NRIs in the US With Income in India: The Income Tax Act 2025 Without Panic

If you are an NRI living in the US with a flat rented out in Pune, a few fixed deposits in your NRO account, or mutual funds you started before you left India, you have probably seen messages like “Old Income Tax Act scrapped!”, “Assessment Year abolished!”, “All forms changed!” And you may have wondered whether everything you knew about Indian tax is now useless.

It is not. India’s new Income-tax Act, 2025 came into force on 1 April 2026 and replaced the Income-tax Act of 1961. The language changed. Many section numbers changed. Many form numbers changed. But for most NRIs, the basic duties stayed familiar: income earned in India is taxed in India, TDS is deducted on many payments to you, you may be able to claim treaty relief, and you file a return when required.

This guide is a calm map of what the Income Tax Act 2025 for NRIs means in practice, especially from tax year 2026-27. I am not a chartered accountant, and you should confirm your own case with a CA who handles NRI returns. But I hope this saves you from confusion and from paying for advice you do not need.

The Rent Receipt That Suddenly Had New Numbers

Let me describe a scene many NRIs will recognise. A software engineer in Seattle receives a TDS certificate from her tenant in Hyderabad. She has been receiving these for years. This time, the form number is different, and the section mentioned is not the familiar 195. She messages her CA in a panic: “Is this correct? Did my tenant make a mistake?”

Her CA replies calmly: the tenant is now following the new Act, the section number has moved, and the rent is still taxed in the same basic way. Nothing is wrong.

Her worry was understandable. When numbers you have known for years suddenly change, it feels like the ground has moved. But most of what changed is the address of the rules, not the rules themselves. Once you have the new addresses, the old habits still work. That is the purpose of this article.

What the Income Tax Act 2025 for NRIs Changed in Simple Terms

The Income-tax Act, 2025 took effect on 1 April 2026, as reported by the Free Press Journal. The biggest visible change is the “tax year”. Instead of a previous year in which you earn income and an assessment year in which you are assessed, there is now a single tax year. Income earned from 1 April 2026 to 31 March 2027 is tax year 2026-27.

Filing deadlines from tax year 2026-27 are 31 July for individuals with simple returns, 31 August for business or professional income without audit, 31 October for companies and audit cases, and 30 November for special cases. The window to revise a return was extended from 9 months to 12 months, with a fee of Rs 1,000 for income up to Rs 5 lakh, or Rs 5,000 for higher income, for revised returns filed after 9 months.

The same report noted that tax slabs under the old and new regimes were unchanged, and that TDS on property purchases from non-residents can now be paid using PAN, which should make life easier for buyers of NRI-owned property.

For NRIs, the key message is this: the new Act applies to income from 1 April 2026. Income you earned before that, in financial year 2025-26, is still dealt with under the old Act and old forms, even if you file the return after April 2026.

Tax Year 2026-27 NRI: Which Income Falls Under the New Act

So which of your income is covered by the tax year 2026-27 NRI rules under the Income Tax Act 2025 for NRIs? Everything earned in India from 1 April 2026 onwards: rent from April 2026, interest on NRO fixed deposits accruing from April 2026, capital gains from sales made on or after that date, dividends paid from that date.

Income from April 2025 to March 2026 belongs to financial year 2025-26 under the old Act. Its return was due in 2026 under the old rules and forms. If you missed it or need to revise it, follow the old Act’s procedures. According to TrustNRI’s mapping, reviewed on 28 October 2026, FY 2025-26 income still uses the old forms, even when the return is filed after April 2026.

This creates a transition year where you may deal with both systems. For example, a TDS certificate for rent paid in March 2026 may use the old section, while one for rent paid in May 2026 uses the new section. That is normal.

A practical tip: keep separate folders for FY 2025-26 and tax year 2026-27. Put certificates, statements and receipts in the right folder. It will make your CA’s work, and your own understanding, much easier.

Old vs New Section Numbers NRIs Should Know

Here are the old vs new section numbers and forms that matter most to NRIs, based on TrustNRI’s mapping. Some new numbers are still being discussed among practitioners, so check with your CA before quoting them in any official communication.

