Non resident Indians with family, property, or investments back in Chennai often have a genuine Indian tax filing obligation that gets overlooked simply because they no longer live here, and the rules around what counts as taxable income for an NRI are different enough from resident taxation to cause real confusion.
What actually makes you an NRI for tax purposes
Residential status for tax purposes depends on the number of days spent in India during the financial year and the preceding years, not on your passport, visa status, or where you consider home. It is entirely possible to hold an Indian passport and still qualify as a non resident for a given year, or to hold a foreign passport and still be treated as resident, depending purely on the day count.
What income is taxable in India for an NRI
Income that arises or is received in India remains taxable regardless of residential status. This typically includes rental income from property in India, capital gains from selling Indian property or investments, and interest earned on Indian bank accounts and fixed deposits. Foreign salary and foreign investment income generally stays outside the scope of Indian tax for a genuine NRI.
The NRO versus NRE account distinction
Interest earned on an NRE account is exempt from Indian tax, while interest on an NRO account is fully taxable and typically has TDS deducted at a higher rate at source. Many NRIs assume both accounts are treated the same way for tax purposes, which leads to either overpaying tax that could have been avoided or underreporting taxable interest.
Filing obligations and refunds
Even where TDS has already been deducted on Indian income, filing a return is often necessary to claim a refund if the TDS rate applied is higher than the NRI's actual tax liability, or to report capital gains correctly. A Double Taxation Avoidance Agreement between India and the NRI's country of residence may also allow credit for Indian tax paid against tax owed abroad, but this needs to be claimed properly on both sides.
A quick checklist for NRIs with Indian ties
- Confirm your residential status for the year based on actual days spent in India
- List all India sourced income: rent, capital gains, interest, dividends
- Check whether NRO account TDS was deducted at a rate higher than your actual liability
- Review the DTAA with your country of residence for any credit or exemption available
If you are an NRI with property, investments, or family financial matters in Chennai and are unsure about your Indian filing obligation, C S Rushil & Co. handles NRI tax filing and can review your specific situation remotely. Reach out for a free consultation.