Latest Income Tax Slabs for NRIs in India (FY 2025-26)
An NRI in Singapore messaged us yesterday: "Ankur, I'm filing my India tax return for the first time. My CA is asking if I want old regime or new regime. I have no idea what that means. My rental income is ₹5.8 lakh. Will I pay 5% tax or 30%? I'm completely confused about which slab I fall into."
We see this confusion every single tax season at Belong.
NRIs know they need to pay tax on India income. But they have no clue which tax rate actually applies to them. Is it 5%? 20%? 30%? Does the regime choice matter? What about surcharge and cess?
Your Mumbai rental income sits in one slab. Your capital gains might be in another. Your NRO interest adds to the total.
And suddenly you're calculating percentages on percentages, wondering if you're doing it right.
Meanwhile, your CA tells you "new regime is simpler" but your friend swears "old regime with deductions saves more tax." You have no way to verify who's right.
Here's what we've learned helping thousands of NRIs file taxes at Belong: tax slabs aren't complicated once you understand the two regime system and which one benefits you based on your specific income and deductions.
This guide breaks down the exact tax slabs for NRIs in FY 2025-26.
We'll cover both regimes, how to choose between them, real examples with calculations, and how our team at Belong ensures you always pay minimum legal tax.
The two tax regime system: Why you have a choice
Before we dive into slabs, you need to understand why India now has two parallel tax systems.
What are tax regimes?
Old regime: Higher tax slabs, but you can claim deductions (Section 80C, 80D, home loan interest, etc.).
New regime: Lower tax slabs, but almost no deductions allowed (introduced in Budget 2020, made default from FY 2023-24).
You choose one regime each year when filing ITR.
Why two systems exist
Government wanted to simplify taxation. Many taxpayers don't have deductions to claim anyway. New regime gives them lower rates without needing to chase deduction proofs.
But taxpayers with home loans, life insurance, ELSS investments benefit more from old regime deductions.
So both systems coexist. You pick what saves you more tax.
👉 Tip: You can switch between regimes every year. Choose old regime one year if you have more deductions. Switch to new regime next year if deductions reduce. Our team calculates tax under both regimes and recommends the optimal choice.
Learn how to file ITR as an NRI.
New tax regime slabs for NRIs (FY 2025-26)
Let's start with the new regime since it's now the default.
Income tax slabs (new regime)
Plus: 4% Health and Education Cess on total tax.
No deductions allowed except standard deduction on salary (₹50,000 for FY 2023-24, ₹75,000 from FY 2024-25 onwards, check latest for FY 2025-26).
Real example: NRI with rental income only
Your India income:
Rental income from Bangalore property (after deductions): ₹5.6 lakh.
Tax calculation (new regime):
₹0 to ₹3 lakh: Nil. ₹3 lakh to ₹5.6 lakh: 5% on ₹2.6 lakh = ₹13,000.
Total tax: ₹13,000.
Plus cess (4%): ₹520.
Final tax: ₹13,520.
Real example: NRI with rental income and capital gains
Your India income:
Rental income (after deductions): ₹4.8 lakh. Long-term capital gains from mutual fund redemption: ₹6 lakh (taxable at 12.5%, but LTCG has separate calculation).
Regular income tax calculation:
₹0 to ₹3 lakh: Nil. ₹3 lakh to ₹4.8 lakh: 5% on ₹1.8 lakh = ₹9,000.
LTCG tax (separate calculation):
₹6 lakh LTCG. Less ₹1.25 lakh exemption: ₹4.75 lakh taxable. Tax at 12.5%: ₹59,375.
Total tax: ₹9,000 + ₹59,375 = ₹68,375.
Plus cess (4%): ₹2,735.
Final tax: ₹71,110.
👉 Tip: Capital gains (LTCG/STCG) are taxed separately at their own rates, not at slab rates. This is why you need to calculate them independently.
Understand capital gains taxation.
Old tax regime slabs for NRIs (FY 2025-26)
Now let's look at the old regime.
Income tax slabs (old regime)
Senior citizens (60-80 years): Exemption limit is ₹3 lakh instead of ₹2.5 lakh.
Super senior citizens (80+ years): Exemption limit is ₹5 lakh.
Plus: 4% Health and Education Cess on total tax.
Deductions allowed:
Section 80C: ₹1.5 lakh (EPF, PPF, life insurance, ELSS, home loan principal). Section 80D: ₹25,000-50,000 (health insurance). Section 24(b): ₹2 lakh (home loan interest). HRA (if applicable). LTA (if applicable).
Real example: Same NRI, old regime
Your India income:
Rental income (after deductions): ₹5.6 lakh. No other deductions to claim.
