Tax Filing in India for NRIs: TDS, DTAA & Refunds
Tax filing is where many NRIs feel uncertain — which income is taxable in India, how much TDS is deducted, and how to get a refund of excess tax. The rules are clear once you understand residential status and the DTAA. This guide explains tax filing in India for NRIs, covering TDS, DTAA relief, and how to claim refunds.
Determining Residential Status
Your tax liability depends on your residential status under the Income Tax Act, which is based on the number of days you spend in India during the financial year. An NRI is taxed in India only on income that is earned or accrued in India — not on global income.
What Income Is Taxable for an NRI?
- Rental income from property in India.
- Capital gains on sale of Indian property, shares, or mutual funds.
- Interest on NRO deposits and certain accounts.
- Dividends from Indian companies.
- Any income received or accruing in India.
Interest on NRE and FCNR accounts is exempt from Indian tax — see NRE vs NRO vs FCNR accounts.
TDS on NRI Income
NRIs face higher TDS than residents on many income types. Tenants deduct TDS on rent, buyers deduct TDS on property purchase, and banks deduct TDS on NRO interest. Often, the TDS deducted exceeds the actual tax liability — which is exactly why filing a return to claim a refund matters.
DTAA: Avoiding Double Taxation
India has Double Taxation Avoidance Agreements (DTAA) with many countries. The DTAA lets you avoid paying tax twice on the same income — either through an exemption or by claiming a credit in your country of residence. To claim DTAA benefits, NRIs typically provide a Tax Residency Certificate (TRC) and Form 10F.
How to Claim a Refund
If TDS deducted is more than your actual tax liability, file an income tax return in India to claim the excess as a refund. Common refund situations for NRIs include:
- TDS on property sale higher than the actual capital gains tax.
- TDS on NRO interest where total income is below the taxable threshold.
- Excess TDS on rent or professional income.
A faster way to avoid blocked refunds is to apply for a lower or nil TDS certificate before the transaction.
Filing Process Summary
| Step | Action |
|---|---|
| 1 | Determine residential status |
| 2 | Compute India-sourced income |
| 3 | Claim DTAA relief (TRC, Form 10F) |
| 4 | File the income tax return |
| 5 | Claim refund of excess TDS |
Frequently Asked Questions
Do NRIs pay tax on global income in India?
No. NRIs are taxed only on income earned or accrued in India.
Is NRE interest taxable?
No, NRE and FCNR interest is exempt from Indian income tax for NRIs.
How do I claim DTAA benefits?
Provide a Tax Residency Certificate and Form 10F, and apply the relevant treaty rate.
How do I get a refund of excess TDS?
File an Indian income tax return; the excess TDS over your actual liability is refunded.
File Right and Recover Your Refunds
S. Choudhary & Co. handles NRI tax returns, DTAA claims, lower-TDS certificates, and refunds. Explore our international taxation services or call +91 90248 28295 · sushil@sushilchoudhary.com.
