NRI Tax & Compliance — Common Questions Answered

NRI (Non-Resident Indian) status under the Income Tax Act is determined by the number of days you spend in India in a financial year (April–March).

You are a Resident Indian if you stay in India for 182 days or more in the year — OR if you stayed 365+ days across the four preceding years AND at least 60 days in the current year. If you don't meet either condition, you are an NRI.

One important update from Finance Act 2020: if you earn ₹15 lakh or more from Indian sources and aren't taxed in any other country, you may be treated as a Deemed Resident. This catches a common structure where high earners avoid residency in both countries simultaneously.

Why it matters: Residents are taxed on worldwide income. NRIs are taxed only on Indian-source income — rent, NRO account interest, capital gains from Indian assets, business income from India. Getting the classification right for each year is the starting point for any NRI tax plan. Getting it wrong can mean years of overpaying, or a sudden demand when the department catches the mismatch.

There is also a transitional status called RNOR (Resident but Not Ordinarily Resident), which applies for 1–3 years after you return to India. RNOR means your foreign income is still not taxed in India during that window — most returning NRIs are unaware of this and overpay.

An NRI must file an Indian income tax return (ITR) if their Indian-source taxable income exceeds ₹2.5 lakh in a financial year. Indian-source income includes:

Rent from Indian property · Interest from NRO savings or fixed deposits · Capital gains from selling Indian property, shares, or mutual funds · Business income earned in India · Any other income with an Indian source.

Even if TDS has been deducted at source, you may still need to file — particularly if you want a refund. TDS on NRI property sales is 20–30%, but after applying the cost index and exemptions, the actual tax liability is often far lower. Filing is the only way to recover that excess.

You do not need to file if your only Indian income is interest that has already had TDS deducted and that TDS is your entire liability — a narrow set of circumstances.

The ITR form is ITR-2 or ITR-3 depending on your income types. The filing deadline is July 31 of the assessment year (October 31 for audit cases). Late filing attracts a penalty of ₹5,000 (₹1,000 if income is below ₹5 lakh) plus interest on unpaid tax under Section 234A.

DTAA stands for Double Taxation Avoidance Agreement — a treaty between two countries that determines which country has the right to tax particular types of income, and prevents the same income from being taxed fully in both countries.

India has DTAA treaties with 90+ countries including the UK, USA, Australia, Canada, UAE, Germany, Singapore, and the Netherlands.

Here is a concrete example: An NRI in the UK earns ₹5 lakh rent from an Indian property. Without DTAA, they'd pay Indian tax on the rental income and then UK tax on the same income again. Under the India-UK DTAA, they can claim a foreign tax credit in the UK for taxes already paid in India — so the income is effectively taxed only once, at whichever rate is higher between the two countries.

DTAAs also set reduced "treaty rates" for specific income types. Dividends and interest from Indian companies may be taxable at 10–15% under a treaty rather than 20–30% under domestic law.

To claim DTAA benefits you need: a Tax Residency Certificate (TRC) from your country of residence, Form 10F filed with Indian tax authorities, and correct disclosure in your Indian ITR. Many NRIs have been overpaying for years simply because no one set this up. It is the first thing we check.

When an NRI receives money from India — property sale proceeds, NRO withdrawals, rent, etc. — the bank requires specific forms before allowing international transfer.

Form 15CB is a certificate issued by a Chartered Accountant. It confirms the nature of the payment, the applicable DTAA provisions (if any), and that correct tax has been deducted or is not required. This is the CA's professional certification of the transaction. It must be obtained before you file Form 15CA.

Form 15CA is a self-declaration filed online on the Income Tax portal by the person making the payment (or the NRI's representative). It references the 15CB and specifies the nature and amount of the remittance and tax paid. The bank receives a copy of both before releasing funds.

For remittances above ₹5 lakh in a financial year for taxable transactions, both forms are required. For amounts below ₹5 lakh or certain exempt categories (listed in Rule 37BB), only Part A of Form 15CA may be needed without a 15CB.

In practice, for property sales, both forms are almost always required. Getting the sequence wrong — or submitting an incorrect 15CB — can delay your remittance by weeks. We handle the full sequence, typically within 2–3 business days once we have the documents.

Yes. NRIs and PIOs (Persons of Indian Origin) can purchase residential and commercial property in India under FEMA regulations without any special permission.

What NRIs cannot buy: Agricultural land, plantation property, or farmhouse — unless received through inheritance.

Payment must come from: NRE or NRO account funds, inward foreign currency remittance through banking channels, or a home loan from an Indian bank (NRIs are eligible). Purchases cannot be funded directly from a foreign bank account without routing through India.

Tax implications to plan for: Rental income from the property is taxable in India each year. When you sell, capital gains tax applies — 20% with indexation for long-term gains (held over 2 years). The buyer is required to deduct TDS at 1% if the property value exceeds ₹50 lakh (standard buyer rule); NRI-specific TDS of 20–30% applies when you sell.

Repatriation: Sale proceeds can be sent abroad, up to the original foreign currency investment, subject to proper documentation and RBI conditions. We handle the full sequence — from purchase advice to eventual repatriation.

Yes, with the right documentation, most types of NRI funds can be sent abroad.

