If you're a Non-Resident Indian tracking how Indian tax law affects your investments, property, and income back home, the Income-tax Act, 2025 brings the same pattern we've seen throughout this series: renumbering and reorganisation, with the core rules — residential status tests, TDS on NRI income, and DTAA benefits — reported to carry forward largely unchanged. Here's what to actually watch for.
Residential Status: The Test Itself Is Unchanged
Your tax liability in India as an NRI starts with your residential status — determined by the number of days you spend in India during the financial year (now 'Tax Year') and the preceding years. The core tests — the 182-day rule, the 60-day plus 365-day-in-4-years rule, and the special provisions for Indian citizens/PIOs visiting India with total income exceeding ₹15 lakh (deemed residency and the 120-day threshold) — are reported to be carried forward without substantive change under the Income-tax Act, 2025. The only terminology shift is that the 'previous year' for which residential status is determined is now called the 'Tax Year', running 1 April to 31 March exactly as before.
What's Renumbered for NRIs
| Area | What Changes | What Doesn't |
|---|
| TDS on NRI income (rent, interest, capital gains) | New section/code references under Section 393-394 framework | TDS rates, including the higher rates applicable to non-residents under Section 195-equivalent provisions |
| Capital gains on Indian assets | Reorganised into Clauses 67, 196-198 | Holding periods, tax rates, DTAA relief eligibility |
| NRE/NRO account interest taxation | Citation renumbered | NRE interest exemption (if maintaining NRI status); NRO interest taxable as before |
| DTAA relief claims | Procedural references renumbered | Treaty benefits, Form 10F/TRC requirements |
The Faceless Assessment Changes Matter More for NRIs
Two changes covered elsewhere in this series have an outsized impact on NRIs specifically:
- The codified right to a personal hearing via video conferencing (Section 532) is particularly valuable for NRIs, who previously found it logistically difficult to attend in-person hearings for scrutiny assessments. A statutory video-conferencing hearing right removes a major practical barrier.
- The ₹10,000-₹1,00,000 penalty for non-response to faceless notices is a bigger risk for NRIs, who may not check Indian email accounts or registered mobile numbers as frequently. Action: NRIs should specifically verify their registered contact details on the e-filing portal reflect an email and phone they monitor regularly from abroad, and consider authorizing a India-based CA to monitor the portal on their behalf.
Selling Property in India: TDS on Sale by NRIs
Buyers purchasing property from NRI sellers are required to deduct TDS at a significantly higher rate than for resident sellers (since the standard 1% TDS under the old Section 194-IA applies only to resident sellers; sales by NRIs attract TDS at the rate applicable under Section 195-equivalent provisions, generally based on the applicable capital gains rate plus surcharge and cess, unless a lower-deduction certificate is obtained). This structure — including the option for NRI sellers to apply for a certificate for TDS at a lower or nil rate based on actual capital gains — is reported to continue under the Income-tax Act, 2025's renumbered provisions, with the transaction now referenced under the new Section 393/394 codes rather than old section letters.
Repatriation and FEMA: Unaffected
The Income-tax Act, 2025 governs taxation only — it does not alter FEMA (Foreign Exchange Management Act) rules on repatriation of funds, the USD 1 million per financial year remittance limit for NRIs under the Liberalised Remittance Scheme for NRO account balances, or RBI reporting requirements. These remain governed by FEMA and RBI regulations, entirely separate from the Income-tax Act restructuring.
Action Checklist for NRIs — FY 2026-27
- ✓ Continue tracking your day-count in India exactly as before — the residential status tests are unchanged
- ✓ Update registered email/mobile on the e-filing portal to ensure you receive faceless notices — the new non-response penalty makes this critical
- ✓ If selling Indian property, continue the lower-TDS-certificate process if your actual capital gains tax liability is less than the default TDS rate
- ✓ Keep claiming DTAA relief with Form 10F/TRC as before — procedural references may be renumbered but the relief mechanism continues
- ✓ FEMA remittance limits and reporting are unaffected by this Act — no change to your repatriation planning
Frequently Asked Questions
Does the Income-tax Act 2025 change who qualifies as an NRI for tax purposes? ▼
No. The residential status tests — including the 182-day rule, the 60-day-plus-365-days-in-4-years rule, and the special deemed-residency provisions for Indian citizens/PIOs with India-sourced income exceeding ₹15 lakh visiting India for 120+ days — are reported to be carried forward unchanged under the Income-tax Act, 2025. Only the terminology changes: the relevant 'previous year' is now called the 'Tax Year'.
Will TDS rates on NRI property sales increase under the new Act? ▼
There is no indication that the Income-tax Act, 2025 changes the TDS rates applicable to NRI property sales. The existing framework — TDS based on the applicable capital gains rate (since NRI sellers don't qualify for the flat 1% rate available to resident sellers), with the option to apply for a lower-deduction certificate based on actual tax liability — is reported to continue, citing renumbered Section 393/394 provisions.
Should NRIs be more worried about the new faceless assessment penalty than resident taxpayers? ▼
NRIs face a practical extra risk: the ₹10,000-₹1,00,000 penalty for non-response to faceless notices applies regardless of residential status, but NRIs are statistically less likely to be actively monitoring Indian email/SMS on their registered contact details. NRIs should specifically verify their e-filing portal contact details are ones they check regularly, and consider authorizing their India-based CA to monitor for notices on their behalf.