Tax Saving Strategies for NRIs in India — Complete Deduction & Exemption Guide (2026)

Author: CA Mayank Wadhera (CA | CS | CMA | IBBI Registered Valuer) Founder, MKW Advisors | Legal Suvidha | DigiComply

Last Updated: March 2026 | Applicable for FY 2025-26 (AY 2026-27)

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Every year, millions of Non-Resident Indians remit money to India, earn rental income, receive interest on deposits, and sell property or investments back home. The Indian Income Tax Act taxes NRIs on income that is earned in or received in India, and for FY 2025-26, the landscape has shifted significantly with the new tax regime now being the default for all taxpayers, including NRIs.

The result? Many NRIs are either over-paying taxes because they fail to claim legitimate deductions, or they are stuck under the new regime without realizing they can still opt for the old regime where it is more beneficial. Some are losing lakhs every year to excessive TDS deductions that could be prevented with a simple certificate.

This guide is the definitive resource for NRI tax saving in India. We cover every deduction, every exemption, every strategy -- with actual numbers, worked examples, and a clear old-versus-new regime comparison table -- so you can make informed decisions for FY 2025-26.

Need a personalized NRI tax plan? Our team of Chartered Accountants specializes exclusively in NRI taxation. Book a consultation now or WhatsApp us at +91-96677 44073.

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Table of Contents

1. New Regime vs Old Regime: What NRIs Must Know
2. Section 80C Deductions for NRIs (up to Rs 1.5 Lakh)
3. Section 80D: Health Insurance Premium Deduction
4. Section 24: Home Loan Interest Deduction
5. Capital Gains Exemptions: Section 54, 54EC, and 54F
6. Section 80TTA / 80TTB: Savings Interest Deduction
7. NRE Interest Exemption under Section 10(4)(ii)
8. GIFT City: The Zero-Tax Route for NRI Investments
9. Standard Deduction of Rs 75,000 (New Regime)
10. Section 197: Lower TDS Certificate
11. Tax-Loss Harvesting on Equity Investments
12. Timing Strategies: Choosing the Right Financial Year
13. New Regime Slab Benefit Analysis with Examples
14. Comparison Table: Old Regime vs New Regime Deductions for NRIs
15. Common Mistakes NRIs Make
16. FAQs — NRI Tax Saving in India

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1. New Regime vs Old Regime: What NRIs Must Know for FY 2025-26

Starting from FY 2023-24, the new tax regime under Section 115BAC became the default regime for all taxpayers, including NRIs. If you do not explicitly opt out, you are automatically assessed under the new regime.

New Regime Tax Slabs (FY 2025-26)

Key point: Under the new regime, taxable income up to Rs 12,00,000 results in zero tax liability due to the enhanced rebate under Section 87A (Rs 60,000). However, this rebate is not available to NRIs. This is one of the most misunderstood provisions in NRI taxation -- more on this under Common Mistakes.

Old Regime Tax Slabs (FY 2025-26)

The Critical NRI Decision

For NRIs, the regime choice depends on how many deductions you can actually claim. If your total deductions under the old regime exceed approximately Rs 3.75 lakh (the breakeven point varies by income level), the old regime is likely more beneficial. If your Indian income is primarily interest, capital gains, or rental income with limited deductions, the new regime's lower slab rates may win.

Important: NRIs with business income must make the regime choice at the time of filing and it can be changed every year. NRIs without business income can switch between regimes each assessment year.

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2. Section 80C Deductions for NRIs (Up to Rs 1,50,000)

Section 80C offers a deduction of up to Rs 1,50,000 per financial year. However, not all 80C instruments are available to NRIs. Here is the definitive breakdown.

Available to NRIs

Practical Tip for NRIs

The most accessible and liquid 80C instrument for NRIs is ELSS mutual funds. They offer the shortest lock-in (3 years), potential for equity market returns, and are available to NRIs from most jurisdictions. US-based NRIs should verify AMC acceptance before investing, as some fund houses do not accept investments from US/Canada residents.

Need help identifying the right 80C instruments for your specific country of residence? Contact our NRI tax specialists at [email protected] or schedule a call.

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3. Section 80D: Health Insurance Premium Deduction

Section 80D allows deductions for health insurance premiums -- and this is one of the most underutilized deductions by NRIs.

