An NRI's Guide to Indian Taxes

Navigating Your Tax Obligations in India from the USA

Step 1: Are You a Non-Resident Indian (NRI)?

Your tax liability hinges on your residential status for the financial year (April 1 - March 31). Follow this simple flow to find out.

Did you stay in India for 182 days or more in the financial year?

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YES

You are a Resident. Your global income is taxable in India.

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You are an NRI. Only your Indian income is taxable.

Note: This is a simplified check. Deemed residency rules may apply if your stay is 120+ days and Indian income exceeds ₹15 lakh. Consulting a tax professional is recommended.

Step 2: Know Your Taxable Income

As an NRI, you only pay Indian tax on income that is earned or received in India. Here's a quick breakdown.

✅ Taxable in India

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Salary: For services performed in India, regardless of where it's paid.
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Rental Income: From any property located in India.
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Capital Gains: From selling assets in India (e.g., property, stocks, mutual funds).
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Interest/Dividends: From Indian bank accounts (NRO) and Indian companies.

❌ Not Taxable in India

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Foreign Salary: Earned and received abroad for services outside India.
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Interest on NRE/FCNR: Interest from Non-Resident External and Foreign Currency accounts is tax-free.
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Foreign Investments: Gains from selling assets located outside India.
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Rent from Foreign Property: Income from property located outside India.

Step 3: Understand the Tax Rates

Your Indian income is taxed based on slabs. Here's a look at the rates under the New Tax Regime, which is the default option.

Note: Special flat rates apply to certain incomes, like long-term capital gains (10-20%) and short-term gains on stocks (15%).

Step 4: Use the DTAA Safety Net

Worried about paying tax twice? The Double Taxation Avoidance Agreement (DTAA) between India and the USA has you covered.

Pay Tax in India

Pay the applicable tax on your Indian-sourced income as per Indian law.

File Your US Return

Declare your global income, including the income earned in India, on your US tax return.

Claim Foreign Tax Credit

Claim a credit in the USA for the taxes you've already paid in India, reducing your US tax liability.