Non-Resident Taxation in India: Filing Requirements

Published on October 2, 2025 and written by Cyril Jarnias

In an increasingly globalized world, many individuals and businesses find opportunities outside their home countries, leading to crucial questions about non-resident taxation in India.

Recognized for its diverse opportunities, this country imposes specific tax rules on non-residents, requiring a thorough understanding of filing obligations to avoid costly mistakes.

This unique tax system may seem complex, but it’s essential for effectively managing financial affairs and ensuring compliance with laws while optimizing tax burdens.

Through this article, you’ll discover the nuances of obligations and how to navigate the Indian tax universe, providing an essential overview for anyone seeking to establish themselves in India without the complications associated with unfamiliarity with local regulations.

Non-Resident Taxation: General Framework in India

Tax Framework Applicable to Non-Residents in India

A non-resident in India is taxed only on their Indian-sourced income, according to specific rules, rates, and conventions.

Tax Residence Criteria

An individual is considered non-resident if they do not stay in India:

• 182 days or more during the current fiscal year, or
• 60 days or more during the current fiscal year and 365 days or more during the previous 4 years.

For Indian citizens or persons of Indian origin visiting India, the 60-day condition is extended to 182 days.

Tax Status	Presence Criteria in India
Non-Resident (NRI)	Does not meet any of the above criteria
Resident	Meets at least one of the above criteria

General Principles of Non-Resident Taxation

Only Indian-sourced income is taxable for non-residents.

The main types of income concerned are:

• Employment income for work performed in India
• Rental income from properties located in India
• Interest, dividends, royalties, and fees from Indian sources
• Capital gains on the transfer of assets located in India

Applicable Tax Rates

Income Bracket (INR)	Tax Rate for Non-Residents
Up to 2,50,000	0%
2,50,001 to 5,00,000	5%
5,00,001 to 10,00,000	20%
Above 10,00,000	30%

These rates generally apply, without the specific deductions or exemptions reserved for residents.

Certain income (interest, dividends, royalties) is subject to specific withholding rates, often between 10% and 20% depending on the nature of the income and tax treaties.

Categories of Taxable Income

• Employment income: taxed if the activity is performed in India.
• Interest: taxed at source, unless exempted by treaty.
• Dividends: taxed at source, with rates sometimes reduced by treaty.
• Capital gains: taxed on assets located in India, with distinction between short-term and long-term.

International Tax Treaties

India has signed numerous Double Taxation Avoidance Agreements (DTAAs).

These treaties allow:

• Avoidance of double taxation
• Reduction of withholding tax rates for certain income (dividends, interest, royalties)
• Granting of tax credits in the non-resident’s country of residence

Each treaty must be consulted to determine applicable rates and tax credit procedures.

Recent Changes

• Residence thresholds and criteria have been clarified to prevent abuse (particularly for Indians working abroad).
• Exit tax and the concept of “stateless person” have been introduced to prevent aggressive tax planning.
• The dividend tax regime has evolved, moving from a system taxing the distributing company to direct taxation of shareholders, including non-residents, with application of treaty rates if applicable.

Key Points to Remember

• Non-resident status limits taxation to only Indian-source income.
• Tax rates may differ depending on the nature of income.
• International tax treaties play a central role in limiting double taxation and determining applicable rates.
• Residence criteria are strictly defined and regulated by legislation, with recent adjustments to better control international mobility.

Filing Obligations for Expatriates in India

Types of Income Subject to Declaration for Expatriates in India:

• Employment income: salaries, benefits in kind, bonuses, etc.
• Investment income: dividends, interest, capital gains on securities.
• Real estate income: rents received from properties located in India.
• Other income: pensions, fees, independent professional income.

Income Thresholds Defining Tax Obligations:

Annual Income Bracket (INR)	Tax Rate
Up to 200,000	0%
200,001 to 500,000	10% on amount exceeding 200,000
500,001 to 1,000,000	30,000 + 20% on amount exceeding 500,000
Above 1,000,000	130,000 + 30% on amount exceeding 1,000,000

• Above 500,000 INR, filing and tax payment must be done online.
• Employers withhold tax at source on salaries.
• Thresholds may vary according to specific brackets or based on granted deductions.

Specific Filing Deadlines:

The annual income tax return must generally be filed by July 31 of the year following the relevant fiscal year.

In case of delay, financial penalties apply.

