Two Laws, One Filing Season

Before anything else, get this straight: India is currently running two income tax laws.

Income earned up to 31 March 2026 is governed by the Income Tax Act, 1961, filed as AY 2026-27, with a return due date of 31 July 2026. Income earned from 1 April 2026 onwards falls under the Income Tax Act, 2025, referred to as Tax Year 2026-27 — the new law has dropped the "Assessment Year" concept entirely.

For NRIs, this dual-track creates real friction. Property transactions, TDS certificates, DTAA claims, and payments from Indian tenants or businesses rarely wrap up neatly on 31 March. The governing principle is clean: the date of payment or credit determines which law governs TDS. Payment before 31 March 2026 — old Act. Payment from 1 April 2026 onwards — new Act, new section numbers.

Are You Actually an NRI for FY 2025-26?

Residential status is determined under the 1961 Act for this filing year. The core rules are unchanged — you are a non-resident if you spent fewer than 182 days in India during FY 2025-26, subject to certain conditions.

Two provisions that catch people off guard:

If you are an Indian citizen or PIO with Indian income above ₹15 lakh, the threshold tightens — even 120 days in India (combined with 365 days over the preceding four years) can make you a Resident but Not Ordinarily Resident (RNOR).

More significantly: if you are an Indian citizen earning ₹15 lakh or more from Indian sources and are not taxed on that income anywhere in the world, you are treated as a deemed resident of India — regardless of how many days you spent here. This directly targets NRIs in zero-tax jurisdictions like the UAE. If this applies to you, take specific advice before filing.

What Is Taxable in India?

As an NRI, India taxes only income that arises or accrues here. Salary from your foreign employer, savings abroad, foreign investments — none of that is in play. What is in scope: rental income from Indian property, capital gains on Indian shares or property, interest on NRO accounts, and dividends from Indian companies. NRE and FCNR account interest remains exempt.

TDS on Your Indian Income — Section Numbers Have Changed

Under the 1961 Act, TDS on payments to non-residents sat primarily under Section 195. Under the Income Tax Act, 2025 — applicable to all payments from 1 April 2026 — all TDS provisions from Sections 192 to 194T are now consolidated under Section 392 (salary) and Section 393 (everything else), including payments to non-residents.

If your tenant, buyer, or Indian business payer makes a payment to you from April 2026 onwards and quotes Section 195 instead of Section 393, that creates a validation error in their TDS return — and a mismatch in your Form 26AS. Ask payers to verify they are using updated section references for new transactions.

One welcome change on property: when a resident buys immovable property from an NRI seller, TDS must now be deducted and deposited using the buyer's PAN rather than a TAN. Buyers no longer need to register for a TAN solely for this transaction. Fewer hoops for everyone involved.

DTAA Claims — Get the Paperwork Right

If your country of residence has a tax treaty with India, you may be entitled to a lower TDS rate or a credit for Indian taxes paid. Two documents are required: your Tax Residency Certificate (TRC) from your home country's tax authority, and Form 10F for AY 2026-27 transactions (or Form 41 under the new rules for Tax Year 2026-27 onwards).

Submit both to payers before payment — not after. TDS deducted at full rates cannot be reversed by the deductor. Your only recourse then is a refund claim in the ITR, which delays cash flow by months.

File by 31 July 2026

Use ITR-2 if your Indian income is from salary, capital gains, property, or interest. Use ITR-3 if you have business or professional income in India. Even if your total Indian income falls below the basic exemption limit, filing is worth it if TDS has been deducted — it is the only way to claim a refund.

Count your India days, reconcile your Form 26AS and AIS, verify TDS section references on recent payments, and get your TRC and relevant forms in order. The 31 July 2026 deadline is closer than it feels.

CA Praneeth Thunuguntla | Thunuguntla & Associates | Income Tax & GST Advisory