Tax calculation (old regime):
₹0 to ₹2.5 lakh: Nil. ₹2.5 lakh to ₹5 lakh: 5% on ₹2.5 lakh = ₹12,500. ₹5 lakh to ₹5.6 lakh: 20% on ₹60,000 = ₹12,000.
Total tax: ₹24,500.
Plus cess (4%): ₹980.
Final tax: ₹25,480.
Compare to new regime: ₹13,520.
New regime saves ₹11,960 in this case (because you have no deductions to claim).
Real example: NRI with home loan
Your India income:
Rental income (after deductions): ₹6.2 lakh. Home loan interest paid: ₹2.8 lakh (can claim up to ₹2 lakh under Section 24(b)).
Tax calculation (old regime):
Rental income: ₹6.2 lakh. Less Section 24(b) deduction: ₹2 lakh. Taxable income: ₹4.2 lakh.
₹0 to ₹2.5 lakh: Nil. ₹2.5 lakh to ₹4.2 lakh: 5% on ₹1.7 lakh = ₹8,500.
Total tax: ₹8,500.
Plus cess (4%): ₹340.
Final tax: ₹8,840.
Compare to new regime (without home loan deduction):
Rental income: ₹6.2 lakh (no deductions).
₹0 to ₹3 lakh: Nil. ₹3 lakh to ₹6.2 lakh: 5% on ₹3.2 lakh = ₹16,000.
Tax: ₹16,640 (with cess).
Old regime saves ₹7,800 because of home loan interest deduction.
👉 Tip: If you have a home loan in India and are paying significant interest (₹1 lakh+ annually), old regime almost always saves more tax.
Surcharge for high-income NRIs
If your India income is very high, surcharge applies on top of basic tax.
Surcharge slabs
How surcharge works:
Calculate basic tax using slab rates. Add surcharge (percentage of basic tax). Add 4% cess on (basic tax + surcharge).
Real example: High-income NRI
Your India income:
Rental income: ₹18 lakh. NRO interest: ₹8 lakh. Capital gains: ₹35 lakh. Total: ₹61 lakh.
Tax calculation (new regime):
Regular income (rental + NRO): ₹26 lakh.
₹0 to ₹3 lakh: Nil. ₹3 lakh to ₹7 lakh: 5% = ₹20,000. ₹7 lakh to ₹10 lakh: 10% = ₹30,000. ₹10 lakh to ₹12 lakh: 15% = ₹30,000. ₹12 lakh to ₹15 lakh: 20% = ₹60,000. ₹15 lakh to ₹26 lakh: 30% = ₹3.3 lakh.
Tax on regular income: ₹4.4 lakh.
Capital gains (separate): Tax depends on type (LTCG/STCG).
Assume LTCG at 20% on ₹35 lakh: ₹7 lakh.
Total basic tax: ₹4.4 lakh + ₹7 lakh = ₹11.4 lakh.
Surcharge: Income is ₹61 lakh (between ₹50 lakh and ₹1 crore). Surcharge: 10% of ₹11.4 lakh = ₹1.14 lakh.
Cess: 4% of (₹11.4 lakh + ₹1.14 lakh) = ₹50,160.
Final tax: ₹11.4 lakh + ₹1.14 lakh + ₹50,160 = ₹12.59 lakh.
Effective tax rate: Approximately 20.6% of total income.
Old regime vs new regime: Which should you choose?
Here's a decision framework.
Choose NEW regime if:
You have no deductions to claim (no home loan, no Section 80C investments). Your income is below ₹10 lakh. You want simpler filing (no need to maintain deduction proofs).
Example: Dubai-based NRI with only rental income of ₹7 lakh. No home loan, no investments in India. New regime gives lower tax.
Choose OLD regime if:
You have home loan and paying ₹1 lakh+ interest annually. You invest in ELSS, PPF, life insurance (Section 80C). You have health insurance (Section 80D). Your income is ₹8-20 lakh range (deductions create significant savings).
Example: USA-based NRI with ₹12 lakh India income. Home loan interest: ₹2 lakh. ELSS investment: ₹1.5 lakh. Health insurance: ₹25,000. Old regime saves ₹60,000-80,000 more than new regime.
Decision table
👉 Tip: Never guess which regime saves more tax. Calculate both. The difference can be ₹20,000-1 lakh annually. Our team at Belong runs both calculations for every client and recommends the optimal regime.
Special tax rates for specific income types
Not all income follows slab rates.