Residential status remains Section 6 in the new Act. Income deemed to arise in India remains Section 9. Those two familiar numbers did not change.

TDS on payments to non-residents, the old Section 195, now appears under Section 393(2) in TrustNRI’s mapping, though some sources cite a different number, so treat it as not fully settled. A TDS explainer by TDSMAN also describes Section 393(2) as replacing Section 195, with TDS returns moving from Form 27Q to Form 144.

The lower or nil TDS certificate, old Section 197 with Form 13, is now Section 395 with Form 128. The new Act reuses the number 197 for something else, which can confuse people.

The remitter’s declaration Form 15CA becomes Form 145, and the CA certificate Form 15CB becomes Form 146. The foreign tax credit statement Form 67 becomes Form 44. The DTAA self-declaration Form 10F becomes Form 41. Treaty relief under old Sections 90 and 90A is now Section 159, which expressly requires a tax residency certificate and Form 41 to claim treaty relief. And Form 26AS, the annual tax statement, is now Form 168.

TDS on Your NRO Interest, Rent and Capital Gains

TDS is where most NRIs feel the Income Tax Act 2025 for NRIs most directly, because it affects how much money reaches your account.

According to the TDSMAN explainer, under Section 393(2), interest income paid to non-residents carries a TDS rate of 20%, long-term capital gains under the relevant sections 12.5%, and short-term capital gains under the relevant section 20%, all subject to surcharge and cess, with treaty rates applying where more favourable. These rates are broadly in line with what NRIs saw under the old Act after the 2024 changes to capital gains rates.

Rent paid to non-residents also carries TDS. Your tenant must deduct it and issue you a certificate. If your tenant is an individual who has never done this before, they may need help. Many NRIs share a simple note with tenants explaining the TDS obligation and pointing them to a CA.

If your actual tax liability is lower than the TDS, for example because your total Indian income is small or treaty relief applies, you can claim a refund by filing a return, or apply in advance for a lower TDS certificate. Remember that interest on NRE accounts is generally tax-free in India, while NRO interest is taxable, which is why TDS appears on NRO interest.

Lower TDS Certificate NRI: Form 128 Instead of Form 13

When you sell property or earn significant income in India, TDS can lock up a large amount of money until you file a return and get a refund. A lower TDS certificate NRI application lets you ask the tax department, in advance, to authorise a lower or nil rate based on your actual expected tax.

Under the old Act, this was Section 197 and Form 13. Under the new Act, according to TrustNRI’s mapping, it is Section 395 and Form 128. The idea is the same: you apply with details of the expected income and your tax position, and if approved, the payer deducts TDS at the lower rate shown in the certificate.

For property sales in particular, this matters a lot. TDS on a non-resident’s property sale is calculated on the sale value in many cases, not just the gain, so the amount deducted can be far higher than your actual tax. A certificate can reduce that, but it takes time to obtain. Apply well before the sale, ideally once you have a buyer and a broad price.

The application process, documents and timelines may have changed with the new forms. Work with a CA who handles NRI property sales and check the latest procedure on the income tax portal.

DTAA Relief and the New Forms

If you are a US tax resident, you may be able to use the India-US tax treaty, called the DTAA, to reduce Indian tax on some income or claim credit for Indian tax in the US. Under the new Act, according to TrustNRI’s mapping, treaty relief sits in Section 159, and claiming it expressly requires a valid tax residency certificate and Form 41, which replaces the old Form 10F.

What this means in practice: if you want a payer in India to apply a treaty rate, or if you claim treaty benefits in your Indian return, keep your US tax residency certificate and Form 41 ready. In the US, the residency certificate is usually obtained from the IRS using a specific application, which takes time, so plan ahead.

On the US side, if you pay tax in India on Indian income, you may be able to claim a foreign tax credit on your US return. That is a separate process under US rules. Keep your Indian TDS certificates, now possibly on new form numbers, and your Indian return copies for your US tax preparer.

