📋 NRI Tax · 2026 Guide

Which five tax decisions does every NRI need to get right?

Q: Q3 Can I avoid 30% TDS on my NRO interest? Yes — apply the DTAA reduced rate. US tax residents can drop TDS to 15% by filing Form 10F + a Tax Residency Certificate (US: IRS Form 6166) annually with your bank.

By default, banks deduct 30% TDS + cess on NRO interest. With DTAA, US residents drop to 15% . UK and most diaspora countries have similar reduced rates. Required filings, annually with your bank: Form 10F + Tax Residency Certificate from your foreign tax authority + PAN copy . ~20 minutes once a year. TDS guide →

Q: Q4 Should US-resident NRIs avoid Indian mutual funds entirely? Yes for most cases. Indian mutual funds are PFICs under US tax rules — punitive Form 8621 reporting + tax at the highest US rate + interest charge. Direct Indian stocks via demat are fine.

Indian equity mutual funds, NPS, and ULIPs are Passive Foreign Investment Companies (PFICs) under US tax rules. Default treatment taxes any gain at the highest US ordinary rate plus interest charge for the holding period. Practical move: US-resident NRIs should avoid Indian MFs. Direct Indian stocks via Indian demat (reported on Schedule B/D) work fine. FATCA + PFIC guide →

Updated May 2026

Residency (Section 6, the 182/120-day tests), RNOR (the 2-3 year foreign-income tax-exempt window on return), DTAA (Form 10F + TRC to avoid double taxation), TDS on NRO (30% default, drops to 15% via US DTAA), and the FATCA/FBAR/PFIC overlay for US-residents. Get these wrong and you can owe lakhs you didn't have to. Get them right — especially the RNOR window — and you save real money.

⚡ Day Counter · track 182-day rule 📅 Start with residency

Methodology →

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Plain English first

Section numbers (Sec 6, Sec 195, Form 10F etc.) are cited but explained in plain English. We index "what does it cost me" not "what does the section say".

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Country-specific worked examples

DTAA, FATCA, TDS rates differ by country. Every page calls out US, UK, UAE specifically — the three biggest NRI corridors.

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Annual review

Indian Finance Bill changes tax rules every February. Pages reviewed every April after the new fiscal year starts.

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This is education, not advice

Tax depends on personal facts. Use a specialist NRI CPA before filing. We list vetted firms in the rail.

What we ignore: generic "tax is complicated, talk to a professional" hedging, fear-mongering about audits without context, US-CPA copy-paste content that doesn't understand Indian rules.

0 paid placements ever. Annual review post-Budget (every April). Full affiliate disclosure on /about.

Common questions about NRI tax

Q1 Am I an NRI for tax purposes if I spend 4 months a year in India? 4 months = ~120 days. If your taxable Indian income is over ₹15 lakh, 120+ days flips you to tax-resident under the cumulative test. Below ₹15L, the threshold is 60 days + 365 days over the previous 4 FYs. +

The cumulative test (Section 6) catches people who think they're safely under 182 days. If you spent 60+ days in the current FY and 365+ days across the previous 4 FYs combined, you're a resident.

The 60-day threshold stretches to 120 days if your taxable Indian income is under ₹15 lakh. So 4 months a year = 120 days — at the line. Use the Day Counter to track.

Q2 What is the RNOR window and why does it matter so much? RNOR = Resident but Not Ordinarily Resident. A 2-3 year transitional category after returning to India where most foreign income (US salary, capital gains, IRA distributions) stays tax-exempt in India. +

RNOR is the most powerful tax-planning lever for any NRI moving back. During the 2-3 year window, foreign income (US salary, capital gains, dividend income, IRA distributions) is largely tax-exempt in India.

The planning move: concentrate large foreign-asset realizations (US stock sales, IRA conversions, US property sale) into your RNOR window. Once you become full ROR, India taxes worldwide income at slabs up to 30%. Read the RNOR guide →

Q3 Can I avoid 30% TDS on my NRO interest? Yes — apply the DTAA reduced rate. US tax residents can drop TDS to 15% by filing Form 10F + a Tax Residency Certificate (US: IRS Form 6166) annually with your bank. +

By default, banks deduct 30% TDS + cess on NRO interest. With DTAA, US residents drop to 15%. UK and most diaspora countries have similar reduced rates.

Required filings, annually with your bank: Form 10F + Tax Residency Certificate from your foreign tax authority + PAN copy. ~20 minutes once a year. TDS guide →

Q4 Should US-resident NRIs avoid Indian mutual funds entirely? Yes for most cases. Indian mutual funds are PFICs under US tax rules — punitive Form 8621 reporting + tax at the highest US rate + interest charge. Direct Indian stocks via demat are fine. +

Indian equity mutual funds, NPS, and ULIPs are Passive Foreign Investment Companies (PFICs) under US tax rules. Default treatment taxes any gain at the highest US ordinary rate plus interest charge for the holding period.

Practical move: US-resident NRIs should avoid Indian MFs. Direct Indian stocks via Indian demat (reported on Schedule B/D) work fine. FATCA + PFIC guide →