An individual is a Non-Resident if they are present in India for fewer than 182 days in a tax year, or fewer than 60 days in the current year and 365 days over the preceding 4 years. The RNOR (Resident but Not Ordinarily Resident) status — a transitional category with limited global tax exposure — is also preserved under the new Act.
What are TDS rules on NRI property sale under the new Act?
Under the Income Tax Act, 2025, TDS obligations on NRI property sales continue: buyers must withhold tax at 20% for long-term capital gains and 30% for short-term gains on the full sale consideration. NRIs can apply for a Lower Withholding Certificate to reduce TDS to the actual tax on gains. The new Act streamlines the application process and our team routinely handles such certificates.
Is foreign income taxable in India for NRIs under the Act, 2025?
No. The Income Tax Act, 2025 maintains the territorial taxation principle for non-residents — only income accruing or arising in India, or received in India, is taxable for NRIs. Foreign income is not taxable. However, upon returning to India and becoming a Resident, global income becomes taxable. Pre-return tax planning is strongly advised.
How does DTAA work for NRIs under the Income Tax Act, 2025?
The Income Tax Act, 2025 continues to give effect to Double Taxation Avoidance Agreements (DTAAs) signed by India. NRIs can invoke DTAA provisions to avail lower withholding rates on interest, dividends, and royalties from Indian sources. The new Act maintains that DTAA provisions shall prevail where they are more beneficial than the domestic law, giving NRIs maximum treaty relief.
What are capital gains tax rates for NRIs under the Act, 2025?
Under the Income Tax Act, 2025, NRI capital gains are taxed as follows: Listed equity and equity mutual funds — LTCG (held 12+ months) taxed at 12.5% above ₹1.25 lakh; STCG at 20%. For property and other assets — LTCG (held 24+ months) taxed at 12.5% without indexation. The new Act rationalises holding periods and removes indexation benefit for most assets to simplify computation.
How is NRI rental income taxed under the Income Tax Act, 2025?
Rental income from Indian property is taxable for NRIs under the Income Tax Act, 2025. Tenant must withhold TDS at 30% on rent paid to NRI landlord. The NRI can claim a standard deduction of 30% of net annual value and interest on housing loan. The new Act simplifies income from house property computation, and NRIs can file an ITR to claim refunds where excess TDS has been deducted.
What documents are required for NRI tax filing under the new Act?
Under the Income Tax Act, 2025, NRI filings require: Passport & visa copies (to establish non-resident status), PAN card, Annual Information Statement (AIS) and Tax Credit Statement, NRE/NRO bank statements, property and capital gains documents, foreign income evidence, and DTAA residency certificate (Tax Residency Certificate from foreign country). Our team handles the complete filing remotely with a structured document checklist.
