Every abbreviation and term NRIs encounter: AIS, CGAS, CII, DTAA, FBAR, FEMA, GIFT City, LTCG, PIS, RNOR, TRC — grouped by category with NRI-specific definitions.

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NRI Tax Glossary — 75 Essential Terms Every NRI Must Know (2026)

Applicable Period: FY 2025-26 (AY 2026-27)

Last Updated: March 2026

Whether you are an NRI in the United States, the United Kingdom, Canada, the UAE, Singapore, or anywhere else in the world, navigating Indian taxation requires fluency in a specialized vocabulary. The Income Tax Act of 1961, FEMA regulations, DTAA treaties, and cross-border compliance frameworks all come loaded with abbreviations, section references, and technical jargon that can overwhelm even seasoned professionals.

This glossary is your single reference point. We have compiled 75 essential terms that every Non-Resident Indian must understand in FY 2025-26. Each entry includes the full form, a concise definition, and a note on why it specifically matters for NRIs. The terms are organized by category so you can navigate directly to the area you need.

Bookmark this page. You will come back to it often.

Tax Fundamentals
Banking and Accounts
Compliance, Forms, and Filing
Investment and Capital Gains
DTAA and International Tax
US-Specific Terms
Key Sections of the Income Tax Act
FAQs

Tax Fundamentals

1. Advance Tax

Tax paid in quarterly instalments during the financial year itself, rather than as a lump sum at year-end. NRIs earning income in India that is not subject to TDS (such as capital gains on direct equity sales) must pay advance tax if the total tax liability exceeds INR 10,000 in a financial year. Missing advance tax deadlines triggers interest under Sections 234B and 234C.

2. AO — Assessing Officer

The Income Tax officer assigned to a taxpayer's case, responsible for assessment, scrutiny, and raising demands. For NRIs, the AO is typically determined by jurisdiction based on the last known Indian address or the location of the primary source of Indian income. All communications regarding notices under Section 148 or Section 143(1) come from the AO.

3. AY — Assessment Year

The year immediately following a Financial Year, during which the income earned in the preceding FY is assessed and the tax return is filed. For income earned in FY 2025-26, the Assessment Year is AY 2026-27. NRIs must file their ITR by the due date of the relevant AY, which is typically July 31 for individuals not subject to audit.

4. Deemed Resident

A person of Indian origin or an Indian citizen whose total Indian income exceeds INR 15 lakh in a financial year and who is not liable to pay tax in any other country. Deemed residents are taxed on their Indian income only (not global income) but lose certain NRI exemptions. This provision was introduced to target individuals who arrange their affairs to remain "stateless" for tax purposes.

5. FY — Financial Year

The 12-month period from April 1 to March 31 used for all Indian income tax computations. FY 2025-26 runs from April 1, 2025 to March 31, 2026. Your residential status is determined for each FY based on your physical presence in India during that year.

6. HUF — Hindu Undivided Family

A distinct taxable entity under Indian law consisting of members of a Hindu family lineally descended from a common ancestor. NRIs can be karta (manager) of an HUF, and the HUF itself can be classified as resident or non-resident depending on the karta's residential status. HUF status provides an additional set of tax deductions and exemptions, effectively creating a separate taxpayer.

7. OCI — Overseas Citizen of India

A long-term visa status granted to foreign nationals of Indian origin that provides most rights of Indian citizenship except voting and government employment. OCIs are treated the same as NRIs for taxation purposes under the Income Tax Act. OCI cardholders must comply with FEMA regulations regarding property purchase and investment in India.

8. PAN — Permanent Account Number

A unique 10-character alphanumeric identifier issued by the Income Tax Department, mandatory for all financial transactions above specified thresholds. NRIs must obtain a PAN to file returns, buy or sell property, open NRO/NRE accounts, and invest in Indian securities. Without a PAN, TDS on NRI income is deducted at the higher rate of 20% instead of the applicable rate.

9. PIO — Person of Indian Origin

An individual who held an Indian passport at any time, or whose parents or grandparents were Indian citizens. PIOs are now largely subsumed under the OCI card scheme. For tax purposes, PIO status is relevant in determining eligibility for certain DTAA benefits and FEMA relaxations related to property and investment.

10. RNOR — Resident but Not Ordinarily Resident

A transitional residential status for individuals who have recently returned to India or have not been resident in India for extended periods. An RNOR is taxed only on Indian-sourced income and income received in India, not on global income. This status typically applies for two to three years after an NRI returns to India permanently, providing a valuable tax planning window.

11. ROR — Resident and Ordinarily Resident

The standard resident status under Indian tax law, applicable to individuals who meet both the basic and additional conditions of residence under Section 6. RORs are taxed on their worldwide income. NRIs who return to India and spend 182 or more days in the country will eventually transition from NRI to RNOR and then to ROR status.

