What are the Tax Rates Applicable to NRIs in India

I had a similar question when I started filing ITR as an NRI.

The biggest confusion for me was between normal income-tax slabs and special tax rates.

For normal taxable income, the current new-regime slabs include:

• Up to ₹4 lakh — Nil
• ₹4 lakh to ₹8 lakh — 5%
• ₹8 lakh to ₹12 lakh — 10%
• ₹12 lakh to ₹16 lakh — 15%
• ₹16 lakh to ₹20 lakh — 20%
• ₹20 lakh to ₹24 lakh — 25%
• Above ₹24 lakh — 30%

These are slab rates, so the higher percentage applies to the relevant portion of income rather than automatically applying 30% to the entire income. The official tax-rate material confirms this structure for the applicable period.

But this shouldn't be used to calculate capital gains or other income that is governed by special provisions.

Also remember that surcharge and health and education cess can affect the final amount.

For an actual return, I would check the applicable tax year and the Income Tax Department's current rules rather than relying on an old NRI tax calculator.

One thing I would check first is whether you are actually a non-resident for Indian income-tax purposes for the particular tax year.

Being an Indian citizen living abroad doesn't by itself answer the tax-residency question. The Income Tax Department says the basic residential-status tests continue to depend on factors such as the number of days spent in India during the relevant year and certain conditions relating to previous years.

Once residential status is determined, the next question is what type of income you have.

My income in India was mostly rent and bank interest, so my calculation was different from a friend who sold Indian shares during the same year.

That's because "NRI tax rate" isn't really one single percentage. You can have:

• normal slab-rate income;
• income subject to specific provisions;
• capital gains with separate rates;
• dividend or other investment income subject to applicable provisions;
• TDS deducted by the payer.

So I'd be careful with websites that simply say "NRIs pay 30% tax." That's not a complete explanation.

I became an NRI a few years ago and initially made the same mistake of assuming there was a separate, higher "NRI tax slab."

As far as the normal slab rates are concerned, non-resident individuals are taxed using the applicable individual tax-rate structure. The Income Tax Department specifically provides a separate table for non-resident individuals and notes that, under the old regime, the rates for an NRI are the same irrespective of the taxpayer's age.

For the new regime, the normal slab structure currently goes from 0% up to the applicable basic threshold and then increases progressively to 30% for income above ₹24 lakh under the current provisions.

The important part is that you shouldn't apply the slab rate to every type of Indian income automatically.

For example, rental income is generally considered under the income-tax rules applicable to house property, while some investment income and capital gains can have special tax rates.

I would also keep TDS separate from the final tax liability. My bank deducted TDS from NRO interest, but that didn't automatically mean that my entire Indian tax position was settled.

Here are the tax rates for non-resident individuals. If you have an income equal to or less than 2,50,000, then you don't have to pay any tax. If you have an income of more than 2,50,000, then you need to pay a 5% tax rate on your income, which will go higher and higher according to your income.

NRIs have to pay taxes if they earn from any investments or any business. NRIs have a standard deduction of 30% which applies to NRIs, and also if they are earning from their house property, then they should pay the tax that is generated for an NRI.