In this article, we will discuss about...
Introduction
Budget 2025 has introduced key tax changes that impact Non-Resident Indians (NRIs). Whether you earn income in India, send or receive money, or own property, these updates could affect your financial planning.
Let’s break down the major changes in simple terms so you can understand how they apply to you.
Don’t let reading hold you back, Watch our video instead
1. Changes in Tax Slabs and Rebates
A major update in Budget 2025 is the change in tax rebate limits:
-
Previously: No tax on income up to ₹3 lakh
-
Now: No tax on income up to ₹4 lakh
What does this mean for NRIs?
-
If your total Indian income is ₹4 lakh or less, you don’t have to pay any tax.
-
You also don’t need to file an income tax return.
Another major change is the rebate on income up to ₹12 lakh. If your income is below ₹12 lakh, you won’t have to pay taxes. But there’s a catch!
Why is filing a return important?
Even though you don’t owe taxes, you must file an income tax return if your income exceeds ₹4 lakh because:
-
TDS (Tax Deducted at Source) might still be deducted from your income.
-
To claim a refund of the deducted TDS, you need to file a return.
Key takeaway: If your income is between ₹4 lakh and ₹12 lakh, you don’t have to pay tax, but you still need to file your return to claim any deductions.
2. Education Loan EMIs – No More TDS!
Good news for NRIs whose parents are paying for their education abroad!
-
Previously: A 0.5% TDS was deducted on education loan EMI payments made to foreign institutions.
-
Now: This TDS has been removed.
What does this mean?
-
If your parents have taken an education loan in India and are repaying it to a foreign bank or institution, they don’t have to pay TDS anymore.
This makes loan repayments easier and reduces unnecessary deductions.
3. Money Transfers from Parents or Relatives – Higher Exemption
If you receive money from your family in India while living abroad, here’s a positive change:
-
Previously: No TDS on amounts up to ₹7 lakh per year
-
Now: No TDS on amounts up to ₹10 lakh per year
What does this mean?
-
If your parents send you up to ₹10 lakh per year, there’s no TDS.
-
If they send more than ₹10 lakh, a 20% TDS applies to the excess amount.
Example:
If your parents send you ₹12 lakh, TDS will be deducted only on ₹2 lakh (₹12 lakh – ₹10 lakh).
This is helpful for NRI students or professionals receiving financial support from their families.
4. NRIs and Rental Income – New Relaxations
Many NRIs own property in India, and dealing with rental income taxation has always been tricky. Budget 2025 makes it a little easier:
-
Previously: Only one house was exempt from rental income tax if unoccupied.
-
Now: You can claim up to two houses as self-occupied, even if vacant.
What does this mean?
-
If you own two houses in India and they are not rented out, you don’t have to declare rental income on them.
This avoids unnecessary taxes on unoccupied properties.
5. TDS Rate on Property Sales – Clearing the Confusion
One of the biggest concerns for NRIs is TDS on property sales.
-
Previously: Long-term capital gains tax was 20%.
-
Now: The tax rate has been reduced to 12.5%.
What does this mean?
-
If you sell a property that you have held for more than two years, the tax rate is now 12.5% instead of 20%.
-
However, TDS at 20% will still be deducted at the time of payment.
What should you do?
-
If your actual tax liability is less than 20%, file a return to claim a refund.
Even though the tax rate is lower, the TDS deduction remains 20%, so filing a return is important.
Conclusion:
Budget 2025 brings both benefits and responsibilities for NRIs. Here’s a quick recap:
-
Income up to ₹4 lakh? No tax, no need to file returns.
-
Income up to ₹12 lakh? No tax, but you must file returns.
-
Paying education loan EMIs abroad? No more TDS deductions.
-
Receiving money from parents? No TDS up to ₹10 lakh.
-
Own two houses in India? No tax on vacant properties.
-
Selling property? TDS remains at 20%, but actual tax may be lower (12.5%)—file a return to claim a refund.