Every year, thousands of Indians move abroad for work, education, or family reasons, and with that move comes a set of financial questions that rarely have simple answers. How much of my Indian income is actually taxable? Do I still need to file a return once I’ve settled overseas? What happens if my income is taxed twice, once in India and once in my new country of residence? It is precisely these questions that Ashutosh Financial Services set out to address through its webinar, Indian Income Tax Planning for NRIs, held on 21st June 2025. The session was designed for Non-Resident Indians navigating the Indian tax system from abroad, and was led by Daxesh Kothari and CA CFP Rajit Kothari, who walked participants through the practical realities of tax compliance, planning, and investment for NRIs.
The session opened with a look at how India’s tax administration has evolved. Filings, assessments, and appeals are now conducted entirely online, and scrutiny is handled through a faceless system, meaning taxpayers rarely, if ever, interact directly with tax officials. This shift, combined with the way financial transactions are now linked to a person’s Permanent Account Number, has made the system far more transparent and difficult to work around informally. The speakers also touched on the new Income Tax Act, which came into force from 1st April 2026 and largely retains the substance of the earlier 1961 law while simplifying its language and renumbering its sections.
A recurring theme was clarity around who actually needs to file a tax return in India. Under the new regime, an NRI whose Indian income exceeds Rs. 4 lakh in a financial year is required to file, as is anyone seeking a refund of tax already withheld or wishing to carry forward a loss for future years. Certain transactions, regardless of income level, also trigger a filing requirement, such as large deposits in bank accounts, high business turnover, or significant tax already deducted at source. Understanding these thresholds matters because the tax department increasingly cross-checks reported income against financial data it already holds, and mismatches are a common reason returns get flagged for review.
A substantial part of the session was devoted to the Double Taxation Avoidance Agreement, or DTAA, which exists to prevent NRIs from being taxed on the same income by both India and their country of residence. The mechanics were explained through two governing principles: the residence rule, under which a country taxes its residents on their worldwide income, and the source rule, under which India taxes income generated within its borders regardless of where the recipient lives. Because both rules can apply simultaneously, NRIs are entitled to claim relief or tax credit in their country of residence for taxes already paid in India. India currently holds DTAA arrangements with 97 countries, and the applicable concessional rates on dividend and interest income vary considerably from one country to another, which is why understanding the specific treaty that applies to one’s country of residence is worth the effort.
Beyond compliance, the session covered several approaches to structuring finances more efficiently. These included the use of a Hindu Undivided Family structure, which is treated as a separate taxable entity under Indian law and can help make fuller use of exemption thresholds, though this route was noted as unsuitable for NRIs resident in countries like the USA, UK, or Australia due to local tax rules there. Dividing income and investments among family members, and making use of the annual long-term capital gains exemption available to each individual, were also discussed as ways to reduce overall tax incidence.
Investment-specific guidance ran through mutual funds, portfolio management services, guaranteed income plans, real estate, and GIFT City funds, each with distinct tax treatment. The session illustrated, for instance, how a systematic withdrawal plan from mutual funds can be structured to keep the effective tax rate on gains close to zero in early years by making use of available exemptions. GIFT City, India’s first International Financial Services Centre, was presented as a route that allows NRIs to invest in Indian markets through Alternative Investment Funds without the need for a demat account, PAN, or Indian tax filings, since India’s exchange control regulations do not apply within that zone.
Sessions of this kind reflect an approach many NRIs have found useful: that navigating a country’s tax system is far less daunting once its underlying logic is explained plainly. As tax rules, treaties, and investment routes continue to evolve, staying informed remains one of the more practical steps an NRI can take toward managing their Indian finances with confidence.