Capital gains tax rates (same in both regimes)
Long-term capital gains (LTCG):
Property (held >24 months): 20% with indexation benefit. Equity stocks/mutual funds (held >12 months): 12.5% (on gains above ₹1.25 lakh/year). Debt mutual funds: Taxed at slab rate (no indexation post-2023).
Short-term capital gains (STCG):
Property (held <24 months): Slab rate. Equity stocks/mutual funds (held <12 months): 20%. Debt mutual funds: Slab rate.
Dividend income
Taxed at slab rate in both regimes. TDS: 10% on dividends above ₹5,000/year.
Tax-free income (not subject to slabs)
NRE/FCNR deposit interest: Tax-free (Section 10(4)). GIFT City investment returns: Tax-free (Section 10(4D)). Inheritance and gifts from specified relatives: Tax-free.
Understand types of taxable income for NRIs.
How TDS affects your tax calculation
Understanding TDS and tax slabs together is critical.
TDS rates for NRIs
NRO interest: 30% TDS (regardless of your actual slab).
Rental income: 30% TDS (if rent >₹50,000/month).
Property sale: 20% TDS.
Mutual fund redemption: 20% TDS on capital gains.
Why this matters:
TDS is deducted at flat rates (30%, 20%). But your actual tax slab might be lower (5%, 10%, 20%). You claim refund when filing ITR.
Real example: TDS vs actual tax
Your India income: Rental income (after deductions): ₹5.2 lakh.
TDS deducted by tenant: 30% on ₹5.2 lakh = ₹1.56 lakh.
Your actual tax (new regime):
₹0 to ₹3 lakh: Nil. ₹3 lakh to ₹5.2 lakh: 5% on ₹2.2 lakh = ₹11,000. Plus cess: ₹440. Total: ₹11,440.
TDS deducted: ₹1.56 lakh.
Refund due: ₹1.56 lakh - ₹11,440 = ₹1.44 lakh.
This is why filing ITR is critical even when TDS was deducted.
We've helped NRIs recover ₹50,000-3 lakh in excess TDS by filing ITR correctly.
Learn who needs to file ITR as NRI.
GIFT City advantage: Zero tax regardless of slabs
Here's where GIFT City changes everything for NRIs.
Why GIFT City is slab-neutral
GIFT City investment returns (interest and capital gains) are exempt from tax under Section 10(4D).
This means:
Your tax slab doesn't matter. Whether you're in 5% slab or 30% slab, GIFT City returns are tax-free.
Real comparison: Regular MF vs GIFT City MF
Scenario: You invest ₹10 lakh in equity funds.
Option A: Regular Indian mutual fund
After 5 years, gains: ₹8 lakh (LTCG).
Tax: 12.5% on (₹8 lakh - ₹1.25 lakh exemption) = ₹84,375.
Plus cess: ₹3,375.
Total tax: ₹87,750.
Option B: GIFT City mutual fund
After 5 years, gains: ₹8 lakh.
Tax: ₹0 (Section 10(4D) exemption).
GIFT City saves ₹87,750.
This saving applies regardless of which tax regime or slab you're in.
We've helped hundreds of NRIs restructure portfolios to use GIFT City funds instead of regular mutual funds, saving ₹60,000-2.5 lakh annually.
GIFT City tax benefits explained.
Common tax slab mistakes NRIs make
We see these errors constantly.
Mistake 1: Not knowing which regime they filed under
The mistake: Filing ITR without explicitly choosing old or new regime.
Reality: New regime is default from FY 2023-24. If you don't opt for old regime, you're automatically in new regime.
Consequence: You lose deduction benefits (home loan, 80C) without realizing it. You pay ₹20,000-80,000 more tax.
Fix: Always explicitly choose regime in ITR. Our team calculates both and selects the better option.
Mistake 2: Assuming higher income always means 30% tax
The mistake: "My India income is ₹8 lakh, so I pay 30% tax."
Reality: Tax is calculated slab-wise. Only income above ₹15 lakh (new regime) or ₹10 lakh (old regime) is taxed at 30%.
Your ₹8 lakh income:
New regime: Tax is ₹25,000 (effective rate 3.1%, not 30%).
Mistake 3: Not filing ITR to claim TDS refund
The mistake: "TDS was deducted at 30%, so that's my final tax."
Reality: If your actual slab is 5% or 10%, you're owed a huge refund. Without filing ITR, you lose that money permanently.
Fix: Always file ITR when any TDS was deducted, regardless of amount.
Mistake 4: Ignoring surcharge impact
The mistake: Not accounting for surcharge when income exceeds ₹50 lakh.
Reality: Surcharge adds 10-37% on top of basic tax. Your effective rate jumps significantly.