12. SBC — Surcharge and Education Cess

Surcharge is an additional tax levied on taxpayers whose income exceeds specified thresholds (ranging from 10% to 37% depending on income level). Education and Health Cess at 4% is applied on the total of income tax and surcharge. For NRIs with significant Indian income, surcharge can substantially increase the effective tax rate, making DTAA treaty relief and proper structuring critical.

13. Surcharge

An additional levy on income tax applicable when total income exceeds INR 50 lakh. The rates are: 10% for income between INR 50 lakh and 1 crore, 15% for income between 1 and 2 crore, 25% for income between 2 and 5 crore, and 37% for income above 5 crore (capped at 15% for capital gains income under Section 112A). NRIs selling high-value property in India often encounter surcharge that they did not anticipate.

14. TAN — Tax Deduction and Collection Account Number

A 10-digit alphanumeric number required by every person responsible for deducting or collecting tax at source. NRIs do not typically need a TAN, but buyers of NRI property need one to deduct TDS under Section 195. If you are selling property to an NRI buyer, the buyer must obtain a TAN before deducting TDS.

15. TDS — Tax Deducted at Source

Tax deducted by the payer before remitting income to the recipient. For NRIs, TDS rates are significantly higher than for residents: 30% on rent (vs 10% for residents), 20% or higher on property sale proceeds, and treaty rates on interest and dividends. TDS is the primary mechanism through which the Indian government collects tax from NRIs, and claiming refunds for excess TDS is a major compliance activity.

Banking and Accounts

16. CGAS — Capital Gains Account Scheme

A designated bank account under the Capital Gains Account Scheme, 1988, where NRIs can deposit capital gains from property sales to claim exemption under Sections 54, 54EC, or 54F. The funds must be used to purchase or construct a residential property within the specified time limit. If the deposited amount is not utilized within the deadline, it becomes taxable as capital gains in the year the deadline expires.

17. EPF — Employees' Provident Fund

A retirement savings scheme where both employer and employee contribute 12% of basic salary. NRIs who previously worked in India may have accumulated EPF balances. Upon becoming an NRI, the EPF account becomes inoperative after three years without contribution, and the entire balance (including interest) becomes taxable. NRIs can withdraw EPF after two months of leaving employment, and TDS at 10% applies if they have a PAN (34.608% without PAN).

18. FCNR — Foreign Currency Non-Resident Account

A fixed deposit account maintained in foreign currency (USD, GBP, EUR, JPY, CAD, or AUD) by NRIs in Indian banks. Interest earned on FCNR deposits is completely tax-free in India under Section 10(4)(ii) for as long as the holder remains an NRI. Upon returning to India, the FCNR account can be converted to an RFC account. FCNR deposits eliminate exchange rate risk since both deposit and maturity are in foreign currency.

19. GIFT City — Gujarat International Finance Tec-City

India's first International Financial Services Centre (IFSC) located in Gandhinagar, Gujarat. GIFT City offers NRIs unique tax advantages including zero capital gains tax on investments in GIFT City-listed securities, no STT, no CTT, and competitive regulatory frameworks. Fund structures and portfolio management services operating from GIFT City can provide NRIs tax-efficient access to Indian markets.

20. IFSC — International Financial Services Centre

A jurisdiction within India that is treated as a foreign territory for the purpose of financial services regulation and taxation. Currently, GIFT City in Gujarat is India's only operational IFSC. NRIs benefit from IFSC because investments made through IFSC-registered entities enjoy exemptions from capital gains tax, STT, and dividend distribution tax.

21. LRS — Liberalised Remittance Scheme

An RBI scheme allowing Indian residents to remit up to USD 250,000 per financial year abroad for permitted purposes including education, travel, investment, and gifts. LRS is primarily relevant for residents, but NRIs should understand it because family members in India use LRS to send money abroad, and the 20% TCS (Tax Collected at Source) on remittances above INR 7 lakh affects how much the family actually sends.

22. NRE — Non-Resident External Account

A bank account in Indian Rupees maintained by NRIs, funded exclusively by foreign earnings. Interest earned on NRE fixed deposits is completely tax-free in India. The principal and interest are freely repatriable. NRE accounts are one of the most powerful tax-free savings instruments available to NRIs, but the account must be redesignated as a resident account within a reasonable time upon return to India.

23. NRO — Non-Resident Ordinary Account

A bank account in Indian Rupees maintained by NRIs for managing income earned in India, such as rent, dividends, and pension. Interest on NRO deposits is taxable in India, and TDS at 30% (plus surcharge and cess) is deducted by the bank. NRIs can repatriate up to USD 1 million per financial year from NRO accounts after paying applicable taxes and obtaining a CA certificate (Form 15CB).