Deduction Limits (FY 2025-26, Old Regime Only)

NRI-Specific Considerations

• NRIs can claim 80D for health insurance premiums paid in India for policies covering self, spouse, children, and parents.
• Global health insurance premiums (paid to non-Indian insurers) do not qualify under Section 80D.
• Many NRIs purchase health insurance for their parents living in India. This is both a smart financial decision and a legitimate tax deduction.
• The premium must be paid through non-cash modes (cheque, online transfer, etc.) to qualify.

Strategy

If your parents are senior citizens (60+) living in India and you are below 60, buying a health insurance policy for them gives you a deduction of up to Rs 50,000 for parents plus Rs 25,000 for yourself -- a total of Rs 75,000 under Section 80D alone.

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4. Section 24: Home Loan Interest Deduction

If you own property in India financed through a home loan, the interest component is deductible under Section 24(b). This deduction is available under both the old and the new regime (for let-out property), making it one of the most powerful deductions for NRIs.

Deduction Limits

Critical NRI Nuance

Most NRIs do not physically occupy their Indian property. If the property is vacant (not rented out), it may be treated as deemed let-out under the Income Tax Act. For deemed let-out property:

• A reasonable expected rent is computed and added to income.
• The entire home loan interest (no Rs 2 lakh cap) is deductible against this notional rental income.
• If the interest exceeds the deemed rental income, the resulting loss from house property (up to Rs 2,00,000) can be set off against other income under the old regime.

Under the new regime, the loss from house property can only be set off against house property income, not against other heads of income. However, the interest deduction itself remains available for let-out/deemed let-out property.

Pre-Construction Interest

Interest paid during the pre-construction period is deductible in 5 equal installments starting from the year of completion. NRIs purchasing under-construction property should maintain meticulous records of interest payments during the construction phase.

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5. Capital Gains Exemptions: Section 54, 54EC, and 54F

Capital gains from selling Indian assets (property, shares, mutual funds) are fully taxable for NRIs. However, Sections 54, 54EC, and 54F offer powerful exemptions that can eliminate your capital gains tax entirely if used correctly.

Section 54: Exemption on Sale of Residential House

Applicable to: Long-term capital gains (LTCG) arising from sale of a residential house property.

Conditions:

• The property must have been held for more than 24 months (long-term).
• The taxpayer must purchase a new residential house property in India within 1 year before or 2 years after the sale date, or construct within 3 years of sale.
• The new property must not be sold within 3 years of purchase/construction.
• Cap: The exemption is limited to Rs 10 crore (introduced from FY 2023-24 onwards).

Exemption Amount:

• If the cost of the new house is equal to or greater than the LTCG, the entire capital gain is exempt.
• If the cost of the new house is less than the LTCG, exemption is proportional.

NRI Tip: If you cannot identify a new property before the ITR filing deadline, deposit the capital gains amount in a Capital Gains Account Scheme (CGAS) with a designated bank before the return filing due date. This preserves your exemption claim.

Section 54EC: Investment in Specified Bonds

Applicable to: LTCG from sale of land or building (or both).

Conditions:

• Invest the capital gains (up to Rs 50 lakh per financial year) in specified bonds -- NHAI (National Highways Authority of India) or REC (Rural Electrification Corporation) bonds -- within 6 months of the sale date.
• These bonds have a 5-year lock-in period (no premature redemption).
• The interest earned on these bonds (currently around 5% p.a.) is taxable.

NRI Strategy: This is the cleanest capital gains exemption for NRIs who do not wish to reinvest in Indian real estate. The Rs 50 lakh annual limit per financial year effectively allows up to Rs 1 crore of exemption if the sale and reinvestment span two financial years (e.g., sell in February 2026 and invest Rs 50 lakh before March 31, 2026, and another Rs 50 lakh within 6 months).

Section 54F: Exemption on Sale of Any Long-Term Capital Asset (Other Than House)

Applicable to: LTCG from sale of any capital asset other than a residential house (e.g., shares, mutual funds, gold, land that is not a building).

