NRI India Compliance Guide 2026: Tax, FEMA, Property & Banking

Compliance Areas

What Does an NRI Need to Comply With in India?

Non-Resident Indians have obligations under two separate legal frameworks — the Income Tax Act (for taxation of Indian-sourced income) and FEMA 1999 (for all foreign exchange and banking transactions). Here is a complete overview of every area that affects you.

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Residency Status Determination

Your tax obligation in India depends entirely on whether you are classified as NRI, RNOR, or Resident. The rules changed significantly from 1 April 2026 under the Income Tax Act 2025.

Key rules:
• 182-day rule — stay below 182 days to remain NRI
• 120-day rule — applies if Indian income exceeds ₹15 lakh
• Deemed residency — UAE/Gulf NRIs earning ₹15L+ from India
• RNOR status — transitional status with limited tax liability

→ NRI Residency Rules from 1 April 2026

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Income Tax for NRIs

NRIs are taxed only on income earned or received in India. This includes rental income, capital gains on Indian property or shares, interest on NRO accounts, and business income from India.

Key obligations:
• ITR filing if Indian income exceeds ₹2,50,000
• TDS deducted by banks on NRO interest @ 30%
• Capital gains tax on property / equity / MFs
• DTAA benefit claims to avoid double taxation
• Lower TDS certificate via Form 13 application

→ TDS under New Income Tax Act 2025

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NRO, NRE & FCNR Bank Accounts

NRIs must hold Indian income in NRO accounts and can maintain NRE/FCNR accounts for foreign earnings. Mixing these up leads to FEMA violations.

Account comparison:
• NRO — Indian income (rent, dividends). Interest taxable @ 30% TDS
• NRE — Foreign earnings remitted to India. Interest tax-free. Freely repatriable
• FCNR — Foreign currency fixed deposits. No currency risk. Tax-free
• Resident savings accounts must be converted on NRI status change

→ Get advice on account restructuring

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FEMA Compliance & Repatriation

Repatriation of funds from India is governed by FEMA 1999 and RBI regulations. Incorrect repatriation can lead to FEMA compounding proceedings.

Key repatriation rules:
• NRO account: Up to USD 1 million per FY (after tax)
• NRE account: Freely repatriable — no limit
• Property sale proceeds: Subject to capital gains tax and Form 15CA/15CB
• Gifts from residents to NRI relatives: Permitted under FEMA
• Form 15CA/15CB mandatory for most remittances

→ LRS Guide: USD 2,50,000 Limit & TCS Rules

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Property Ownership & Sale

NRIs can own residential and commercial property in India. Agricultural land, plantation property and farmhouses cannot be purchased (only inherited).

Key compliance points:
• TDS @ 20% on long-term capital gains (property held 24+ months)
• TDS @ 30% on short-term capital gains
• Buyer must deduct TDS and file Form 27Q
• Section 54/54F exemption available for reinvestment
• Repatriation of sale proceeds requires Form 15CA/15CB
• FEMA: Maximum 2 residential properties without RBI permission

→ Get advice on property sale & repatriation

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ITR Filing for NRIs

NRIs must file an Indian Income Tax Return (ITR) if their India-sourced income exceeds ₹2,50,000 in a financial year, or if they wish to claim TDS refunds.

ITR filing requirements:
• Applicable form: ITR-2 (no business income) or ITR-3
• Due date: 31 July (non-audit cases) / 31 October (audit cases)
• Foreign income not reportable for NRI / RNOR
• Schedule FA (foreign assets) not applicable for NRI
• PAN mandatory — Aadhaar linking not required for NRIs
• E-verification via EVC or DSC (Net Banking login not required)

→ File your NRI ITR with Shahi & Co.

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Investments in India

NRIs can invest in Indian equities, mutual funds, bonds and portfolio investment schemes (PIS) under FEMA regulations through designated NRE/NRO demat accounts.

Investment compliance:
• Portfolio Investment Scheme (PIS) for stock market investments
• NRE demat for investments using foreign funds (repatriable)
• NRO demat for investments using Indian income (non-repatriable)
• LTCG on equity: 12.5% above ₹1.25 lakh
• STCG on equity: 20% (w.e.f. 23 July 2024)
• TDS on dividends: 20% (reducible under DTAA)

→ NRI investment compliance advisory

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DTAA — Double Tax Avoidance

India has Double Tax Avoidance Agreements (DTAAs) with 90+ countries. NRIs can claim DTAA benefits to reduce or eliminate tax deducted at source in India on interest, dividends, capital gains and other income.

