NRI Earning Salary in India: How Will Income Tax and TDS Apply?

The NRIs working for Indian companies and receiving salaries for their work in India must know about their tax liabilities. The tax on NRI salary income in India is determined according to their residential status and other factors like their place of work. It is important to know about the tax on salary of NRI in India so that you can avoid tax errors and plan finances in a better way.

Is Salary Earned in India Taxable for NRI?

Yes, the income in terms of salary earned by an NRI for rendering service in India will indeed be taxable in India. This may hold true even in case if the salary is transferred to a bank account in another country. Salary received for rendering services outside India will be treated differently.

It will depend upon the nature of employment and tax regulations in this regard. The NRI should consider the nature of their employment and source of income in this regard.

Income Tax Rules for NRI Earning Salary in India

The income tax rules for NRI earning salary in India vary according to the nature of income and tax rules prevailing at that time. Some main points of NRI salary tax in India are listed below:

• Salary Components: Basic Salary, bonus, taxable allowances and other employment benefits may constitute the income.
• Tax Rate: Under the present taxation rules, the amount of tax is determined based on total income and deductions.
• Tax Documents: Salary slips, employment status, and TDS certificates give the required details.

Following the NRI salary taxation rules in India would make NRIs aware of their responsibilities and taxes.

Residential Status and Salary Taxation in India

The residential status is significant in determining the taxing of income. The residential status is determined by applying the conditions provided for by law, and these include the number of days an individual spends in India within the tax year and other considerations. Citizenship of India alone does not mean that an individual will be classified as a tax resident.

On residential status and salary taxation in India, NRIs are usually taxed on income earned, accrued, or derived from India, under the provisions of the law. Residents have a broader tax liability, and therefore residential status is crucial in every financial year.

How Is Salary Earned in India Taxed for NRI?

The taxable income for NRI in India is computed through the following process:

• Calculate total salary: This will include basic salary, bonuses, and taxable allowances along with the employment benefits applicable to him/her
• Check Exemptions: Determine the elements of salary that are eligible for exemption under the respective taxation laws
• Calculate Taxation: Calculate the respective income tax, surcharge and cess applicable to him/her
• Check other sources of income: Other sources of taxable Indian income can be considered

Calculating the tax payable on the salary earned by an NRI individual in India becomes easier by understanding the process of calculation.

TDS on Salary for NRI Under Section 192

Deduction of taxes on salaries is done by the employers as per the expected tax burden of the year for the employee. The section of the Income Tax Act, 1961 that dealt with deduction of TDS on salary till 31st March 2026 was Section 192. Regarding the payments made on or after 1 April 2026, the appropriate section is 392 of the Income Tax Act, 2025.

The TDS on salary for NRI depends upon estimated taxable salary and the applicable tax rate. The NRIs can verify the tax deducted by looking at their salary slip/ Form 16.

TDS Rate on Salary Paid to NRI in India

There is no single fixed TDS rate on salary paid to NRI in India. The TDS is always calculated according to the slab rates of income tax and salary of the employee. It could also be dependent on the tax regime chosen and other additional levies like surcharge and cess.

Section 192 TDS on salary for NRI means TDS on salary under the old Act. The employer should comply with the law prevailing in the respective payment period.

DTAA Benefits for NRI Salary Income

A Double Taxation Avoidance Agreement (DTAA) prevents double taxation of the same income without any relief. It depends upon the specific treaty and the personal circumstances of the person as to whether such benefits are available.

Consider the following for NRIs:

• Check the treaty: Check the treaty signed between India and the country of which you are a tax resident.
• Eligibility to avail: You have to be eligible according to the employment income rule and your personal circumstances to be able to avail of the benefits.
• Keeping necessary documentation: In some cases, a tax residency certificate and other documentation might be required.

Understanding DTAA Benefits for NRI salary income will help the NRIs avail the relief on their salary income.

NRI Income Tax Return Filing for Indian Salary

NRI income tax return filing for Indian salary may be compulsory when the relevant criteria for filing are fulfilled. The fact that TDS has already been deducted does not negate the need to file an income tax return. In addition, filing an income tax return might enable NRIs to get a refund of tax paid over and above the amount of tax due.

It would be worthwhile to go through Form 16, Form 26AS, AIS, and sources of other taxable income before filing the return. NRIs should also verify the applicable deadline and use the correct return form.

Conclusion

NRIs must be well aware of their residential status and how their salaries will be taxed in India. For any queries regarding NRI taxation, TDS on salary, and filing of income tax returns, feel free to contact us from My Startup Solution at +91-7081220800.