Conditions:

• The entire net sale consideration (not just the capital gain) must be invested in a new residential house in India.
• Purchase within 1 year before or 2 years after sale, or construct within 3 years.
• On the date of sale, the taxpayer must not own more than one residential house (other than the new one).
• The new house must not be sold within 3 years.

Key Difference from Section 54: Under 54F, you must invest the entire sale consideration, not just the capital gain. If you invest only a portion, the exemption is proportional.

Worked Example: Section 54 in Action

Mr. Sharma (NRI in the UAE) sells a flat in Mumbai for Rs 2.5 crore in January 2026. He had purchased it in 2015 for Rs 80 lakh. The indexed cost of acquisition (using CII) comes to approximately Rs 1.36 crore.

• LTCG: Rs 2.5 crore - Rs 1.36 crore = Rs 1.14 crore
• Tax at 12.5% (LTCG rate on property post July 2024): Rs 14.25 lakh + cess
• If he buys a new house for Rs 1.14 crore or more within 2 years: Entire LTCG exempt. Tax saved: Rs 14.25 lakh + cess.
• If he invests Rs 50 lakh in 54EC bonds: Rs 50 lakh of LTCG exempt. Remaining Rs 64 lakh taxed at 12.5% = Rs 8 lakh + cess.

Selling property in India? Get a customized capital gains tax plan before you sign. Book a consultation or WhatsApp +91-96677 44073.

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6. Section 80TTA / 80TTB: Savings Account Interest Deduction

Section 80TTA

• Deduction of up to Rs 10,000 on interest earned from savings accounts (not FDs, not RDs).
• Available to individuals below 60 years.
• Available under old regime only.

Section 80TTB

• Deduction of up to Rs 50,000 on interest from deposits (savings, FDs, RDs) for senior citizens (60+).
• Available under old regime only.

The NRI Catch

Here is the critical point most guides miss: Interest earned on NRO savings accounts qualifies for Section 80TTA/80TTB deduction. However, the practical value is limited because:

1. NRO savings account interest rates are typically low (3-4%).
2. The Rs 10,000 cap under 80TTA provides a marginal benefit.
3. NRO FD interest does NOT qualify under 80TTA (only savings account interest).
4. Under the new regime (which is the default), neither 80TTA nor 80TTB is available.

NRE account interest, on the other hand, has a far more powerful benefit -- complete tax exemption -- discussed in the next section.

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7. NRE Interest Exemption: Section 10(4)(ii) — The Single Biggest NRI Tax Saver

This is arguably the most valuable tax provision for NRIs in the entire Income Tax Act.

The Rule

Under Section 10(4)(ii), interest earned on an NRE (Non-Resident External) account or FCNR (Foreign Currency Non-Resident) deposit is completely exempt from Indian income tax, provided the individual maintains NRI status.

Why This Is Massive

• There is no cap on the exemption. Whether you earn Rs 10,000 or Rs 10 crore in NRE interest, it is entirely tax-free.
• NRE FD interest rates are currently in the range of 6.5% to 7.5% depending on the bank and tenure.
• An NRI parking Rs 1 crore in an NRE FD at 7% earns Rs 7 lakh per year -- completely tax-free. A resident earning the same Rs 7 lakh interest would pay approximately Rs 2.1 lakh in tax (at 30% slab).
• This applies to both the old and new tax regimes since it is an exemption under Section 10, not a deduction.

NRE vs NRO: The Tax Difference

Strategy

Maximize your NRE deposits. Every rupee of foreign income that you park in an NRE FD instead of an NRO FD saves you tax at your marginal rate. NRIs who maintain large NRO balances earning taxable interest when those funds could be restructured into NRE-eligible deposits are leaving significant money on the table.

Warning: Upon returning to India and becoming a resident, your NRE account will be redesignated as a resident account, and interest will become taxable from that point forward. Plan your return timing carefully.

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8. GIFT City: The Zero-Tax Route for NRI Investments

Gujarat International Finance Tec-City (GIFT City), officially known as IFSC (International Financial Services Centre) in Gandhinagar, offers a uniquely tax-advantaged investment route for NRIs.