24. PIS — Portfolio Investment Scheme

An RBI-approved route through which NRIs can buy and sell shares and debentures on Indian stock exchanges. NRIs must open a PIS account with a designated bank branch that monitors and reports all transactions. Under PIS, NRIs can invest up to 5% of paid-up capital of a listed company (aggregate NRI limit is 10%, extendable to 24% by the company).

25. PPF — Public Provident Fund

A government-backed long-term savings instrument with tax-free returns and a 15-year lock-in period. NRIs cannot open new PPF accounts, but those opened during resident status can be continued until maturity. However, such accounts earn interest at the post office savings rate (currently around 4%) rather than the regular PPF rate, and no extensions are permitted after the initial 15-year maturity.

26. RFC — Resident Foreign Currency Account

A bank account available to individuals who have returned to India after being an NRI for at least one continuous year. RFC accounts allow returning NRIs to hold foreign currency in India, preserving their foreign exchange assets. Interest on RFC accounts is tax-free as long as the individual qualifies as RNOR, making this a valuable transitional planning tool.

Compliance, Forms, and Filing

27. AIS — Annual Information Statement

A comprehensive document available on the Income Tax portal that aggregates all financial transactions reported by various entities (banks, mutual funds, brokers, registrars) against your PAN. For NRIs, AIS is critical because it reveals what the tax department already knows about your Indian income, including property transactions, share trading, interest income, and dividend receipts. Discrepancies between AIS data and your filed return trigger automated notices.

28. Belated Return

An income tax return filed after the due date but before December 31 of the Assessment Year (or before completion of assessment, whichever is earlier). NRIs who miss the July 31 deadline can file a belated return under Section 139(4), but they lose the ability to carry forward certain losses and may face a late filing fee of up to INR 5,000 under Section 234F. Interest under Section 234A also applies on any outstanding tax liability.

29. CPC Bengaluru — Centralised Processing Centre, Bengaluru

The centralized facility of the Income Tax Department that processes all electronically filed income tax returns. All NRI returns are processed at CPC Bengaluru, and intimation under Section 143(1) is generated here. Refunds are also initiated from CPC Bengaluru, and NRIs must ensure their bank account details (including IFSC code and validated bank account) are correctly linked to receive refunds without delays.

30. Form 10F

A declaration filed by NRIs to claim benefits under a Double Taxation Avoidance Agreement. Form 10F provides details such as residential status, taxpayer identification number in the country of residence, and the period of residential status. Since 2022, Form 10F must be filed electronically on the Income Tax portal, and failure to file it means DTAA benefits cannot be claimed, resulting in TDS at full domestic rates.

31. Form 15CA

An online declaration by the remitter (payer) to the Income Tax Department, required before making any foreign remittance that is chargeable to tax. Form 15CA has four parts: Part A for remittances up to INR 5 lakh, Part B for remittances with a certificate from the AO under Section 195/197, Part C for remittances covered by a CA certificate (Form 15CB), and Part D for non-taxable remittances. NRIs encounter Form 15CA primarily when selling property or receiving other Indian income that needs to be remitted abroad.

32. Form 15CB

A certificate issued by a Chartered Accountant certifying the nature of remittance, the applicable TDS rate, and the DTAA treaty benefit (if any) for foreign remittances exceeding INR 5 lakh that are chargeable to tax. Form 15CB must be uploaded on the Income Tax portal before the corresponding Form 15CA can be submitted. For NRIs selling property, the buyer or the buyer's representative typically arranges for the CA certificate.

33. Form 16A

A TDS certificate issued by the deductor to the deductee for TDS on income other than salary. NRIs receive Form 16A from banks (for interest income TDS), property buyers (for TDS on sale consideration), and tenants (for TDS on rent). Form 16A is essential for NRIs to claim credit for TDS already deducted when filing their Indian tax return.

34. Form 26AS

The consolidated annual tax statement showing all TDS deducted against your PAN, advance tax paid, self-assessment tax paid, and high-value transactions. For NRIs, Form 26AS is the primary document for verifying that TDS deducted by banks, tenants, and property buyers has been correctly deposited with the government. Mismatches between Form 26AS and TDS certificates are a common source of demand notices for NRIs.

35. Form 67

The form required to claim Foreign Tax Credit (FTC) in India for taxes paid in another country. NRIs who are in RNOR or ROR status and have foreign income on which tax was paid abroad must file Form 67 before filing their ITR to claim credit under Section 90/91. Form 67 must now be filed on or before the due date of the return (or the date of filing, whichever is later, as per recent relaxations).