And remember US reporting of Indian accounts and assets. If you hold NRO, NRE or other accounts, FBAR and Form 8938 may apply. Our guides on forgetting to file FBAR and forgetting to file Form 8938 explain what to do if you missed them.

NRI ITR Deadline From Tax Year 2026-27

The NRI ITR deadline under the Income Tax Act 2025 for NRIs depends on the kind of income you have. Most NRIs with rent, interest and capital gains, and no business or audit, fall into the simple category, with a deadline of 31 July after the end of the tax year. So for tax year 2026-27, that would be 31 July 2027.

If you have business or professional income in India without audit, the deadline is 31 August. If your case requires audit, it is 31 October. These deadlines come from the Free Press Journal’s summary of the new Act; confirm with your CA as forms and utilities are released.

Do you need to file at all? NRIs generally need to file if their total Indian income exceeds the basic exemption limit, or if they want to claim a refund of excess TDS, or carry forward losses. Many NRIs with only NRE interest, which is generally tax-free, do not need to file. Those with NRO interest, rent or capital gains often should, even if just to claim refunds.

The extended revised return window of 12 months gives some breathing room if you find a mistake later, though a fee applies after 9 months.

Selling Property Under the Income Tax Act 2025 for NRIs

Property is where NRIs feel tax most painfully, because the amounts are large and TDS can lock up money for months. Under the Income Tax Act 2025 for NRIs, the broad approach is familiar: long-term capital gains are taxed, the buyer deducts TDS on payment to a non-resident seller, and you can file a return to claim any excess back, or apply for a lower TDS certificate in advance.

Two points from the coverage are worth noting. First, the TDSMAN table lists long-term capital gains under the relevant provisions at 12.5% for non-residents, plus surcharge and cess. This matches the post-2024 rate structure many NRIs already knew. Second, the Free Press Journal reported that buyers can now pay TDS on purchases from non-residents using PAN, which should simplify the buyer’s side. Earlier, buyers sometimes struggled because they needed a separate deduction account number. If your buyer is an individual, this change may make the sale smoother.

Still, TDS on a non-resident’s property sale is often calculated on the sale consideration in practice, not just the gain, unless a lower TDS certificate is in place. That is why applying for the lower TDS certificate NRI on Form 128 early matters so much. Without it, a big part of your sale money can be stuck until your refund is processed.

Repatriation is a separate question. Moving sale proceeds out of India involves banking rules and remittance forms, now Form 145 and Form 146 in the new numbering. Your CA and bank will guide you, but plan the timeline before you sign the sale deed, not after.

Mutual Funds, Shares and Dividends for NRIs

Many NRIs keep mutual funds and shares in India. Under the new Act, these continue to be taxed when you sell or receive dividends, with TDS deducted for non-residents according to the applicable provisions, and treaty relief available where it applies.

The practical change is mostly paperwork. Fund houses, brokers and registrars are updating their systems to the new section and form numbers. Your capital gains statements and TDS certificates for sales from April 2026 may look different from earlier years. Keep them carefully, and do not mix them with FY 2025-26 statements.

If you were planning to sell investments, check whether the timing matters. Gains on sales before 1 April 2026 belong to the old Act year, and gains on sales after belong to tax year 2026-27. Rates for most common cases did not change because of the new Act itself, but your CA may still want to plan the timing around your total income and residency.

If you hold investments jointly with parents or have nominated them, make sure your KYC and residency status are up to date with each fund or broker. Incorrect residency status can lead to wrong TDS rates, which are annoying to fix later.

Returning NRIs and Residency During the Transition

If you are thinking about moving back to India, the transition year deserves extra care. Your residential status under Section 6, which kept its number in the new Act, decides whether India taxes only your Indian income or your worldwide income. Returning NRIs may qualify for a transitional status for a period, depending on their history, which can reduce Indian tax on foreign income for a while.

The days you spend in India in a tax year, and in previous years, matter. If you are planning a long visit in 2026-27, or a permanent return, work out your likely status with a CA before the year ends, not after. Your US tax position also changes when you leave, and the substantial presence test calculator can help you understand the US side for a given year.