Tax Benefits in GIFT City IFSC

1. No capital gains tax on transfer of specified securities (shares, bonds, derivatives) listed on GIFT City exchanges (India International Exchange, NSE IFSC).
2. No STT (Securities Transaction Tax) on transactions.
3. No GST on financial services within IFSC.
4. Tax holiday for IFSC units -- 100% tax exemption for 10 consecutive years out of 15 years.
5. No TDS on interest income from IFSC banking units for NRIs.

Practical NRI Opportunities

• Invest in GIFT City-listed funds and ETFs: Several AMCs have launched IFSC-domiciled funds that invest in Indian and global markets. Capital gains from these are exempt.
• Fixed deposits with IFSC banking units: Banks like SBI, HDFC, and ICICI operate IFSC branches in GIFT City. Interest from deposits held by NRIs with these units may have favorable tax treatment.
• Derivatives trading: NRIs can trade in derivatives (options, futures) on GIFT City exchanges without STT or capital gains tax.

Who Should Consider GIFT City?

NRIs with substantial investment portfolios who are looking for a tax-efficient channel to invest in India-linked assets. The ecosystem is still maturing, but the tax advantages are unmatched anywhere else in India.

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9. Standard Deduction: Rs 75,000 Under the New Regime

From FY 2024-25 onwards, the standard deduction has been increased to Rs 75,000 under the new tax regime (up from Rs 50,000). This deduction is available under the old regime as well at Rs 50,000.

NRI Applicability

The standard deduction is available only to salaried individuals and pensioners. For NRIs, this means:

• NRIs earning salary income from an Indian employer (e.g., deputation, short-term assignments) can claim the standard deduction.
• NRIs receiving pension from India can claim it.
• NRIs with only interest, rental, or capital gains income cannot claim the standard deduction.

This is a flat deduction -- no investment required, no proof needed. It is automatically allowed when computing income from salary.

New Regime Advantage

Under the new regime, the Rs 75,000 standard deduction is one of the very few deductions still allowed, making it particularly valuable. Combined with the higher basic exemption limit of Rs 4,00,000 and lower slab rates, salaried NRIs with limited other deductions can benefit significantly from the new regime.

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10. Section 197: Lower TDS Certificate — Stop Overpaying the Government

This is one of the most impactful yet underused provisions for NRIs. If you are an NRI and receiving any income in India, TDS is being deducted at a flat rate -- often much higher than your actual tax liability.

The Problem

• Rental income: TDS at 30% + cess on gross rent (Section 195).
• Property sale: TDS at 12.5% on gross sale consideration (Section 194-IA for residents; Section 195 at 20%+ for NRIs on capital gains).
• Interest income (NRO): TDS at 30% + cess.

In many cases, after claiming all deductions and exemptions, the actual tax payable is far lower than the TDS deducted. The NRI then has to file a return and wait months (or years) for a refund.

The Solution: Section 197

Under Section 197, an NRI can apply to the Assessing Officer for a certificate authorizing TDS at a lower rate or nil rate. This requires:

1. Filing Form 13 with the jurisdictional AO.
2. Providing details of income, deductions, and expected tax liability.
3. The AO issues a certificate specifying the lower TDS rate.
4. This certificate is provided to the payer (buyer, tenant, bank), who then deducts TDS at the lower rate.

Worked Example

Mrs. Patel (NRI in the UK) is selling her flat in Pune for Rs 90 lakh. Without a Section 197 certificate:

• TDS at 12.5% (LTCG rate) on estimated capital gains, but the buyer may deduct at a higher effective rate due to surcharge and cess, or apply 20% on the total consideration under Section 195 if they are unsure.
• TDS deducted: Could be Rs 12-18 lakh or more.

With a Section 197 certificate (after computing actual LTCG with indexation and claiming Section 54 exemption on reinvestment):

• Actual LTCG tax payable: Rs 0 (if full exemption under Section 54).
• TDS certificate issued for: Nil or nominal amount.
• Cash flow saved: Rs 12-18 lakh that would have been locked up as a refund.

Timing Is Critical

File Form 13 well in advance of the transaction. AO processing can take 2-4 weeks (sometimes longer). Do not wait until the last minute.

We handle Section 197 applications for NRIs across India. Our CA team files Form 13, coordinates with the Assessing Officer, and ensures you get the lower TDS certificate before your transaction closes. Start now or email [email protected].