Required Tax Forms:

Form	Primary Use
ITR-1 (Sahaj)	Salary income, pensions, single property, certain interest income (for residents and RNOR only)
ITR-2	Multiple income sources (salaries, capital gains, more than one property, foreign income), for residents and non-residents
ITR-3	Professional income, business income (self-employed)
ITR-4	Simplified scheme for professionals and independent contractors (Presumptive Taxation Scheme)

Expatriates are generally concerned with ITR-2 or ITR-3 depending on the complexity of their situation.

Exceptions or Specifics for Expatriates from Countries with Tax Agreements with India:

• India has signed numerous double taxation avoidance agreements (particularly with France).
• These agreements allow avoidance of double taxation on certain income (salaries, dividends, interest).
• The treaties specify the allocation of taxing rights between the two countries and tax credit mechanisms.
• It’s essential to declare tax residence and present, if applicable, a tax residence certificate from the home country to benefit from treaty advantages.

Obligations to Declare Foreign Financial Assets:

Indian tax residents must declare all foreign financial assets held abroad (bank accounts, stocks, real estate, trusts, etc.) in their annual return.

This obligation also applies to expatriates considered tax residents according to stay criteria.

Penalties for Non-Compliance:

• Late filing or omission: variable financial penalties depending on delay and severity (up to 50% of evaded tax).
• Non-declaration of foreign assets: penalty up to 100% of the value of the undeclared asset, or even criminal prosecution for tax fraud.

Official Resources and Tax Advisory Services:

• Official portal of the Income Tax Department of India for filing and updated information.
• Embassies and consulates, local tax services.
• Specialized international tax firms, bilingual accountants, expatriate support services (e.g., UFE, CFE).
• Practical guides and simulators available on government and association websites.

To Remember:

Every expatriate in India must assess their tax status, declare all their income and worldwide assets if applicable, use forms appropriate to their situation, and strictly respect deadlines to avoid sanctions and penalties. In case of doubt, professional guidance is strongly recommended.

Avoiding Double Taxation: Strategies and Advice

Double taxation occurs when non-residents in India are taxed both in their country of residence and in India on the same income.

This involves tax filing obligations in each country, including the need to declare Indian-source income in the country of residence, even if it has already been taxed in India. Without a tax treaty, the taxpayer risks being taxed twice, unless internal provisions allow deduction of tax paid abroad.

Double Taxation Avoidance Agreements (DTAAs) Signed by India

India has concluded a broad network of DTAAs with many countries to limit or eliminate double taxation. These agreements specify:

• The types of income concerned (interest, dividends, rents, capital gains, etc.)
• Tax residence rules (domicile criteria, permanent home, center of vital interests, etc.)
• The country having the right to tax each category of income
• Mitigation mechanisms: exemption or tax credit

Using DTAAs to Mitigate Double Taxation

• Exemption: income is taxed only in one country, the other grants exemption.
• Tax credit: the country of residence grants a tax credit corresponding to tax paid in India.
• DTAAs often set maximum withholding rates, for example on dividends or interest.

Practical Tips to Reduce Double Taxation

• Verify the existence of a DTAA between India and the country of residence.
• Request application of preferential withholding rates provided in the treaty.
• Obtain a tax residence certificate to benefit from the DTAA.
• Use the foreign tax credit mechanism: declare in detail tax paid in India to claim it in the country of residence.
• Consider specific exemptions provided by the DTAA (for example, exemption on certain types of interest or capital gains).

Best Practices for Tax Documentation

• Keep all tax deduction at source (TDS) certificates issued by the Indian tax administration.
• Maintain copies of Indian and foreign tax returns.
• Archive contracts, bank statements, and tax residence proofs.
• Prepare a summary table of income received, taxes paid, and tax credits claimed.

Document Type	Primary Usefulness
Tax Deduction at Source (TDS) Certificate	Justify tax paid in India
Tax Residence Certificate	Apply the DTAA
Annual Tax Returns	Tracking filing obligations
Bank Statements and Contracts	Proof of nature and source of income

Tax Implications by Nature of Income for Non-Residents in India

Income Type	Taxation in India	Common Treatment by DTAAs
Interest	Withholding at source, variable rates	Maximum rate set by DTAA, tax credit
Capital Gains	Depending on asset nature	Generally taxable in India, possible credit
Rental Income	Taxed at source in India	Taxation in India, tax credit in other country
Dividends	Withholding at source, capped rates	Reduced rate by DTAA, tax credit

To Remember

Non-residents must analyze the nature of each income, verify provisions of the applicable DTAA, and maintain exhaustive documentation to optimize filing and recovery of tax credits. Rigorous planning and recourse to specialized advice are recommended to limit overall tax burden.