36. GPA — General Power of Attorney

A legal document authorizing another person to act on behalf of the NRI for a broad range of matters, including property transactions, bank operations, and tax filing. NRIs frequently grant GPAs to family members or trusted representatives in India to manage their financial affairs. A GPA must be notarized, and in many states, it must be registered and apostilled if executed abroad.

37. ITR — Income Tax Return

The annual return filed by taxpayers declaring their income, deductions, and tax liability. NRIs must file ITR if their Indian income exceeds the basic exemption limit (INR 3 lakh under the new regime for FY 2025-26) or if they wish to claim a refund of excess TDS. NRIs typically file ITR-2 (for income from capital gains and foreign assets) or ITR-3 (if they have business income in India).

38. POA — Power of Attorney

A legal instrument authorizing an agent to act on the NRI's behalf for specific or general purposes. A Special Power of Attorney (SPA) is limited to specific transactions (such as selling a particular property), while a GPA covers broader authority. NRIs selling property remotely almost always need a POA holder in India to execute the sale deed, handle registration, and manage TDS compliance.

39. SPA — Special Power of Attorney

A limited authorization granting power to act on behalf of the NRI for a specific, defined purpose, such as selling a particular property or operating a specific bank account. Unlike a GPA, an SPA expires once the stated task is completed. NRIs prefer SPAs for property sales as they limit the agent's authority to the single transaction, reducing risk.

40. TIS — Taxpayer Information Summary

A summary view derived from the AIS that shows pre-filled income information categorized by income head. NRIs should review their TIS carefully because the pre-filled data feeds directly into the ITR filing utility. Errors in TIS (such as incorrect categorization of NRO interest or property sale proceeds) should be reported through the feedback mechanism on the portal before filing.

41. TRC — Tax Residency Certificate

A certificate issued by the tax authority of the NRI's country of residence, confirming that the individual is a tax resident of that country. TRC is a mandatory prerequisite for claiming DTAA benefits in India. Without a valid TRC, the Indian deductor is not obligated to apply the lower treaty rate for TDS, and the NRI will face TDS at full domestic rates.

Investment and Capital Gains

42. CII — Cost Inflation Index

A number published annually by the government used to adjust the purchase price of a capital asset for inflation when computing long-term capital gains. For NRIs, indexation benefit is available for debt mutual funds, property, and other long-term capital assets acquired before July 23, 2024 (for assets covered under the old regime). The base year for CII is FY 2001-02, meaning any property acquired before 2001 can use the FY 2001-02 FMV as the cost of acquisition.

43. ELSS — Equity Linked Savings Scheme

A category of mutual funds that invests primarily in equities and qualifies for tax deduction under Section 80C, with a lock-in period of three years. NRIs can invest in ELSS, but deduction under Section 80C is available only under the old tax regime. ELSS offers NRIs a dual benefit of equity market exposure and tax savings, though the Section 80C deduction limit is INR 1.5 lakh.

44. FMV — Fair Market Value

The price a capital asset would fetch in an open market transaction between a willing buyer and willing seller. FMV is critical for NRIs in multiple scenarios: determining the cost of acquisition for property acquired before April 1, 2001 (for indexation purposes), computing capital gains on unlisted shares, and establishing the stamp duty value for property transactions. The higher of the FMV or the actual sale consideration is used as the sale value if stamp duty value exceeds sale consideration by more than 10%.

45. Indexation

The process of adjusting the purchase price of a capital asset using the Cost Inflation Index (CII) to account for inflation, thereby reducing the taxable long-term capital gains. For property sold by NRIs, indexation has historically been a significant tax reducer. Note that from FY 2024-25 onwards, the government introduced an option of 12.5% LTCG without indexation for certain assets, while retaining the indexed computation at 20% for properties acquired before July 23, 2024.

46. LTCG — Long-Term Capital Gains

Gains from the sale of capital assets held beyond a specified period: 24 months for immovable property and unlisted shares, and 12 months for listed equity shares and equity mutual funds. NRIs pay LTCG tax at 12.5% on listed equity (above INR 1.25 lakh exemption) and 12.5% (without indexation) or 20% (with indexation, for pre-July 2024 acquisitions) on property. LTCG on NRI property sales is subject to TDS at 12.5% of the gross sale consideration (not just the gain), often resulting in excess TDS and the need to file for a refund or obtain a lower deduction certificate.

47. NPS — National Pension System

A government-sponsored pension scheme with two tiers of accounts, offering market-linked returns through professional fund management. NRIs (but not OCIs) can open and contribute to NPS. Contributions qualify for deductions under Section 80CCD(1) within the Section 80C limit of INR 1.5 lakh and an additional INR 50,000 under Section 80CCD(1B), but only under the old tax regime. If the NRI's citizenship status changes, the NPS account must be closed.

