For Indians residing outside India (NRIs), a frequently asked question is whether they are liable to pay taxes in India on their earnings. Tax regulations differ for ordinary residents of the country compared to expatriates. Following Budget 2026 and the introduction of new income tax provisions, there is now significantly greater clarity regarding these rules.

If you are an NRI generating income in India through investments, property, or bank accounts, the deadline for filing your Income Tax Return (ITR) is July 31, 2026. Let us explore in detail the tax rules, eligibility criteria, and exemptions applicable to NRIs.

According to India's tax laws, an NRI is not required to pay taxes in India on their global income. They are liable to pay tax only on income that is sourced from India:

**Profits from Indian Assets (Capital Gains):** Profits realized from the sale of shares, mutual funds, or any property located in India.

**Interest from Bank Accounts:** Interest earned on ordinary accounts (NRO accounts) held in Indian banks.

**Services Rendered in India (Salary):** Income received as a salary for work performed while physically present in India.

**Rental Income from Property:** Rent received from a house or land owned by you in India.

**Indian Business/Profession:** Income derived from a business or professional service established and operated within India.

**Important Information:** The interest earned on deposits held in NRE (Non-Resident External) and FCNR (Foreign Currency Non-Resident) accounts is completely tax-free in India. However, the interest earned on an NRO (Non-Resident Ordinary) account is fully taxable.

**Who is considered an NRI?**
In India, your tax liability depends more on your 'Residential Status' (the number of days you reside in the country) than on your citizenship. You will be classified as an NRI if:

You have not resided in India for 182 days or more during a specific financial year.

You have resided in India for less than 60 days in the current financial year, *and* for a cumulative total of less than 365 days over the preceding four financial years. Rules Regarding Income from Salary and Property

Salary: If an NRI works abroad for the Government of India (such as a diplomat or an ambassador), their salary is taxable in India. Furthermore, if a payment for private employment originates from India, it is also subject to taxation.

Property Rent: For rental income derived from a property located in India, NRIs are entitled to a standard deduction of 30% of the Net Annual Value, just like resident taxpayers. If the rental income exceeds a prescribed threshold, the tenant is required to deduct TDS (Tax Deducted at Source) under Section 194-IB. Forms 15CA and 15CB may be required for this purpose.

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