Taxes in India
India's tax system is undergoing significant modernization with the Income Tax Bill 2025, replacing the six-decade-old Income Tax Act of 1961.
Tax Residency
You're a tax resident if you spend 182+ days in India during a financial year (April-March), OR 60+ days in the current year AND 365+ days in the preceding 4 years.
Special rules (from April 2026):
- Indian citizens and PIOs with Indian income exceeding ₹15 lakh: 120-day threshold (instead of 60 days)
- Deemed residency: Indian citizens earning ₹15 lakh+ from Indian sources but residing in tax-free jurisdictions may be treated as full residents
Personal Income Tax Rates (New Regime - Default FY 2025-26)
| Annual Income (INR) | Rate |
|---|---|
| Up to 4,00,000 | 0% |
| 4,00,001 - 8,00,000 | 5% |
| 8,00,001 - 12,00,000 | 10% |
| 12,00,001 - 16,00,000 | 15% |
| 16,00,001 - 20,00,000 | 20% |
| 20,00,001 - 24,00,000 | 25% |
| Above 24,00,000 | 30% |
A tax rebate of up to ₹60,000 is available for residents earning up to ₹12,00,000, effectively making income up to ₹12 lakh tax-free.
NRI/Expat Taxation
Non-residents are taxed only on:
- Income earned or received in India
- Salary earned in India
- Rent from Indian property
- Capital gains from Indian assets
- Interest on NRO accounts (TDS deducted by banks)
Foreign income of non-residents is NOT taxable in India.
Double Taxation Relief (DTAA)
India has DTAA agreements with 90+ countries including:
- USA, UK, Canada, Australia, Germany, France, Japan, Singapore, UAE, and most major economies
Relief is provided via:
- Exemption method: Income taxed in only one country
- Tax credit method: Tax relief claimed in country of residence
Key Filing Dates
- Financial year: April 1 - March 31
- Filing deadline: July 31 (individuals)
- PAN: Required for filing; can apply online
- TDS: Tax Deducted at Source applies to salary, rent, interest
Practical Considerations
Digital nomads: If on a business e-visa and spending less than 182 days, you're likely non-resident. Only Indian-sourced income would be taxable.
Employment visa holders: Salary earned in India is fully taxable. Employer handles TDS.
GST: Goods and Services Tax (18% standard rate) applies to most services and goods.
Pro Tips
- •Non-residents are only taxed on Indian-sourced income—foreign income is exempt
- •The new tax regime is now the default—opt into old regime only if deductions benefit you
- •Get a PAN card early—required for most financial and tax activities
- •Check DTAA provisions with your home country to avoid double taxation
- •Digital nomads spending under 182 days are typically non-resident for tax purposes
Have questions about taxes in India?