48. STCG — Short-Term Capital Gains

Gains from the sale of capital assets held for less than the specified period (24 months for property, 12 months for listed equity). STCG on listed equity is taxed at 20% (from FY 2024-25 onwards), while STCG on other assets is taxed at the NRI's applicable slab rate. For NRIs, STCG on property is subject to TDS at 30% of the gross sale consideration, which is frequently far in excess of the actual tax liability.

49. STT — Securities Transaction Tax

A tax levied on the purchase and sale of securities on recognized Indian stock exchanges. STT is relevant for NRIs because payment of STT on equity shares and equity mutual funds qualifies the transaction for the concessional LTCG rate of 12.5% (rather than 20% or slab rates). If STT is not paid (as in off-market transfers), the capital gains tax rate can be significantly higher.

50. ULIP — Unit Linked Insurance Plan

A hybrid insurance-cum-investment product where premiums are partly allocated to life cover and partly invested in equity, debt, or balanced funds. NRIs can purchase ULIPs in India, and the maturity proceeds are tax-free under Section 10(10D) if the annual premium does not exceed INR 2.5 lakh. For NRIs in the US, ULIPs may be classified as PFICs, creating onerous US tax reporting obligations.

51. VDA — Virtual Digital Asset

Cryptocurrency, NFTs, and any other digital asset as defined under Section 2(47A) of the Income Tax Act. Income from transfer of VDAs is taxed at a flat 30% with no deductions allowed except the cost of acquisition, and TDS at 1% applies under Section 194S. NRIs transferring VDAs through Indian exchanges face TDS, and there is no DTAA relief available for VDA income. Losses from VDA transfers cannot be set off against any other income.

DTAA and International Tax

52. DTAA — Double Taxation Avoidance Agreement

A bilateral treaty between India and another country to prevent the same income from being taxed twice. India has active DTAAs with over 90 countries. For NRIs, DTAA provides reduced TDS rates on interest (typically 10-15% instead of 30%), dividends (10-15%), royalties, and fees for technical services. To claim DTAA benefits, NRIs must provide a TRC, Form 10F, and a no-PE declaration to the deductor.

53. FTC — Foreign Tax Credit

A credit claimed in one country for taxes paid in another, to avoid double taxation. NRIs (particularly those who have returned to India and are in RNOR/ROR status) can claim FTC in India under Section 90 (where a DTAA exists) or Section 91 (where no DTAA exists) by filing Form 67. The FTC is limited to the lower of the tax paid abroad or the Indian tax attributable to that foreign income.

US-Specific Terms

54. FBAR — Foreign Bank Account Report (FinCEN Form 114)

A US filing requirement for US persons (citizens, green card holders, and US tax residents) who have a financial interest in or signature authority over foreign (non-US) bank accounts with an aggregate value exceeding USD 10,000 at any point during the year. NRIs who are US persons must report their NRE, NRO, FCNR, PPF, and other Indian financial accounts on FBAR. Penalties for non-filing can be severe: up to USD 12,500 per account per year for non-willful violations and up to the greater of USD 100,000 or 50% of the account balance for willful violations.

55. FATCA — Foreign Account Tax Compliance Act

A US law requiring foreign financial institutions (including Indian banks and mutual fund houses) to report information about accounts held by US persons to the IRS. Indian financial institutions require NRIs to provide a FATCA self-certification when opening accounts. NRIs holding US citizenship or green cards are particularly impacted because their Indian accounts are reported to the IRS, making it essential to ensure all Indian income is properly disclosed on US returns.

56. PFIC — Passive Foreign Investment Company

A US tax classification for foreign (non-US) corporations that derive primarily passive income or hold primarily passive assets. For NRIs who are US tax residents, Indian mutual funds are classified as PFICs, subjecting gains to punitive tax rates and complex reporting requirements (Form 8621). This classification makes direct investment in Indian mutual funds highly tax-inefficient for US-based NRIs, who may prefer to invest through ETFs listed on US exchanges instead.

57. W-8BEN — Certificate of Foreign Status of Beneficial Owner

An IRS form used by non-US persons to certify their foreign status and claim reduced withholding on US-source income under an applicable tax treaty. NRIs who are not US persons but earn US-source income (dividends from US stocks, interest from US bonds) submit W-8BEN to the US payer to claim the India-US DTAA rate (typically 15% on dividends and 15% on interest) instead of the default 30% US withholding rate. W-8BEN must be renewed every three years.

Key Sections of the Income Tax Act

58. Section 10(4)

Provides exemption for interest earned on NRE and FCNR deposits. This is one of the most important provisions for NRIs because it makes NRE savings account interest and NRE/FCNR fixed deposit interest completely tax-free in India. The exemption is available only as long as the account holder maintains NRI status; upon becoming a resident, the NRE account must be redesignated and interest becomes taxable.