Popular DTAA countries:
• USA: 15% on dividends, 10-15% on interest
• UAE: No tax on capital gains under India-UAE DTAA
• UK: Reduced rates on dividends and interest
• Canada, Australia, Singapore, Germany — all covered
• Tax Residency Certificate (TRC) required from foreign country
• Form 10F to be filed with Indian bank/deductor

→ Claim DTAA benefits with our help

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Gifts & Inheritance

Gifts received from relatives are exempt from income tax in India. NRIs can receive gifts from resident relatives and also give gifts to resident relatives under FEMA provisions.

Key rules:
• Gifts from relatives: Fully exempt from tax (no limit)
• Gifts from non-relatives: Taxable if above ₹50,000 per year
• NRI to resident relative: Permitted under FEMA (LRS route)
• Resident to NRI relative: Permitted — up to USD 2,50,000 per FY
• Inherited property: NRI can hold and sell; repatriation limited to USD 1M
• Agricultural land: Can be inherited but not purchased

→ Get advice on NRI gifts & inheritance

Annual Obligations

NRI Annual Compliance Calendar — FY 2026-27

Key deadlines every NRI must be aware of for FY 2026-27 (April 2026 to March 2027).

Due Date	Compliance Requirement	Applicable To	Penalty / Consequence
31 Aug 2026	ITR filing for FY 2025-26 (non-audit cases)	NRIs with Indian income above ₹2.5 lakh	Late fee up to ₹5,000 (₹1,000 if income < ₹5 lakh)
Per transaction	Form 15CA / 15CB — before each remittance	NRIs repatriating funds from NRO account, property sale proceeds, rent	Penalty of Rs.1 lakh per default under Section 271-I of Income Tax Act
30 Sep 2026	Form 15CA/15CB for remittances (per transaction)	NRIs remitting funds from NRO account	Penalty ₹1 lakh per default under Section 271-I
31 Oct 2026	ITR filing for FY 2025-26 (audit cases)	NRIs with income requiring tax audit	Late fee + interest under Section 234A
31 Mar 2027	Belated / revised ITR for FY 2025-26	All NRI taxpayers — belated filing permitted up to 31 March of the assessment year	Late fee up to Rs.5,000; losses (other than house property) cannot be carried forward
15 Jun / 15 Sep / 15 Dec / 15 Mar	Advance tax instalments (if tax liability > ₹10,000)	NRIs with Indian business / capital gains income	Interest @ 1% per month under Sections 234B & 234C
Annual	Form 10F renewal (for DTAA benefit claims)	NRIs claiming DTAA benefits from Indian deductors	TDS deducted at higher rate without valid Form 10F
Annual	Tax Residency Certificate (TRC) renewal	NRIs claiming DTAA benefits	DTAA benefits denied without valid TRC
On each transaction	PIS reporting for equity purchases/sales	NRIs investing in Indian stock markets	FEMA violation — compounding with RBI
Within 60 days of return	Conversion of resident savings account to NRO	Persons becoming NRI	FEMA contravention — penalty up to 3x the amount

Tax Deduction at Source

TDS Rates Applicable to NRIs — FY 2026-27

Tax is deducted at source on most payments made to NRIs. These rates apply under the Income Tax Act 2025 (effective 1 April 2026) and may be reduced under applicable DTAA.

Nature of Income	TDS Rate (Act)	DTAA Reduction Possible	Relevant Section
Interest on NRO account	30% + surcharge	Yes — 10-15% under most DTAAs	Section 195
Dividends from Indian companies	20% + surcharge	Yes — 10-15% under most DTAAs	Section 195
Long-term capital gains (property)	20% + surcharge	Varies by DTAA	Section 195
Short-term capital gains (property)	30% + surcharge	Varies by DTAA	Section 195
LTCG on listed equity / equity MFs	12.5% (above ₹1.25L)	Varies by DTAA	Section 112A
STCG on listed equity / equity MFs	20%	Varies by DTAA	Section 111A
Rental income from property	30% (on gross)	Varies by DTAA	Section 195
Professional / technical fees	20%	Yes	Section 195
Interest on NRE / FCNR accounts	Nil (exempt)	N/A — already exempt	Section 10(4)

Lower TDS Certificate

If TDS rates under the Act are higher than your actual tax liability, you can apply to the Income Tax Officer for a lower TDS / nil TDS certificate under Section 197. This can significantly reduce TDS on property sale proceeds, rental income and NRO interest. Our team handles these applications regularly.

