NRI Tax Exemptions · Panaji, Goa
Not all Indian income is taxable in NRI hands. Our Chartered Accountants in Goa identify every income exemption available to NRIs — from NRE account interest and FCNR deposits to Section 10 exemptions and DTAA treaty reductions — ensuring you never pay more Indian tax than the law requires.
Overview
The Income Tax Act provides specific exemptions for NRIs that significantly reduce their Indian tax liability. The most impactful are the full exemption on NRE account interest and FCNR deposit interest — both completely tax-free regardless of the amount. Beyond these, NRIs benefit from Section 10 exemptions, capital gains exemptions under Sections 54 and 54EC, and DTAA-based reduced rates or exemptions on certain income types. Many NRIs are unaware of all the exemptions available to them and end up paying more tax than required.
This topic is part of our broader special provisions for NRIs under Chapter XII-A and filing return of income in India guidance for non-residents and overseas Indians.
What's covered
End-to-end guidance and compliance for non-resident Indians.
Book a free consultation →Confirming full income tax exemption on interest earned on NRE savings accounts, NRE fixed deposits and FCNR (B) deposits under Section 10(4).
Identifying all other applicable Section 10 exemptions — gratuity, provident fund, life insurance maturity proceeds, and scholarships.
Advising on Section 54 (reinvestment in house property), Section 54EC (capital gains bonds) and Section 54F exemptions available to NRIs on property sales.
Identifying income items that are taxable only in the country of residence under the applicable DTAA — resulting in zero Indian tax.
Advising on the current tax treatment of dividends from Indian companies and mutual funds in NRI hands.
Ensuring all exemptions are correctly claimed and reported in the income tax return, avoiding excess TDS without a refund claim.
Our process
We identify every source of Indian income and its potential exemption status.
We apply Section 10, DTAA and capital gains exemptions to your income.
We compute the actual tax payable after all available exemptions.
We file the return claiming all exemptions correctly and claim TDS refund.
Frequently asked questions
Yes. Interest earned on Non-Resident External (NRE) savings accounts and NRE fixed deposits is fully exempt from Indian income tax under Section 10(4)(ii) of the Income Tax Act, provided the account holder maintains NRI status. There is no limit on the amount of NRE interest that can be earned tax-free. This exemption ceases to apply once the individual becomes a Resident in India.
No. Interest on FCNR (Foreign Currency Non-Resident Bank) deposits is completely exempt from Indian income tax under Section 10(15)(iv)(fa) as long as the account holder is an NRI or has RNOR status. This makes FCNR deposits a highly tax-efficient investment vehicle for NRIs placing foreign currency in Indian banks.
Yes. Interest earned on NRO (Non-Resident Ordinary) accounts is fully taxable in India at the flat rate of 30% (plus surcharge and cess), with TDS deducted at the same rate. Unlike NRE interest, NRO interest does not have any exemption. However, DTAA benefits may reduce the effective rate, and excess TDS can be reclaimed by filing a return.
NRIs can claim: Section 54 exemption (reinvest long-term capital gains from one residential house into another within prescribed timelines); Section 54EC exemption (invest capital gains in NHAI or REC bonds up to ₹50 lakh); Section 54F exemption (reinvest net consideration from sale of non-house long-term assets into a residential house). These exemptions apply equally to NRIs and Residents.
After the abolition of DDT (Dividend Distribution Tax) from FY 2020-21, dividends from Indian companies and mutual funds are taxable in NRI hands at the rates applicable under the Income Tax Act — typically 20% under Chapter XII-A for NRIs. However, many DTAAs (with countries like Mauritius, Singapore and Netherlands) prescribe lower withholding rates of 5-15% on dividends.
Under various DTAAs, certain types of income may be taxable only in the country of residence — meaning zero tax in India. Examples include: business profits of a foreign enterprise with no permanent establishment in India; certain employment income; shipping profits; and in some treaties, specific categories of interest and royalties. The specific exemptions depend on the treaty between India and the country where the NRI is resident.
NRIs can claim certain deductions under Chapter VI-A, including Section 80C (subject to the type of investment — life insurance on their life or dependants, NSC, ELSS), Section 80D (health insurance premium), and Section 24(b) (interest on home loan for Indian property). However, PPF contributions are not permitted for NRIs after acquiring NRI status. We advise on which deductions are available in your specific case.
Contact N D Savla & Associates in Panaji, Goa. We map all your Indian income sources, identify every applicable exemption — Section 10, DTAA, capital gains relief and Chapter XII-A benefits — and ensure your return is filed claiming every rupee of legal exemption, with a refund claim for any excess TDS deducted.
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Book a free consultation with a qualified Chartered Accountant in Goa. We'll identify all your available exemptions and file your return correctly — no obligation.