Question 1

What is the difference between the 182-day rule and the 120-day rule for NRIs?

Accepted Answer

Under the Income Tax Act 2025 (in force from 1 April 2026), you are resident if you spend 182 days or more in India in a tax year. For Indian citizens and PIOs visiting India, a second test (60 days in the year plus 365 days in the previous four years) only applies with 120 days instead of 60 when your Indian income (excluding foreign income) exceeds ₹15 lakh. If your Indian income is ₹15 lakh or less, only the 182-day test applies to you. Anyone made resident by the 120-day rule is automatically RNOR, not ROR.

Question 2

What is Section 6(7) deemed residency and does it affect NRIs in the UAE?

Accepted Answer

An Indian citizen whose Indian income exceeds ₹15 lakh and who is not liable to tax in any other country because of domicile or residence is deemed resident in India, even with zero days in India. This mainly affects Indians in the UAE, Saudi Arabia, Qatar, Bahrain, Oman and Kuwait. Deemed residents are treated as RNOR, so foreign salary stays outside Indian tax, but they lose NRI treatment on Indian income. A UAE Tax Residency Certificate helps show you are a tax resident there.

Question 3

Which days count as days in India?

Accepted Answer

Both the day you arrive and the day you leave are generally counted as days in India. Keep your passport stamps, e-gate records and boarding passes; the tax department relies on immigration data.

Question 4

How long does RNOR status last after I return to India?

Accepted Answer

RNOR lasts as long as you meet either condition: you were non-resident in 9 of the 10 preceding years, or you spent 729 days or fewer in India in the 7 preceding years. For most people who lived abroad for 10+ years this gives 2 years, and with careful timing (arriving between October and March) up to 3 tax years in which foreign income such as US 401(k) withdrawals, foreign interest and overseas capital gains is not taxed in India.

Question 5

Is NRE and FCNR interest really tax-free in India?

Accepted Answer

Yes. Interest on NRE savings, NRE fixed deposits and FCNR(B) deposits is exempt from Indian income tax while you are a non-resident (or RNOR for FCNR), and banks deduct no TDS. Your country of residence may still tax it: US, UK, Canadian and Australian residents must report it at home. UAE residents pay no tax on it anywhere.

Question 6

Why is TDS on NRO interest so high?

Accepted Answer

Banks deduct TDS on NRO interest at 30% plus surcharge and 4% health and education cess, which works out to about 31.2% for most depositors. You can reduce this to the treaty rate (typically 10%–15%) by giving the bank a Tax Residency Certificate, Form 10F and a no-PE declaration, or claim the excess back by filing ITR-2.

Question 7

Should I choose an NRE FD or an FCNR deposit?

Accepted Answer

Choose NRE if you are comfortable holding rupees and want the higher rate (around 6.5%–7.25%). Choose FCNR(B) if you want your money to stay in USD, GBP, EUR, CAD, SGD or AED with no currency risk; rates are lower, roughly in line with rates in that currency. Both are tax-free in India and fully repatriable.

Question 8

Can I use UPI in India with my US, UK, UAE, Canada or Singapore phone number?

Accepted Answer

Yes. NPCI allows NRE and NRO account holders with mobile numbers from eligible countries, including the USA, UK, UAE, Canada, Singapore, Australia, Saudi Arabia, Qatar, Oman, Bahrain, France, Malaysia and Hong Kong, to use UPI without an Indian SIM. Your bank (for example ICICI, HDFC, Axis, SBI, IDFC First or Federal Bank) must have your international number registered, and the UPI app must support international numbers.

Question 9

Why am I not receiving the UPI verification SMS abroad?

Accepted Answer

UPI apps verify your number by sending an outgoing SMS from your phone. Make sure international SMS is enabled with your carrier, the SIM with the registered number is in slot 1, roaming SMS is not blocked and you have credit. Wi-Fi calling alone cannot send the verification SMS on many carriers.

Question 10

How much money can I repatriate from my NRO account each year?

Accepted Answer

Under FEMA you can remit up to USD 1 million per financial year from your NRO account (including sale proceeds of assets) after paying applicable taxes. Balances in NRE and FCNR accounts are fully repatriable without any limit.

Question 11

When do I need Forms 145 and 146 (formerly Forms 15CA and 15CB)?

Accepted Answer

Form 145 is the online declaration formerly filed as Form 15CA before your bank remits money abroad. Form 146, formerly Form 15CB, is a Chartered Accountant's certificate for taxable remittances above ₹5 lakh in a financial year and is filed before Form 145 Part C. Many specified non-taxable remittances do not need them; your bank checks the applicable exemption.

Question 12

What is the new e-OCI card introduced in 2026?

Accepted Answer

The Ministry of Home Affairs launched the e-OCI card on 30 June 2026. New OCI approvals are digital only, and both new and existing cardholders can download the card free from ociservices.gov.in or the official Indian Visa Su-Swagatam app. Existing physical OCI booklets remain valid for travel and all OCI-related services.

Question 13

Do I need to update my OCI every time I get a new passport?

Accepted Answer

If you are under 20, you must upload details of every new passport. After turning 20, you update once with your first new passport after that age, and once more after turning 50. Updates within three months are free. A one-time amnesty waives the USD 25 late fee for fresh applications received from 1 November through 31 December 2026, inclusive.

Question 14

What is the Fast Track Immigration (FTIP) biometric consent for OCI holders?

