For income tax purposes, an NRI is defined as an individual who does not qualify as a resident of India under Section 6 of the Income Tax Act, 1961. According to reports from Mint, an individual qualifies as a resident if they meet either of the following conditions: staying in India for 182 days or more during the financial year, or staying in India for 60 days or more during that year and 365 days or more during the four preceding financial years. However, special residency rules apply to certain individuals, with Indian citizens and Persons of Indian Origin visiting India having their 60-day condition replaced with 182 days, and the same relaxation applying to Indian citizens leaving India for employment abroad or as crew members of an Indian ship. As per recent guidance, the 182-day threshold remains unchanged under the new Income-tax Act, 2025, starting from FY 2026-27, ensuring consistency for taxpayers making mid-year moves.
An NRI must file an ITR if taxable income earned in India exceeds the basic exemption limit. As reported by Mint, under the new tax regime, the threshold is ₹4 lakh, while under the old regime it is ₹2.5 lakh. Salary is taxable in India if services are performed in India or if salary is received in an Indian bank account, even if the individual resides abroad. Rental income from house property situated in India is also taxable, with taxpayers able to claim the deduction of 30% on the net annual value after adjusting municipal taxes. Recent practical examples demonstrate how calendar timing affects tax liability - a mid-year departure can significantly impact residential status, with even a three-week difference in travel dates potentially changing an individual's entire tax bill. The requirement applies even when the entire tax due has already been paid through TDS, with failure to file by the due date attracting a late filing fee of ₹1,000 where total income does not exceed ₹5 lakh and ₹5,000 where income exceeds ₹5 lakh.
Profits from selling Indian shares, mutual funds, or immovable property are taxable in India. According to Mint, if tax deducted at source (TDS) exceeds the actual tax liability, filing an ITR is necessary to claim a refund. Interest earned on NRO accounts and dividends from Indian investments are subject to TDS, with filing an ITR helping claim a refund if excess tax has been deducted. The 182-day departure rule provides crucial relief for Indian citizens leaving for employment abroad, allowing them to keep their India stay under 182 days in their departure year to comfortably qualify as NRIs, ensuring their foreign salary remains completely outside the Indian tax net. Interest on NRE and FCNR deposits is exempt from the exemption threshold, and NRIs do not have to declare foreign income or assets in their Indian ITR.
NRIs carrying on a business in India or earning professional income are required to file an ITR. As reported by Mint, if an NRI incurs eligible capital or business losses in India, filing the return allows those losses to be carried forward and adjusted against future taxable income, subject to the Income Tax Act. Additionally, NRIs paying tax on the same income in both India and another country may claim relief under the Double Taxation Avoidance Agreement (DTAA), with filing an ITR helping claim tax credit or exemption depending on the applicable treaty. The 182-day departure rule also applies to Indian citizens or persons of Indian origin visiting India, ensuring they can avoid the harsh 60-day threshold and maintain NRI status even during frequent visits.
Under the deemed residency provisions introduced by the Finance Act, 2020, an Indian citizen with total income exceeding ₹15 lakh (excluding foreign-sourced income) is treated as a resident if he is not liable to tax in any country. According to Mint, if an Indian citizen or PIO visiting India has total income exceeding ₹15 lakh during the financial year (excluding income from foreign sources), the 60-day threshold is replaced with 120 days instead of 182 days. Filing is also mandatory even when there is no income to report if an NRI has deposited more than ₹50 lakh in an Indian savings account or ₹1 crore in a current account during a financial year. The last date for filing an ITR in India is 31 July, with disclosure made for the financial year (not calendar year), covering income, gains and transactions realized between 1 April 2025 and 31 March 2026.
