Tax Residency Rules
NRI Tax Residency & DTAA Tax Shield Master Guide
Determining your statutory tax residency status ensures you don't accidentally become a resident Indian for tax purposes or pay 30% TDS unnecessarily on NRO deposits.
The Statutory Physical Presence Thresholds
Standard 182-Day Rule
If your physical stay in India is less than 182 days in a financial year (April 1 to March 31), you qualify as an NRI for tax purposes.
Special 120-Day Rule (High Income)
If your Indian-sourced income exceeds ₹15 Lakh and you stay in India for 120 days or more (plus 365+ days in preceding 4 years), you are treated as RNOR.
How to Claim DTAA Tax Relief on NRO FDs
By default, Indian banks deduct 30% TDS plus surcharge on NRO FD interest. You can reduce this to 10%-15% under DTAA by submitting:
- Tax Residency Certificate (TRC): Obtained from tax authorities in your country of residence (e.g., IRS in USA, HMRC in UK, MoF in UAE).
- Form 10F: Filed electronically on the Income Tax e-Filing Portal.
- Self-Declaration: Declaration of non-permanent establishment in India.