NRI India Income Tax Calculator

How Indian Tax Works for a U.S.-Based NRI

A person who is non-resident for Indian income-tax purposes can still have Indian-source income that is taxable in India. Examples include Indian bank interest, dividends, capital gains from Indian assets and income from Indian property.

Indian withholding (TDS) is not always the same thing as final tax liability. TDS is an amount withheld by the payer; the final tax is determined after applying the applicable computation provisions, deductions, exemptions, capital-gain rules, surcharge, cess and other relevant provisions.

NRO Interest

Interest from an NRO account is generally taxable in India for a non-resident. A commonly displayed 30% rate is not the same as saying every taxpayer's final tax or every withholding amount will be exactly 31.2%. Surcharge, cess, treaty relief, documentation and the nature of the payment can affect the actual amount.

Under Article 11 of the U.S.-India treaty, qualifying U.S. residents can generally obtain a 15% source-country ceiling for ordinary interest, subject to the treaty's conditions. Treaty documentation must be properly satisfied.

NRE and FCNR Interest

Qualifying NRE interest is exempt from Indian income tax under Section 10(4)(ii). Qualifying FCNR interest has a separate exemption under Section 10(15)(iv)(fa). These are different statutory provisions and should not be combined into a single “Section 10(4)” rule.

Indian exemption also does not automatically create U.S. tax exemption. U.S. citizens and U.S. tax residents generally report worldwide income, including foreign bank interest, under U.S. tax law.

Indian Dividends

Dividend income received by a non-resident is generally taxable at the special domestic rate applicable to the recipient, subject to a more beneficial treaty provision. The current Income Tax Department material states a general 20% domestic rate for non-resident dividend income, while the U.S.-India treaty can provide a lower rate for qualifying U.S. residents.

This page's calculator uses a simplified rate and should not be treated as a complete dividend-tax computation including surcharge, cess and treaty eligibility.

Equity and Equity-Mutual-Fund Capital Gains

For qualifying Section 112A assets transferred on or after 23 July 2024, long-term capital gains above the aggregate ₹1.25 lakh annual threshold are taxed at 12.5%, subject to the statutory conditions. Qualifying Section 111A short-term capital gains are taxed at 20% for transfers on or after 23 July 2024.

These rates apply to the capital gain, not automatically to the gross sale proceeds. The actual computation can involve acquisition cost, transfer expenses, STT conditions, grandfathering rules for older holdings and other provisions.

Sale of Indian Property by a Non-Resident

For Indian immovable property held for more than 24 months, the gain is generally long-term. For transfers on or after 23 July 2024, the general LTCG rate is 12.5% without indexation, subject to the applicable rules.

Section 195 withholding is a separate issue. A buyer paying a non-resident seller should determine withholding on the taxable amount under the applicable provisions. The seller can consider the statutory lower/nil deduction certificate mechanism where appropriate.

Rental Income From Indian Property

Indian rental income earned by a non-resident is generally taxable in India. For income from house property, the tax computation can generally allow a 30% standard deduction from net annual value, subject to the statutory rules.

The payer's Section 195 withholding should not be confused with the final tax calculation. The exact withholding rate can depend on the applicable law, treaty position, surcharge and cess, and whether a lower/nil deduction certificate applies.

U.S.-India DTAA

A U.S. tax resident may be entitled to treaty benefits for qualifying Indian-source income. The treaty generally operates as a limitation on India's source-country taxation for specified categories of income; it does not automatically eliminate U.S. taxation.

The taxpayer must satisfy the treaty's residence, beneficial-ownership and other requirements and provide the documentation required by the Indian payer or tax authority.

Foreign Tax Credit in the United States

An eligible U.S. taxpayer may generally claim a foreign tax credit for qualifying Indian income taxes, subject to the Internal Revenue Code and Form 1116 rules. The credit is limited by the U.S. foreign-tax-credit computation and cannot simply be assumed to eliminate all U.S. tax on the same income.

Keep Indian TDS certificates, tax payment records and the supporting income documents needed to substantiate the foreign tax claimed.

Important Limitation of This Calculator