Home›Glossary›NRI

NRI

Tax

Non-Resident Indian

An Indian citizen (or person of Indian origin) who resides outside India for tax purposes, based on the number of days spent in India during a financial year, with distinct banking and tax rules.

Definition

NRI status determines how India's tax and banking rules apply to an Indian citizen or person of Indian origin living outside the country. It's based primarily on the number of days spent in India during a financial year, generally under 182 days qualifies someone as non-resident, though additional rules apply for higher earners and those with extended prior-year presence.

NRI status affects which bank accounts you can legally hold (NRE or NRO instead of a regular resident account), how your income is taxed, and the rules around repatriating money out of India.

Formula

There's no formula, NRI status is determined by a day-count test:

Non-Resident if Days in India During Financial Year < 182 (subject to additional conditions for certain income thresholds)

Worked Example

Someone spends 150 days in India and 215 days abroad during a financial year, working a job based outside India.

  • Days in India: 150, below the 182-day threshold
  • Status: Non-Resident Indian for that financial year

Their foreign salary generally isn't taxed in India, while any India-sourced income, rent from an Indian property, for instance, remains taxable regardless of NRI status.

Key Things to Know

  • Reassessed every financial year based on actual days present. NRI status isn't a permanent label, it's recalculated annually based on travel patterns.
  • Only India-sourced income is generally taxable for NRIs. Foreign salary, foreign investment income, and similar earnings abroad typically fall outside Indian tax jurisdiction.
  • Bank accounts must be converted upon becoming NRI. Continuing to operate a resident savings account after NRI status begins isn't compliant with FEMA regulations.
  • DTAA agreements prevent double taxation on cross-border income. If income is taxed in both the country of residence and India, tax treaties typically provide relief through credit or exemption mechanisms.
  • RNOR status offers a transitional period upon returning to India. Returning NRIs often get a couple of years of continued favorable tax treatment on foreign income before fully reverting to resident tax rules.

Related Terms

NRE AccountNon-Resident External AccountNRO AccountNon-Resident Ordinary AccountRepatriationRepatriation of Funds

Frequently Asked Questions

How many days do I need to be outside India to qualify as NRI?
Generally, spending fewer than 182 days in India during a financial year makes you a non-resident for that year, though there are additional conditions involving prior years' presence that can affect the determination for certain income levels.
Does NRI status change automatically when I move abroad?
It's based on actual days spent in India during the financial year, not visa status or intent, so it's reassessed each year based on your travel pattern, not a one-time designation that sticks permanently.
Can an NRI still hold a regular Indian savings account?
No, once you become an NRI, regular resident savings accounts need to be converted to [NRE](/glossary/nre-account/) or [NRO](/glossary/nro-account/) accounts, holding a resident account after NRI status begins isn't compliant.
Is NRI income earned abroad taxed in India?
Generally no, only income earned or accrued in India is taxable for NRIs, foreign income typically isn't subject to Indian tax, though [DTAA](/glossary/dtaa/) agreements govern how income taxed in both countries is handled.
What happens to my tax status if I return to India permanently?
Your residential status shifts back to resident based on the same day-count rules, and there's often a transitional 'Resident but Not Ordinarily Resident' (RNOR) status for a couple of years that offers some continued NRI-like tax treatment on foreign income.