59. Section 54

Provides exemption from LTCG tax on the sale of a residential property if the capital gains are reinvested in purchasing or constructing another residential property in India. The new property must be purchased within one year before or two years after the sale, or constructed within three years. NRIs frequently use Section 54 when selling Indian property, and if the reinvestment cannot be made immediately, the capital gains must be deposited in a CGAS account before the ITR filing due date.

60. Section 54EC

Provides exemption from LTCG on any capital asset (not just property) if the gains are invested in specified bonds (NHAI, REC, PFC, or IRFC bonds) within six months of the sale. The maximum investment is INR 50 lakh per financial year, and the bonds have a five-year lock-in. For NRIs selling high-value property, Section 54EC is a popular alternative when they do not wish to reinvest in another property.

61. Section 54F

Provides exemption from LTCG on the sale of any capital asset other than a residential house if the net sale consideration (not just the gain) is invested in a residential property. The NRI must not own more than one residential house (other than the new one) on the date of transfer. Section 54F is particularly useful for NRIs selling shares, mutual funds, or other non-property assets who wish to purchase residential property in India.

62. Section 80C

Allows a deduction of up to INR 1.5 lakh for specified investments and expenditures, including ELSS, PPF contributions, life insurance premiums, tuition fees, and home loan principal repayment. NRIs can claim Section 80C deductions only if they opt for the old tax regime. The new tax regime (default from FY 2023-24 onward) does not permit Section 80C deductions.

63. Section 80D

Allows a deduction for health insurance premiums paid for self, spouse, children, and parents. NRIs can claim up to INR 25,000 for self and family and an additional INR 25,000 (INR 50,000 if parents are senior citizens) for parents' health insurance. The premium must be paid by a mode other than cash. This deduction is available only under the old tax regime.

64. Section 87A

Provides a rebate of up to INR 25,000 on tax for resident individuals whose total income does not exceed INR 7 lakh (under the new regime) or INR 5 lakh (under the old regime). NRIs are not eligible for Section 87A rebate, as it is available only to "resident" individuals. This is a critical distinction that many NRIs miss, resulting in unexpected tax liabilities on income that would have been tax-free for a resident.

65. Section 115A

Specifies the tax rate for NRIs on certain categories of income: interest, royalties, and fees for technical services. Under Section 115A, interest income (other than NRE/FCNR) is taxed at 20%, and royalties and technical service fees earned under agreements entered after March 31, 1976 are taxed at 10%. NRIs earning these categories of income need not file a return if the income is limited to these categories and TDS has been fully deducted.

66. Section 115BBH

Levies a flat 30% tax on income from transfer of virtual digital assets (VDAs), with no deductions permitted other than cost of acquisition. No set-off of losses from VDA against any other income is allowed, and losses from VDA transfers cannot be carried forward. For NRIs trading crypto on Indian exchanges, this section ensures a steep and non-negotiable tax burden.

67. Section 139(9)

Deals with defective returns, where the ITR filed has errors, inconsistencies, or missing information. NRIs frequently receive Section 139(9) notices for mismatches between income reported and TDS credits claimed, failure to report foreign assets (for RNOR/ROR), or incorrect residential status declaration. The defect must be rectified within 15 days (extendable on request) of receiving the notice.

68. Section 143(1)

The provision under which CPC Bengaluru issues an intimation after processing the ITR, indicating whether the return is accepted as filed, adjusted for apparent errors, or results in a refund or demand. NRIs commonly receive Section 143(1) adjustments for TDS mismatches, disallowed deductions, or income additions based on AIS/TIS data. The intimation must be responded to promptly if it creates an adverse demand.

69. Section 148

Empowers the AO to reopen a previously filed or unfiled return for assessment if there is reason to believe that income has escaped assessment. For NRIs, Section 148 notices are commonly triggered by unreported property sales (detected through stamp duty registration data), large NRO inflows, or FATCA/CRS data shared by foreign governments. The time limit for reopening has been revised, and assessments can be reopened for up to 10 years if the escaped income exceeds INR 50 lakh.

70. Section 154

Allows rectification of mistakes apparent from the record in any order passed by the AO or CPC. NRIs can file a Section 154 application online to correct errors in processed returns, such as failure to give credit for TDS reflected in Form 26AS, incorrect computation of capital gains, or wrong application of DTAA rates. Rectification requests must be made within four years of the original order.

71. Section 192

Governs TDS on salary income by the employer. When NRIs earn salary in India (or salary attributable to services rendered in India), the employer must deduct TDS under Section 192 at the applicable slab rate. This is relevant for NRIs who work partly in India, as their Indian-attributable salary is taxable even if paid into a foreign bank account.

