NRI Taxation of Taxes on Foreign Income

An individual of Indian heritage who lives abroad is referred to as a Non-Resident Indian (NRI). The Income Tax Act, which was introduced in 1961, establishes distinct tax regulations for Indian residents and NRIs. People of Indian descent become citizens after they have spent a certain amount of time in India. The legislation defines the terms for citizens as well as NRIs when it comes to taxes.

This piece talks about NRI taxation classifications, income taxes, and Resident but Not Ordinarily Resident (RNOR). Determine how your tax-deductible earnings are determined according to your position and if you are an RNOR.

Guidelines for NRI Taxation Status

The two primary statutes that regulate and lay down regulations for foreigners living in India include the following:

  • The Act on Income Tax – Governs the fee obligations of NRIs
  • Foreign Exchange and Management Act (FEMA) – Governs all transactions and investments, the opening of bank accounts, etc., of NRIs

The meaning of an NRI varies according to these laws. In the preceding paragraphs, we talked about the definition of NRIs under the Income Tax Act of 1961.

Are you a citizen of India or a Non-Resident Indian?

To determine the amount of tax you’re obligated to pay in India, it’s essential to determine whether your place of residence is located there. Keep in mind that residential status needs to be verified for each year that is under consideration.

For instance, if you have been a resident of another country for a year, for the following year and beyond, you’ll need to verify your residency when you’ve gone on vacation, relocated to another place, etc. This status will determine your tax liability in India. Before discussing who is a Non-Resident Indian, let’s begin by examining who is a Resident Indian.

Who has a residence in India?

A person would be a RESIDENT of India for income tax purposes if-

  • He/she was in India for 182 days or more during the financial year.


  • When he/she is in India for a minimum of 365 days over the four years before the year in question AND for a minimum of sixty days during the year in question.

You become a resident once you begin working outside of India

If you are a permanent Indian citizen who leaves India for a job outside of India or joins the crew as a passenger on an Indian ship, your status will be Non-Resident Indian (NRI) if you were a resident of India during the preceding year for 182 days or more. Therefore, if you are an Indian citizen or a person of Indian origin who has resided outside of India for at least 182 days, you’ll qualify as an NRI.

Reputation of residency

Irrespective of the conditions previously mentioned to qualify as a resident, it is also possible to be considered a resident.

Someone who is a citizen of India with a total earnings (Other than from a foreign source) that exceeds Rs. 15 lakhs in a given year is considered to be a resident in India in the year in which they are not residents of a different nation.

Who are the non-residents of India?

If you fail to meet the requirements stated earlier – you’re going to be viewed as a NON-RESIDENT Indian. Therefore, if you’re in the country for a shorter period than 182 days, you’re going to be regarded as an NRI.

Who constitutes an RNOR?

You’ll be regarded as Resident but Not Ordinarily Resident in a year if you meet either of the two requirements –

  • When you were an NRI in nine out of ten economic years before that one.


  • You resided in India for a total of 729 days or fewer in the 7 years before the year in question.

Effectively navigating the intricate landscape of NRI taxation necessitates a clear understanding of residency criteria, NRI classifications, and RNOR status. stands as your reliable resource, offering comprehensive insights into Indian taxation for individuals of Indian heritage residing abroad. Stay well-informed to optimize your tax-deductible earnings based on your unique position and residency status. Explore for a wealth of knowledge tailored to your NRI tax concerns.

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