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11. Tax-Loss Harvesting on Equity Investments

Tax-loss harvesting is a strategy where you sell investments that are at a loss to offset gains from other investments, thereby reducing your overall capital gains tax.

How It Works for NRIs (FY 2025-26)

Equity Shares and Equity Mutual Funds (listed):

• LTCG (held > 12 months): Taxed at 12.5% above Rs 1.25 lakh annual exemption.
• STCG (held < 12 months): Taxed at 20%.

Strategy:

1. Before March 31, 2026, review your Indian equity portfolio.
2. Identify holdings with unrealized losses.
3. Sell these loss-making positions to book the loss.
4. Use the loss to offset capital gains from profitable sales during the same year.
5. If you want to retain exposure, buy back the same shares/units after a reasonable gap (India does not have a formal wash-sale rule like the US, but maintain substance).

Example

An NRI has:

• LTCG of Rs 3,00,000 from selling Stock A.
• Unrealized loss of Rs 2,00,000 on Stock B.

Without harvesting: Tax on Rs 3,00,000 - Rs 1,25,000 (exemption) = Rs 1,75,000 at 12.5% = Rs 21,875.

With harvesting (sell Stock B): Net LTCG = Rs 3,00,000 - Rs 2,00,000 = Rs 1,00,000. Since Rs 1,00,000 is below the Rs 1,25,000 exemption, tax = Rs 0. Tax saved: Rs 21,875.

Carry Forward of Losses

• Capital losses can be carried forward for 8 assessment years.
• Long-term capital losses can only be set off against long-term capital gains.
• Short-term capital losses can be set off against both short-term and long-term capital gains.
• You must file your ITR by the due date (July 31 or the extended deadline) to carry forward losses.

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12. Timing Strategies: Choosing the Right Financial Year to Recognize Income

Intelligent timing of income recognition can result in significant tax savings. This is especially relevant for NRIs because of TDS withholding and the interplay between residential status and tax liability.

Strategy 1: Defer Property Sale to Qualify for LTCG

If you are about to sell a property held for just under 24 months, consider waiting until the holding period crosses 24 months. This converts the gain from short-term (taxed at slab rates, up to 30%) to long-term (taxed at 12.5%), potentially saving 17.5% or more in tax.

Strategy 2: Split Capital Gains Across Two Financial Years

If you are selling multiple assets, consider selling one asset before March 31 and another after April 1. This spreads the capital gains across two financial years, allowing you to:

• Use the Rs 1.25 lakh LTCG exemption twice.
• Stay in lower tax slabs.
• Claim Section 54EC exemption twice (Rs 50 lakh per FY).

Strategy 3: Return to India Strategically

If you are planning to return to India permanently, the timing of your return affects your residential status and tax liability:

• If you arrive in India with the intention of staying permanently, you become a Resident but Not Ordinarily Resident (RNOR) for up to 2-3 years (subject to conditions).
• RNOR status provides the same tax benefit as NRI status -- foreign income is not taxable in India.
• Use the RNOR window to repatriate foreign income, close foreign accounts, and restructure investments before becoming an Ordinary Resident.

Strategy 4: Harvest NRE FD Interest Before Returning

Before your NRI status ends, maximize NRE FD interest accumulation. Once you become a resident, the NRE account is redesignated and interest becomes taxable. Lock in long-term NRE FDs while you still have NRI status.

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13. New Regime Slab Benefit Analysis with Worked Examples

Let us compare the tax payable under both regimes for common NRI income scenarios.

Scenario 1: NRI with Rs 15 Lakh Rental + Interest Income, Rs 3 Lakh Deductions

Scenario 2: NRI with Rs 25 Lakh Income, Rs 5.5 Lakh Deductions

*Section 24 interest on let-out property is available under new regime as well.

Takeaway: There is no universal answer. NRIs with deductions exceeding Rs 3.5-4 lakh typically benefit from the old regime. NRIs with lower deductions benefit from the new regime's wider slabs and lower rates.

Not sure which regime saves you more tax? Our team runs a personalized tax simulation for your specific income profile. Get your analysis.

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14. Comparison Table: Deductions Available in Old vs New Regime for NRIs

Note: Section 10 exemptions (NRE interest, LTCG on equity up to Rs 1.25 lakh, agricultural income) are available under both regimes as they are income exemptions, not deductions.