NRE accounts: Fully and freely repatriable at any time — both principal and interest. No forms required.

NRO accounts: Up to USD 1 million per financial year (across all NRO sources), after paying applicable taxes and submitting Form 15CA and 15CB. This covers rental income, NRO FD maturity, property sale proceeds credited to NRO, and other Indian income.

Property sale proceeds: Can be repatriated up to the original foreign currency investment (what you paid for it), within certain limits. Sale of up to 2 residential properties can be repatriated. Proceeds must flow through the NRO account.

Inherited funds: Up to USD 1 million per financial year can be repatriated by an NRI who inherits from a resident Indian.

Documentation typically required: Form 15CA and 15CB, proof of source of funds, tax payment certificates, bank certificate confirming legitimate source. When documents are in order, the process takes 2–4 weeks. Delays happen most often due to missing TDS certificates or incorrect 15CB valuations.

Section 148 of the Income Tax Act allows the department to "reopen" a completed assessment — reassessing a year that was already filed and accepted — if the Assessing Officer has reason to believe that income "escaped assessment" (was not declared or was underreported).

Since Finance Act 2021, the process now starts with a Section 148A show-cause notice, giving you the department's information and a chance to respond before the full reopening. If your response is satisfactory, the reassessment may be dropped here. This is your best window — many cases end at this stage with a well-drafted reply.

Time limits for reopening: Up to 3 years for escaped income of ₹50 lakh or less. Up to 10 years if the department has documentary evidence of escaped income above ₹50 lakh (information from search/seizure, foreign asset disclosure, FATCA/CRS data).

Common triggers: Property purchase/sale not matched to declared income, foreign remittances reported by banks but not in ITR, third-party SFT data mismatches, or information from other government agencies.

What to do: Do not ignore it. Do not respond without professional guidance. The day you receive it, engage a CA. Missing the 148A response window is the single most expensive mistake we see NRI clients make.

Response deadlines vary by notice type:

Section 143(1) Intimation — Usually no response needed unless you disagree. You can file a rectification under Section 154 within 4 years if there is an error.

Section 148A show-cause — 7 days, extendable to 30 days on application. This is the most time-critical. Missing this window means losing your chance to stop the reopening before it becomes a full reassessment.

Section 148 — Fresh return must be filed within the time specified (usually 30–45 days).

Section 143(2) Scrutiny — Initial response within 15–30 days. Full assessment must be completed by the department within 12 months from the end of the assessment year.

Section 156 Demand — Pay within 30 days. Apply for instalment or stay if you can't pay immediately — do not simply ignore it.

Section 245 Refund Adjustment — Reply within 30 days if you disagree with the set-off.

Important: If a notice was sent to an old address and you found out late, the department's position is that service was complete when it was dispatched. Act immediately on discovery — apply for condonation of delay the same day.

FEMA (Foreign Exchange Management Act, 1999) governs all cross-border money movements and foreign currency transactions involving Indian parties. For NRIs, FEMA compliance covers several key areas:

Bank accounts: NRIs can hold NRE accounts (for foreign income — freely repatriable), NRO accounts (for Indian income — repatriable up to USD 1 million/year with documentation), and FCNR deposits (foreign currency fixed deposits). Using the wrong account for a transaction violates FEMA.

Investments: NRIs can invest in Indian stocks through the Portfolio Investment Scheme (PIS) on a repatriation or non-repatriation basis. Direct mutual fund investments and real estate have separate conditions.

Remittances: Current account transactions like rent and dividends are freely remittable. Capital account transactions (investment proceeds, property sale proceeds) need specific documentation and have limits.

Loans: NRIs can take home loans from Indian banks. However, receiving loans from Indian residents in foreign currency is prohibited.

Non-compliance penalties: Up to 3 times the amount involved, or ₹2 lakh if the amount is unquantifiable, plus ₹5,000 per day for continuing violations. The Enforcement Directorate investigates serious FEMA violations. Most NRI FEMA issues are unintentional — wrong account type, missing documentation, or unawareness of RBI guidelines. We catch and correct these before they become notices.

Fees are based on complexity, not a fixed menu — because no two clients have identical situations. Here is a general range to help you plan:

Tax notice response: ₹8,000–₹30,000+ depending on notice type, assessment year, and complexity. Section 148 reassessment and tribunal appeals are at the higher end.

NRI ITR filing: ₹5,000–₹20,000 depending on income sources. A straightforward salary + FD return is at the lower end; multiple properties, shares, and foreign income with DTAA claims is higher.

Property sale (15CA/15CB + capital gains): ₹15,000–₹35,000 depending on the number of properties and complexity of the capital gains calculation. Section 197 lower TDS certificate adds to this.

GST compliance: ₹3,000–₹8,000 per month for ongoing filings. One-time registration from ₹3,000.

Company incorporation: ₹15,000–₹40,000 depending on entity type (LLP, Pvt Ltd, etc.) and whether NRI or foreign directors are involved.

First consultation (30 minutes): Free — no obligation. We do not charge for giving you a clear picture of your situation. If the work is simple enough to handle yourself, we will tell you. If it needs professional handling, we give you a fixed quote before starting — no surprises.