The Income Tax Act 2025 for NRIs did not change Section 6’s number, but it is wise to confirm that the detailed residency conditions you rely on are carried over as you expect. Do not assume old blog posts are fully accurate under the new law.

For the emotional and practical side of returning, the moving back to India from USA checklist covers bank accounts, insurance and other steps that interact with tax.

Working With Your CA in the First Year of the New Act

The first year of any new law is when good professional advice is worth the most. Here is how to make your CA’s job easier and your own costs lower.

Send your documents organised by year, as suggested above. Include TDS certificates, bank interest statements for NRO and NRE accounts, rent agreements and receipts, capital gains statements, and any foreign tax credit details.

Ask your CA directly whether they have updated their templates and software to the new forms. A CA who still uses old form numbers for tax year 2026-27 may make avoidable mistakes. Most professionals have updated, but it is fair to ask.

Ask for a short written summary of your position: expected income, expected TDS, whether you need to file, and any treaty forms needed. This helps you plan and gives you something to share with your US tax preparer.

And if you are unsure about the old vs new section numbers on any document, ask. A good CA will explain without making you feel foolish. The new Act is new for everyone.

A Simple Example for Tax Year 2026-27 NRI Income

Let me put it together with a made-up example. Imagine an NRI in California with three kinds of Indian income in tax year 2026-27 NRI terms: rent from a flat in Hyderabad, interest on an NRO fixed deposit, and long-term gains from selling some equity mutual funds in January 2027.

The tenant deducts TDS on rent under the new provisions and issues a certificate on the new form. The bank deducts TDS on NRO interest at the applicable rate. The fund house deducts TDS on the gains. All three show up on the annual tax statement, now Form 168 in the old vs new section numbers mapping, instead of the old 26AS.

If the total TDS is more than the actual tax due, perhaps because treaty relief applies or because the overall income is modest, the NRI files a return to claim a refund. With rent, interest and capital gains but no business or audit, the NRI ITR deadline would be 31 July 2027.

On the US side, the same income is reported on the US return, and Indian tax paid may be claimed as a foreign tax credit, subject to US rules. The NRI keeps the Indian certificates for the US preparer.

None of this is very different from earlier years. The forms have new numbers, the year has a new name, and the paperwork is a little different. The logic is the same.

Common Mistakes NRIs Are Making in the Transition

The first is using new form numbers for old-year income, a common slip in the first year of the Income Tax Act 2025 for NRIs. FY 2025-26 income uses the old Act’s forms and sections. Do not try to file it under the new system.

The second is assuming nothing changed. The broad rules are familiar, but forms, section references and some procedures are new. A CA who has not updated their templates may give you outdated forms.

The third is ignoring treaty paperwork. With Section 159 explicitly requiring a tax residency certificate and Form 41, missing documents can mean losing treaty benefits.

The fourth is waiting until the last month to apply for a lower TDS certificate before a property sale. These take time. Start early.

The fifth is losing track of residential status. Your status in India depends on days in India and other conditions under Section 6, which remains in place. If you are thinking about moving back, the rules around residency and returning NRIs matter a lot. Our moving back to India from USA checklist and the article on the NRI return dilemma can help you plan.

A Simple Plan for NRIs This Year

Here is the plan I would suggest for the Income Tax Act 2025 for NRIs transition.

Separate your records into FY 2025-26 and tax year 2026-27. Ask your tenants, banks and payers to send TDS certificates for the new year on the new forms.

Meet your CA once this tax year, ideally before December, to check your expected income, TDS, treaty position and whether a lower TDS certificate makes sense for any large transaction.

Get your US tax residency certificate if you plan to claim treaty benefits, and prepare Form 41.

Keep your US reporting in order, including FBAR and Form 8938 where applicable, and your US tax preparer informed about Indian taxes paid.

And put the NRI ITR deadline for tax year 2026-27, 31 July 2027 for most simple cases, in your calendar now.

Questions NRIs Ask About the Income Tax Act 2025