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15. Common Mistakes NRIs Make in Tax Planning

Mistake 1: Claiming Section 87A Rebate as an NRI

The single most common error. Section 87A provides a rebate that effectively makes income up to Rs 12 lakh (new regime) tax-free. However, this rebate is available only to resident individuals. NRIs are explicitly excluded. Every year, thousands of NRI returns are processed with incorrect 87A claims, leading to demands and penalties.

Mistake 2: Claiming Deductions Under the New Regime

NRIs who do not explicitly opt out of the new regime sometimes claim Section 80C, 80D, and other deductions that are not allowed under it. The CPC (Centralized Processing Centre) will disallow these deductions and raise a demand.

Mistake 3: Not Filing ITR Because "TDS Is Already Deducted"

TDS is often deducted at the highest rates for NRIs (30% on interest, 20%+ on property). Many NRIs assume this is final. In reality, filing a return often results in a substantial refund, especially when actual tax liability is lower after applying slab rates and deductions.

Mistake 4: Not Using DTAA Benefits

India has Double Taxation Avoidance Agreements with over 90 countries. NRIs can claim DTAA benefits to avoid being taxed twice on the same income. Common examples:

• Lower TDS rates on interest (10-15% under most DTAAs vs 30% under the Act).
• Tax credits in the country of residence for taxes paid in India.

To claim DTAA benefits, you must obtain a Tax Residency Certificate (TRC) from your country of residence and file Form 10F in India.

Mistake 5: Ignoring Advance Tax Obligations

NRIs with a tax liability exceeding Rs 10,000 in a financial year must pay advance tax in quarterly installments (June 15, September 15, December 15, March 15). Failure to pay attracts interest under Sections 234B and 234C.

Mistake 6: Not Updating KYC and Residential Status

Failing to update your NRI status with banks, demat accounts, and mutual funds can result in incorrect TDS rates, non-compliant investments, and regulatory issues with FEMA.

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16. Frequently Asked Questions: NRI Tax Saving in India

Q1. Can NRIs claim Section 80C deductions in India?

Yes, NRIs can claim Section 80C deductions up to Rs 1,50,000 under the old tax regime. Eligible instruments include ELSS mutual funds, life insurance premiums, home loan principal repayment, tuition fees, and 5-year tax-saving FDs (through NRO accounts). However, NRIs cannot make fresh investments in PPF, Sukanya Samriddhi, or Senior Citizens Savings Scheme.

Q2. Is NRE FD interest taxable in India?

No. Interest earned on NRE (Non-Resident External) accounts and FCNR deposits is completely exempt from Indian income tax under Section 10(4)(ii), provided the individual maintains NRI/NRE status. There is no upper limit on this exemption.

Q3. Which is better for NRIs: old regime or new regime?

It depends on your deduction profile. If your total deductions (80C + 80D + 24(b) + others) exceed approximately Rs 3.75 lakh, the old regime is generally more beneficial. If you have limited deductions (mainly interest and capital gains income), the new regime's lower slab rates may save you more. We recommend running a comparison calculation for your specific situation.

Q4. Can NRIs get a lower TDS certificate under Section 197?

Yes. NRIs can file Form 13 with their jurisdictional Assessing Officer to obtain a certificate for lower or nil TDS deduction. This is especially useful when selling property, receiving rent, or earning significant interest income where the TDS rate (30%+) far exceeds the actual tax liability.

Q5. How does GIFT City help NRIs save tax?

Investments made through the IFSC (International Financial Services Centre) in GIFT City, Gandhinagar, enjoy several tax benefits: no capital gains tax on specified securities, no STT, no GST on financial services, and favorable treatment of interest income. NRIs can invest in GIFT City-listed funds, ETFs, and fixed deposits for tax-efficient returns.

Q6. Can NRIs claim Section 54 exemption on property sale?

Yes. NRIs can claim exemption under Section 54 on long-term capital gains from selling a residential house property in India, provided they purchase or construct a new residential house in India within the specified time limits (2 years for purchase, 3 years for construction). The exemption is capped at Rs 10 crore.