72. Section 194S

Mandates TDS at 1% on payment for transfer of virtual digital assets (cryptocurrency, NFTs) exceeding INR 10,000 in a financial year. For NRIs transacting in VDAs on Indian platforms, Section 194S ensures that TDS is deducted before the sale proceeds are credited. The 1% TDS applies in addition to the 30% flat tax under Section 115BBH.

73. Section 195

The single most important TDS provision for NRIs. It mandates that any person making a payment to an NRI that is chargeable to tax in India must deduct TDS at the applicable rate. Section 195 covers property purchase payments, rent, interest, professional fees, and virtually any other payment to NRIs. The payer must obtain a TAN, deduct TDS, deposit it with the government, and issue Form 16A. The rate of TDS is determined by the nature of income, and DTAA rates can be applied if the NRI provides a TRC, Form 10F, and PAN.

74. Section 197

Allows an NRI to apply to the AO for a nil or lower TDS certificate when the tax deductible under the normal provisions exceeds the actual tax liability. This is extremely valuable for NRIs selling property, where TDS on the gross sale consideration at 12.5-20% can be far higher than the actual capital gains tax. Obtaining a Section 197 certificate requires filing an application with the jurisdictional AO, along with computation of actual gains and supporting documents.

75. Section 234A / 234B / 234C / 234F

These four sections impose interest and fees for different defaults:

Section 234A: Interest at 1% per month on unpaid tax for delay in filing the return after the due date.
Section 234B: Interest at 1% per month for shortfall in advance tax payment (when 90% of assessed tax is not paid as advance tax).
Section 234C: Interest at 1% per month for deferment of advance tax instalments (quarterly shortfalls).
Section 234F: Late filing fee of INR 5,000 (INR 1,000 if income is below INR 5 lakh) for filing ITR after the due date.

NRIs frequently incur interest under 234A and 234B when they sell property mid-year and fail to account for the capital gains tax through advance tax payments.

76. Section 245

Empowers the AO to adjust refunds due to the taxpayer against outstanding tax demands. NRIs awaiting refunds (particularly from excess TDS on property sales) often find that the refund is adjusted against old outstanding demands, including disputed or erroneous demands. If you receive a Section 245 intimation, respond within 30 days to either accept the adjustment or contest the demand.

77. Section 270A

Imposes a penalty of 50% of tax payable on under-reported income and 200% on misreported income. For NRIs, Section 270A is triggered when property sale capital gains are underreported (for example, by using incorrect cost of acquisition or failing to report the transaction entirely), or when rental income from Indian property is not disclosed. Maintaining proper documentation and accurate reporting is the best defense against Section 270A penalties.

78. FEMA — Foreign Exchange Management Act, 1999

The primary legislation governing foreign exchange transactions in India, administered by the Reserve Bank of India. FEMA determines what types of property NRIs can buy (residential and commercial, but not agricultural land), how much money can be repatriated from India, the types of bank accounts NRIs must maintain, and the investment routes available. Violations of FEMA can attract penalties of up to three times the amount involved.

FAQs

Q1. I am an NRI. Do I need to file an income tax return in India?

You must file an ITR in India if your gross total Indian income (before deductions) exceeds the basic exemption limit of INR 3 lakh for FY 2025-26 under the new regime, or INR 2.5 lakh under the old regime. Even if your income is below the threshold, you should file if TDS has been deducted and you want to claim a refund. Filing is also required if you have sold property, have capital gains, or want to carry forward losses.

Q2. What is the difference between Form 26AS, AIS, and TIS?

Form 26AS is the legacy tax credit statement showing TDS deposited, advance tax paid, and specified financial transactions. AIS (Annual Information Statement) is the expanded version that aggregates data from multiple reporting entities, including banks, mutual funds, brokers, and registrars. TIS (Taxpayer Information Summary) is a pre-processed summary of AIS data organized by income heads. Always cross-check all three for accuracy before filing your ITR.

Q3. How does DTAA reduce my TDS burden?

If India has a DTAA with your country of residence, you can claim a lower TDS rate on interest, dividends, royalties, and other specified income categories. For example, the India-US DTAA reduces interest TDS to 15% (from 30%), and the India-Singapore DTAA may reduce it further. To avail DTAA rates, you must provide the deductor with a Tax Residency Certificate (TRC), Form 10F, a PAN, and a self-declaration of beneficial ownership and no permanent establishment.

Q4. My bank deducted TDS at 30% on NRO interest. Can I get it back?

