NRI tax in India 2026 and who must file under the new Act

New Delhi (Desk), 18 Oct 2026 (IST) · Explainer

India taxes people by residency, not citizenship. If you're a non-resident for a tax year, India taxes only your Indian income, such as rent, interest on NRO deposits, capital gains on Indian assets or an Indian salary. Your salary earned abroad isn't taxed in India.

From 1 April 2026, these rules sit in a new law, the Income-tax Act, 2025, which replaced the 1961 Act. The good news for NRIs: the main residency tests and NRI concessions have carried over largely unchanged, according to the Income Tax Department's own guidance.

Key points

• Tax years starting on or after 1 April 2026 (tax year 2026-27 onwards) fall under the Income-tax Act, 2025; earlier years stay under the 1961 Act.
• The basic test is still 182 days in India in a tax year; a second test (60 days plus 365 days over four years) applies to some people, with special rules for Indian citizens.
• Indian citizens with Indian income above ₹15 lakh (about $15,500) face a tighter 120-day test, and can be "deemed resident" if no other country taxes them.
• NRIs are taxed in India only on income that arises, accrues or is received in India.
• Tax treaties (DTAAs) can reduce Indian tax, usually with a Tax Residency Certificate and Form 10F.

NRI tax in India: what changed in April 2026

The Income-tax Act, 2025 replaced the 1961 law from 1 April 2026. It uses simpler language and a single "tax year" in place of the old "previous year" and "assessment year" pair.

The Income Tax Department says residential status for tax years beginning on or after 1 April 2026 is decided under the new Act, while earlier years, including any reassessments, stay under the old one. The day-count tests, the ₹15 lakh rules and the definition of "not ordinarily resident" have been carried over, though the section numbers have changed. For example, the residency rules sit in Section 6 of both Acts, but the deemed-residency clause has moved from Section 6(1A) to Section 6(7).

So for most NRIs, the practical rules for tax year 2026-27 look the same as last year. The forms and section numbers are what's new.

Are you a resident or a non-resident?

Residency is decided separately for each tax year (April to March), purely by facts about your stay and income.

You're resident if you're in India for 182 days or more in the tax year, or for 60 days or more in the tax year and 365 days or more in the four previous years.

Special rules for Indian citizens and people of Indian origin:

• If you leave India for employment abroad, or as crew on an Indian ship, only the 182-day test applies for that year. The 60-day test doesn't.
• If you're an Indian citizen or person of Indian origin visiting India, you're resident only if you stay 182 days or more, unless your Indian income exceeds ₹15 lakh. Then the 60-day test becomes a 120-day test: 120 days in the year plus 365 days in the previous four.

Deemed resident: an Indian citizen whose Indian income exceeds ₹15 lakh, and who isn't liable to tax in any other country because of residence or domicile, is treated as resident regardless of days spent in India. This rule targets people who live in places with no income tax and aren't taxed anywhere.

Not ordinarily resident (NOR): someone who qualifies as resident may still be "not ordinarily resident" if they were non-resident in nine of the previous ten years, or spent 729 days or less in India over the previous seven. NOR status, common for people returning to India, generally keeps foreign income outside the Indian tax net for a transition period.

What income is taxed in India for NRIs

A non-resident is taxed in India on income that:

• arises or accrues in India, such as rent from Indian property, interest on NRO deposits, dividends from Indian companies, or capital gains on selling Indian shares, mutual funds or property; or
• is received in India, even if earned elsewhere.

Salary for work done abroad, paid abroad, isn't taxed in India. Interest on NRE accounts is exempt, as long as you're a non-resident under foreign exchange rules; that exemption has been carried into Schedule IV of the new Act. FCNR deposit interest is also generally exempt while you're non-resident.

Why it matters: Millions of Indians abroad own homes, shares or savings in India, and many visit for long stretches. Spending a few extra weeks in India, or having a big capital gain in a year, can change your residency and your tax bill. For readers in other countries, India's ₹15 lakh and 120-day rules are an example of how countries try to stop people from being tax resident nowhere.

Do NRIs need to file an income tax return?

Generally, an NRI must file an Indian return if their taxable Indian income exceeds the basic exemption limit, or if they want to claim a refund of excess TDS, carry forward losses, or meet certain other conditions.

There's one long-standing relief. If an NRI's Indian income consists only of investment income or long-term capital gains, or both, and tax has been deducted at source on it, they don't need to file a return. This was Section 115G of the old Act and is Section 216 of the new one, according to the Income Tax Department.

NRIs can also choose a special regime for certain investment income from foreign-exchange assets, taxed at 20%, with concessional rates on related long-term capital gains, or opt out of it in their return and use the normal rules.

The usual return due date for individuals whose accounts don't need an audit has been 31 July after the end of the tax year. Check the Income Tax Department's portal for the due date that applies to tax year 2026-27.

Using a tax treaty (DTAA) to avoid double tax

India has Double Taxation Avoidance Agreements with many countries, including the US, UK, UAE, Canada, Singapore and Australia. A DTAA can reduce the Indian tax on interest, dividends and some other income, or let you claim credit in your home country for tax paid in India.

To use treaty rates in India, you typically need:

• a Tax Residency Certificate (TRC) from the tax authority of the country where you live;
• Form 10F filed on the Indian tax portal; and
• your PAN (Permanent Account Number).

Banks apply TDS at the domestic rate unless you give them these documents, so many NRIs end up with more tax deducted than they owe and claim it back by filing a return.

Selling property in India? The buyer must deduct tax on the capital gains when paying an NRI seller. If the deduction would be higher than the actual tax due, you can apply for a lower deduction certificate before the sale.

Tax rules for NRIs aren't really complicated; they're just unforgiving of guesswork. Keep a simple record of the days you spend in India each year, and of every Indian income source. That record will answer most of the questions above before you ever need to ask an accountant.

This explainer is general information, not tax advice. Consult a qualified tax professional for your situation.