Q7. Is Section 87A rebate available to NRIs?

No. This is one of the most common misconceptions. The Section 87A rebate (Rs 12,500 under old regime, Rs 60,000 under new regime) is available only to resident individuals. NRIs cannot claim this rebate, regardless of their income level.

Q8. Can NRIs invest in PPF?

NRIs cannot open new PPF accounts or make fresh contributions to existing ones. If an NRI holds a PPF account that was opened while they were a resident, it will continue at the prevailing interest rate until maturity, but no new deposits can be made. The account cannot be extended beyond the maturity date.

Q9. What is the TDS rate on NRO fixed deposit interest?

TDS on NRO FD interest for NRIs is 30% plus 4% health and education cess, resulting in an effective rate of 31.2%. If the DTAA between India and the NRI's country of residence provides a lower rate (typically 10-15%), the NRI can claim the lower rate by submitting a TRC and Form 10F to the bank.

Q10. How can NRIs reduce TDS on property sale?

NRIs selling property in India face TDS at 12.5% (LTCG) or higher on the sale consideration. To reduce this:

1. Apply for a Section 197 lower TDS certificate by filing Form 13.
2. Claim capital gains exemptions (Section 54, 54EC, 54F) to reduce actual liability.
3. Ensure the buyer deducts TDS on the capital gain amount, not the full sale price (requires the Section 197 certificate).

Q11. Can NRIs carry forward capital losses?

Yes, NRIs can carry forward capital losses for 8 assessment years, provided the income tax return for the year in which the loss was incurred is filed on or before the due date. Long-term capital losses can only be set off against long-term capital gains. Short-term losses can be set off against both types.

Q12. What happens to NRE accounts when an NRI returns to India?

Upon returning to India and becoming a resident, the NRI must redesignate:

• NRE savings/FD accounts become resident savings/FD accounts. Interest becomes taxable from the date of status change. However, interest earned on NRE FDs (existing ones maturing after return) continues to be tax-free until maturity.
• NRO accounts become regular resident accounts.
• FCNR deposits can continue until maturity; interest remains non-taxable until maturity.

Q13. Are NRIs required to file income tax returns in India?

NRIs must file an ITR in India if their total gross income (before deductions) exceeds the basic exemption limit (Rs 2.5 lakh under old regime, Rs 4 lakh under new regime). Even if TDS has been fully deducted, filing is advisable to claim refunds, carry forward losses, and maintain compliance records.

Q14. Can NRIs claim HRA exemption?

HRA exemption under Section 10(13A) is available to NRIs only under the old regime and only if they receive HRA as part of salary from an Indian employer. NRIs earning purely non-salary income cannot claim HRA.

Q15. What is the deadline for NRI ITR filing for FY 2025-26?

The due date for filing income tax returns for FY 2025-26 (AY 2026-27) is July 31, 2026, unless extended by the government. NRIs who need to file audit reports have an extended deadline of October 31, 2026. Belated returns can be filed until December 31, 2026, but with penalties and loss of certain carry-forward benefits.

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Your Next Step: Build a Personalized NRI Tax Plan

Tax planning for NRIs is not a one-size-fits-all exercise. Your optimal strategy depends on your country of residence, DTAA applicability, income mix (salary vs rental vs capital gains vs interest), investment portfolio, and future plans (returning to India or staying abroad).

At MKW Advisors, our team of Chartered Accountants, Company Secretaries, and Cost Accountants works exclusively with NRIs across 30+ countries. We do not just file returns -- we build comprehensive tax strategies that minimize your Indian tax liability while keeping you fully compliant.

What We Offer NRIs

• Regime Selection Analysis: Personalized old vs new regime comparison with exact tax savings.
• Section 197 Applications: End-to-end handling of lower TDS certificates for property sales, rent, and interest.
• Capital Gains Planning: Section 54/54EC/54F structuring with CGAS account management.
• DTAA Optimization: TRC procurement assistance and Form 10F filing.
• Return Filing: ITR preparation and filing for all NRI income types.
• FEMA Compliance: Repatriation assistance, LRS advisory, and property transaction compliance.

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Ready to start saving?

• Book a consultation with our NRI tax experts
• WhatsApp: +91-96677 44073
• Email: [email protected]

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