Fix: Use a tax calculator or professional help for high-income scenarios.
How Belong's tax filing service optimizes your slabs
Let's talk about how we ensure you always pay minimum legal tax.
What we do for you
1. Regime comparison
We calculate your tax under both old and new regime. We account for all deductions you're eligible for. We recommend the regime that saves you more tax.
Real result: We helped a Dubai NRI save ₹68,000 by choosing old regime instead of new regime. His CA had defaulted to new regime without checking.
2. Deduction maximization
We identify all deductions you can claim (Section 80C, 80D, 24b). We ensure you don't miss any eligible deduction. We maintain documentation for future scrutiny.
3. Accurate slab calculation
We calculate tax slab-wise correctly (not flat rate on total income). We separate capital gains tax from regular income tax. We account for surcharge and cess at high incomes.
4. TDS reconciliation and refund claims
We download Form 26AS showing all TDS deducted. We match TDS against actual tax liability. We claim every rupee of excess TDS as refund.
Real result: We recovered ₹1.83 lakh for a USA-based NRI. Excess TDS had been sitting with the tax department for 2 years because he didn't file ITR.
5. GIFT City integration
If you invest through Belong's GIFT City platform, we pre-fill GIFT City income in your ITR. We report it correctly as exempt income (Section 10(4D)). We ensure zero tax is calculated on it.
Result: Tax filing becomes dramatically simpler. No slab calculations needed for GIFT City portion.
Book Belong's NRI tax filing service.
Your action plan: Optimize your tax this year
Step 1: Calculate your total India income
Add: Rental income, NRO interest, capital gains, salary, pension, business income.
Step 2: Identify deductions you can claim
Do you have home loan interest? Section 80C investments (ELSS, life insurance)? Health insurance?
Step 3: Calculate tax under both regimes
Use online tax calculators or our service. Compare old vs new regime.
Step 4: Choose optimal regime
Select the regime that gives lower tax. File ITR explicitly opting for that regime.
Step 5: Consider GIFT City for future investments
For equity exposure, use GIFT City funds (tax-free) instead of regular mutual funds (12.5% LTCG tax). For fixed income, use GIFT City USD FDs (tax-free) instead of NRO FDs (30% slab tax).
Or let our team handle everything.
We calculate both regimes. We optimize deductions. We file ITR correctly. We claim all refunds.
Simple ITR: ₹2,500. Standard ITR: ₹4,500. Complex ITR: ₹7,500.
Book Belong's tax filing service.
Frequently Asked Questions
Are tax slabs different for NRIs and residents?
No. Tax slabs are the same for NRIs and residents. The difference is what income gets taxed. NRIs pay tax only on India-sourced income. Residents pay tax on global income.
Which regime is better for NRIs: old or new?
Depends on your deductions. If you have home loan interest >₹1 lakh or Section 80C investments, old regime saves more. If you have no deductions, new regime is usually better.
Do I pay 30% tax if my income is ₹6 lakh?
No. Tax is calculated slab-wise. With ₹6 lakh income in new regime: ₹0-3 lakh is tax-free. ₹3-6 lakh is taxed at 5%. Total tax: ₹15,000 (effective rate 2.5%, not 30%).
Can I switch between old and new regime every year?
Yes. You can choose old regime one year and new regime the next year. Select the regime that saves you more tax for that specific year.
Is GIFT City income subject to tax slabs?
No. GIFT City income (interest and capital gains) is exempt from tax under Section 10(4D). Your tax slab doesn't matter. Returns are tax-free regardless.
What if my income exceeds ₹50 lakh?
Surcharge applies: 10% surcharge (₹50 lakh to ₹1 crore), 15% (₹1-2 crore), 25% (₹2-5 crore), 37% (above ₹5 crore). This significantly increases effective tax rate.
Do senior citizen NRIs get higher exemption?
Yes. In old regime: ₹3 lakh exemption (age 60-80), ₹5 lakh exemption (age 80+). In new regime: Same slabs as non-senior citizens.
How much does Belong's tax filing service cost?
Simple ITR (only NRE/NRO income): ₹2,500. Standard ITR (rental or capital gains): ₹4,500. Complex ITR (DTAA, multiple income sources): ₹7,500. Fixed pricing, no hidden fees.
Check pricing and book service.
Disclaimer: This article is for informational purposes only and does not constitute financial, tax, or legal advice. Income tax slabs, regime rules, and surcharge rates are subject to change by government notification. Consult a qualified chartered accountant before making tax regime decisions. Belong (getbelong.com) is a SEBI-registered investment advisor offering GIFT City-based investment products under IFSCA regulation and professional NRI tax filing services.
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