Yes. If the applicable DTAA rate is lower than 30%, or if your total Indian income falls below the taxable threshold, you can claim a refund by filing an ITR. You can also proactively apply for a lower TDS certificate under Section 197 so that the bank deducts TDS at the correct lower rate going forward.

Q5. What is a Section 197 certificate and why do NRIs need it for property sales?

A Section 197 certificate is an order from the AO directing the payer (property buyer) to deduct TDS at a lower rate or nil rate, based on the actual computed tax liability rather than the gross sale amount. Without this certificate, the buyer must deduct TDS at 12.5% (for LTCG) or 30% (for STCG) on the entire sale consideration. Since the actual capital gains tax is computed only on the profit (sale price minus indexed cost of acquisition), the effective tax is usually much less than the TDS deducted on the gross amount. This is why every NRI selling property should apply for a Section 197 certificate before completing the transaction.

Q6. Can NRIs claim deductions under Section 80C and 80D?

Yes, but only if they opt for the old tax regime. The new tax regime (which is the default from FY 2023-24 onwards) does not allow deductions under Section 80C, 80D, or most other Chapter VI-A provisions. NRIs should calculate their tax liability under both regimes and choose the one that results in lower tax. Note that NRIs are not eligible for the Section 87A rebate regardless of the regime chosen.

Q7. What is the penalty for not disclosing foreign bank accounts on FBAR (for US-based NRIs)?

FBAR non-filing penalties are steep. Non-willful violations can attract penalties of up to USD 12,500 per account per year. Willful violations can result in penalties of up to the greater of USD 100,000 or 50% of the account balance, plus potential criminal prosecution. The IRS Streamlined Filing Compliance Procedures provide a path for non-willful taxpayers to come into compliance with reduced or no penalties.

Q8. I just returned to India. How long does RNOR status last, and what are its tax benefits?

RNOR status typically applies for two to three financial years after returning to India, depending on your history of stays in India during the preceding years. During RNOR status, you are taxed only on Indian-sourced income and income received in India, not on your global income. This means foreign salary, foreign rental income, foreign capital gains, and foreign interest/dividends remain untaxed in India. Use this window to restructure your global assets, convert FCNR deposits to RFC accounts, and plan the repatriation of foreign income.

Q9. Are NRE fixed deposit interest and FCNR deposit interest truly tax-free?

Yes. Under Section 10(4) of the Income Tax Act, interest on NRE savings accounts and NRE/FCNR fixed deposits is completely exempt from Indian income tax for as long as you maintain NRI or RNOR status. This exemption does not require any filing or claim; the bank simply does not deduct TDS on NRE/FCNR interest. However, this interest may be taxable in your country of residence, so consult a cross-border tax advisor.

Q10. What happens to my PPF account after I become an NRI?

You can continue to hold the PPF account until its maturity (15 years from opening), but you cannot extend it beyond the initial maturity period. Interest earned after you become an NRI is credited at the Post Office Savings Account rate (currently around 4%) rather than the standard PPF rate. New contributions may also not earn the regular PPF rate. You cannot open a new PPF account as an NRI.

Quick Reference: TDS Rates for NRIs (FY 2025-26)

Income Type	TDS Rate (Without DTAA)	Typical DTAA Rate
Salary	Slab rates	Per treaty
Interest on NRO deposits	30% + surcharge + cess	10-15%
Rent	30% + surcharge + cess	Per treaty
LTCG on property	12.5% on sale consideration	Per treaty
STCG on property	30% on sale consideration	Per treaty
LTCG on listed equity (STT paid)	12.5% on gains above INR 1.25L	Per treaty
STCG on listed equity (STT paid)	20%	Per treaty
Dividends	20% + surcharge + cess	10-15%
Professional / technical fees	10%	Per treaty
VDA (Crypto/NFT)	1% (Section 194S) + 30% tax	No DTAA relief

Note: Surcharge and 4% Health & Education Cess apply over and above the base TDS rates.

Need Expert Help With NRI Tax Compliance?

Navigating 75 terms is one thing. Applying them correctly to your unique situation, across two or more tax jurisdictions, while ensuring full compliance and minimum tax leakage, is an entirely different challenge.

CA Mayank Wadhera and the MKW Advisors team specialize exclusively in NRI taxation, DTAA optimization, cross-border compliance, and FEMA advisory. Whether you need a Section 197 lower TDS certificate for a property sale, DTAA treaty benefit claims, FBAR compliance for US-based accounts, or end-to-end return filing with capital gains computation, we handle it all.

Get in touch today:

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Disclaimer: This glossary is for informational and educational purposes only and does not constitute legal or tax advice. Tax laws and regulations are subject to change. Always consult a qualified Chartered Accountant or tax advisor for guidance specific to your situation. Information is current as of March 2026 for FY 2025-26 (AY 2026-27).