Activity	Permitted	Conditions / Limits
Hold NRE / NRO / FCNR accounts	Yes	Must be maintained as per FEMA regulations
Repatriate from NRE account	Yes — freely	No limit on amount or frequency
Repatriate from NRO account	Yes — up to limit	USD 1 million per financial year after tax payment
Purchase residential / commercial property	Yes	Maximum 2 residential properties without RBI approval
Purchase agricultural land	No	Only inheritance permitted — not purchase
Invest in Indian equities / MFs	Yes — via PIS	Through designated PIS bank account only
Give loan to resident relative	Yes	In Indian Rupees; interest free; specific conditions apply
Give gift to resident relative	Yes	Up to USD 2,50,000 per year (LRS route from abroad)
Open foreign currency account in India	Limited	RFC account only — on return to India
Invest in Indian partnership firm	With conditions	Not permitted in agricultural / plantation / real estate firms

Frequently Asked Questions

NRI Compliance — Common Questions

Do I need to file an ITR in India if I am an NRI?

Yes, if your India-sourced income exceeds ₹2,50,000 in a financial year, you must file an ITR. Even if your income is below this threshold, filing is advisable if TDS has been deducted — since you can claim a refund only by filing an ITR. Income earned outside India is not reportable for NRIs.

Can I hold a resident savings account after becoming an NRI?

No. Under FEMA regulations, once you become an NRI, your resident savings account must be converted to an NRO account (or closed) within a reasonable time — generally within 60 days of departure. Continuing to operate a resident account as an NRI is a FEMA contravention and may attract a penalty of up to 3 times the amount involved.

Is NRE account interest taxable in India?

No. Interest earned on NRE savings and fixed deposit accounts is exempt from Indian income tax under Section 10(4) of the Income Tax Act, as long as you maintain NRI or RNOR status. This exemption is lost when you become a full Resident and Ordinarily Resident (ROR) — at which point NRE accounts must be redesignated as resident accounts.

What is Form 15CA and 15CB? When are they required?

Form 15CA is an online declaration by the remitter confirming that applicable taxes have been paid or deducted on the amount being remitted abroad. Form 15CB is a certificate issued by a Chartered Accountant certifying the tax computation. Both are required for most foreign remittances from India — including repatriation of NRO funds, property sale proceeds, and rent. Specific exemptions exist for certain current account transactions listed under Rule 37BB of the Income Tax Rules.

How do I claim DTAA benefit to reduce TDS on NRO interest?

To claim DTAA benefit, you must submit to your Indian bank: (1) a valid Tax Residency Certificate (TRC) from the tax authority of your country of residence, and (2) Form 10F — a self-declaration with specific details. Once submitted, the bank applies the reduced DTAA rate instead of the standard 30% TDS rate on NRO interest. TRC must be renewed each year and Form 10F filed annually on the income tax portal.

Can an NRI buy property in India? Are there any restrictions?

Yes. NRIs can purchase residential and commercial immovable property in India without RBI permission. However, they cannot purchase agricultural land, plantation property, or farmhouses (though these can be inherited). NRIs can hold a maximum of 2 residential properties without RBI approval — beyond this, prior approval is required. Payment must be made through NRE/NRO accounts or by inward remittance in foreign currency.

What happens to my PF and PPF accounts when I become an NRI?

You can continue your existing PPF account till maturity — but NRIs cannot open new PPF accounts. Contributions from NRE/NRO accounts are permitted. EPF (Employee Provident Fund) balance can be withdrawn by an NRI after 2 months of unemployment (after leaving India). Interest on PPF is fully exempt from tax for NRIs during the NRI period as well.

Do NRIs need to link Aadhaar with PAN?

No. NRIs are exempt from the mandatory Aadhaar-PAN linking requirement. However, PAN is mandatory for all financial and tax transactions in India — including opening bank accounts, filing ITR, buying property, and claiming TDS refunds. NRIs who do not have a PAN should obtain one before transacting in India.

NRI India Compliance Guide 2026: Tax, FEMA, Property & Banking

What Does an NRI Need to Comply With in India?

NRI Annual Compliance Calendar — FY 2026-27

TDS Rates Applicable to NRIs — FY 2026-27

What NRIs Can and Cannot Do Under FEMA

NRI Compliance — Common Questions

Speak to a CA Who Understands NRI Compliance

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