Accepted Answer

The Fast Track Immigration – Trusted Traveller Programme lets pre-verified Indian nationals and OCI cardholders use e-gates at major airports such as Delhi, Mumbai, Bengaluru, Chennai, Hyderabad, Kolkata, Kochi and Ahmedabad. The 2026 OCI process lets you opt in to sharing your biometrics for FTIP while applying; enrolment still requires completing the FTI registration.

Question 15

Do I have to surrender my Indian passport after becoming a US, UK or Canadian citizen?

Accepted Answer

Yes. India does not allow dual citizenship. You must renounce Indian citizenship and obtain a Surrender Certificate, now filed electronically, and you should not travel on your Indian passport after naturalisation. Penalties apply for late surrender or for using the Indian passport after acquiring foreign citizenship. You need the Surrender Certificate to apply for OCI.

Question 16

What is the 2026 TAN waiver for buying property from an NRI?

Accepted Answer

Under CBDT Notification No. 121/2026, effective 1 October 2026, resident individual and HUF buyers no longer need a TAN for a covered property purchase from a non-resident. They pay and report TDS through the PAN-based Form 141, Schedule E, within 30 days from the end of the deduction month. Corporate buyers still need a TAN.

Question 17

How much tax does an NRI pay on selling property in India?

Accepted Answer

Property held for more than 24 months is long-term, taxed at 12.5% without indexation plus surcharge and 4% cess. Property held for 24 months or less is short-term, taxed at your slab rate. The buyer deducts TDS on the full sale price, not on your gain, which is why many NRIs apply for a Form 128 lower TDS certificate (formerly Form 13).

Question 18

What is a Form 128 lower TDS certificate and how long does it take?

Accepted Answer

Form 128, formerly Form 13, is an electronic application on TRACES asking the Assessing Officer to authorise lower or nil TDS based on your actual expected tax. With a purchase deed, sale agreement, PAN, passport and tax history, it typically takes 3–4 weeks. Apply before the transaction; it can unlock lakhs that would otherwise wait for a refund.

Question 19

Should US-based NRIs invest in Indian mutual funds?

Accepted Answer

Indian mutual funds are Passive Foreign Investment Companies (PFICs) for US tax purposes. Gains are taxed at the highest ordinary rate with interest charges under the default method, or yearly mark-to-market, and each fund needs Form 8621. Many US NRIs prefer direct Indian stocks through a PIS account, US-listed India ETFs (INDA, SMIN, EPI), or carefully structured GIFT City products. Speak to a US CPA before buying.

Question 20

What are GIFT City funds and why do NRIs use them?

Accepted Answer

GIFT City in Gujarat is India's International Financial Services Centre (IFSC). Funds there are denominated in USD, so you invest without converting to rupees, and specified income of non-residents from IFSC funds is exempt from Indian tax, with no TDS. You do not need an NRE or NRO account. US persons should still check PFIC treatment with a CPA.

Question 21

Are NRIs required to link PAN with Aadhaar?

Accepted Answer

No. CBDT exempts non-residents from mandatory PAN–Aadhaar linking. However, your PAN must show your residential status as non-resident in the Income Tax database, otherwise it may be marked inoperative for not being linked, leading to higher TDS. Update your status through the PAN correction form or your jurisdictional Assessing Officer.

Question 22

Do NRIs get the Section 87A rebate?

Accepted Answer

No. The rebate that makes income up to ₹12 lakh effectively tax-free under the new regime is available only to resident individuals. NRIs pay tax from the first rupee above the basic exemption limit.

Question 23

Can an NRI inherit agricultural land in India?

Accepted Answer

Yes. FEMA does not allow NRIs or OCIs to buy agricultural land, plantation property or farmhouses, but they can inherit them from a resident or another person who held them legally. They can sell such land only to a person resident in India, and can repatriate sale proceeds within the USD 1 million NRO limit.

Question 24

Can an NRI open or extend a PPF account?

Accepted Answer

No. NRIs cannot open a new PPF account. A PPF account opened while you were resident can continue until its 15-year maturity, with contributions from NRO funds, but cannot be extended in 5-year blocks once you are non-resident.

Question 25

What changed for NRIs investing in NPS in 2026?

Accepted Answer

NRIs and OCI cardholders can enrol from age 18 to 85 and fund NPS through inward remittance or NRE, FCNR or NRO accounts, with eligible net proceeds repatriable after tax. For the All Citizen Model, normal exit allows up to 80% as a lump sum with at least 20% used for an annuity. Standardised scheme names and risk labels must be implemented by 1 December 2026.

Question 26

What happens to my NRE and NRO accounts when I return to India?

Accepted Answer

You must tell your bank once you become a resident under FEMA, which is usually on arrival with intent to stay. NRO accounts become ordinary resident savings accounts. NRE balances can move to a Resident Foreign Currency (RFC) account to keep foreign currency, or to a resident rupee account. NRE FDs can run to maturity, but interest becomes taxable once you are ROR (RNOR status preserves tax-free treatment for FCNR and RFC interest).

Question 27

What can I bring duty-free under Transfer of Residence?

Accepted Answer

If you lived abroad for at least two years and stayed in India for no more than 6 months in total during the preceding two years, you can bring used personal and household effects under Transfer of Residence rules, with specified items (such as large TVs above the free allowance) attracting concessional duty. Goods can arrive up to two months before or one month after you.

NRI questions, answered