Non-Resident Indians (NRIs) living in the USA, the UAE, Canada, the UK and the wider diaspora face a tax compliance picture that has expanded materially over the past five years. India introduced the deemed residency provisions in 2020 and carried them into the Income Tax Act, 2025 framework. The USA enforces its worldwide-income regime through Form 1040, FBAR and Form 8938. The UAE introduced its first corporate tax regime in 2023, affecting NRIs running UAE-based businesses. Treaty mechanics for India-USA and India-UAE bilateral matters have been clarified through Mutual Agreement Procedure framework updates. This article is the practitioner-level reference an NRI and their adviser need for filing across India, the USA and the UAE in 2026.
Indian Residency Tests for 2026
The Indian residency framework has three branches. The standard test: an individual is resident if present in India for 182 days or more in the financial year, or for 60 days in the year plus 365 days across the prior four years. For Indian citizens or persons of Indian origin visiting India, the 60-day threshold rises to 120 days where total Indian source income exceeds INR 15 lakh (and to 182 days where it does not).
The deemed residency provision: an Indian citizen with total Indian source income (other than foreign source income) exceeding INR 15 lakh in the financial year is deemed resident in India if they are not liable to tax in any other country. This provision targets the rare case of stateless tax residency and applies to a small share of NRIs, but it must be checked annually.
The RNOR (Resident but Not Ordinarily Resident) status applies to a returning Indian who has been a non-resident in 9 of the prior 10 financial years or who has been in India for 729 days or less across the prior 7 financial years. RNOR taxpayers are taxed on Indian source income plus foreign income from a business controlled in India or a profession set up in India; pure foreign income (overseas salary, overseas investment income) is not taxable in India under RNOR.
The residency determination needs to be made fresh each financial year. The status from the prior year does not carry forward by default.
Indian Filing Obligations for NRIs
NRIs with Indian source income above the basic exemption limit (currently INR 2.5 lakh for under-60 individuals, INR 3 lakh for 60-80 and INR 5 lakh for 80+) must file an Indian income tax return. The return form is typically ITR-2 for NRIs (or ITR-3 if business or professional income is present).
Indian source income includes salary earned for services rendered in India, business income from any source in India, capital gains on Indian assets (including listed Indian securities, Indian real property and Indian private company shares), rental income from Indian property, interest on Indian bank deposits other than NRE accounts, and any other income arising or accruing in India.
Schedule FA reporting applies to RNOR and resident taxpayers, not to NRIs. NRIs are not required to disclose foreign assets on Schedule FA. RNOR taxpayers and resident taxpayers, however, must report every foreign financial account (bank, brokerage, depository), every foreign equity and debt holding, every foreign immovable property and any signing authority over foreign accounts. The Black Money Act penalty for non-reporting is INR 10 lakh per asset.
The Indian filing deadline is July 31 (extended to October 31 where the assessee has international transactions requiring Form 3CEB). Belated returns and updated returns can be filed under the procedures in the IT Act, 2025 framework.
US Filing Obligations for NRIs
NRIs who are US tax residents (US citizens, green card holders or non-citizens meeting the substantial presence test) file Form 1040 reporting worldwide income, regardless of where they earned it or where they live.
Foreign earned income exclusion under Section 911: US tax residents whose tax home is in a foreign country and who meet either the bona fide residence test (resident of a foreign country for an uninterrupted period that includes an entire tax year) or the physical presence test (present in a foreign country for at least 330 full days during any 12-month period) can exclude up to a specified amount of foreign earned income (the limit is indexed annually).
Foreign tax credit under Section 901: US tax residents can claim a credit for foreign income taxes paid against US tax on the same income, subject to the per-category limitations under Section 904. The categories are passive income, general income, branch income, GILTI and Section 901(j) income.
FBAR (FinCEN Form 114) reporting: US tax residents with aggregate foreign financial accounts exceeding USD 10,000 at any point during the year must file FBAR by April 15 with an automatic extension to October 15. The penalty for non-willful failure to file is up to USD 10,000 per violation; willful failure to file can be much higher.
Form 8938 reporting under FATCA: US tax residents with specified foreign financial assets above the prescribed thresholds (which vary by filing status and residence) must file Form 8938 with their tax return. The threshold for a single filer living abroad is currently USD 200,000 on the last day of the tax year or USD 300,000 at any point during the year.
UAE Filing Obligations for NRIs
The UAE Corporate Tax (CT) Law took effect for financial years beginning on or after 1 June 2023. For NRIs running businesses in the UAE through mainland companies or non-Qualifying Free Zone Persons, the standard 9 percent CT rate applies to taxable income above AED 375,000. For Qualifying Free Zone Persons (in DIFC, ADGM, JAFZA, DMCC and other free zones), the 0 percent rate applies to Qualifying Income subject to substance requirements.
The UAE does not levy personal income tax on individuals, so NRIs working in the UAE as employees do not file personal tax returns. NRIs who are owners or beneficial holders of UAE businesses, however, may have CT compliance obligations through those entities.
Transfer pricing documentation applies to UAE taxable persons with related-party transactions above the prescribed thresholds. Master File and Local File obligations apply at the group level for groups above the CbCR threshold or the UAE-specific revenue threshold.
The UAE has substance regulations requiring qualifying entities to demonstrate that core income-generating activities take place in the UAE. For NRIs structuring through UAE entities, the substance test is a recurring compliance consideration.
Treaty Mechanics — India-USA
The India-USA double taxation avoidance agreement (DTAA) allocates taxing rights between the two countries and provides relief from double taxation through credit and exemption mechanisms. The treaty covers individual income tax, corporate tax, withholding taxes on dividends, interest and royalties, and capital gains on specific asset categories.
For NRIs who are US tax residents earning Indian source income, the treaty typically allows India to tax certain categories (Indian salary, Indian real property capital gains) at standard rates, with the US allowing a foreign tax credit. Other categories (Indian dividends, Indian interest, Indian listed share capital gains) are subject to specific treaty provisions.
Where double taxation cannot be resolved through the credit mechanism, the Mutual Agreement Procedure (MAP) under Article 27 of the treaty allows the competent authorities to negotiate a resolution. The Indian competent authority is in the CBDT’s Foreign Tax and Tax Research Division; the US competent authority is in the IRS APMA program. MAP timelines have been clarified through recent OECD-influenced procedural updates.
The treaty’s Limitation on Benefits (LOB) clause restricts treaty benefits to qualified residents. Most individuals automatically qualify; corporate beneficial owners need to meet specific tests on ownership and active business.
Treaty Mechanics — India-UAE
The India-UAE Comprehensive Economic Partnership Agreement (CEPA) and the bilateral tax treaty define the framework for cross-border income between the two countries. The treaty covers individual income tax, corporate tax, and specific provisions on shipping, air transport and certain investment income.
For NRIs based in the UAE earning Indian source income, the treaty typically caps Indian withholding on dividends, interest and royalties at specific rates. The treaty’s tax residency certificate (TRC) requirement applies: the NRI must hold a TRC from the UAE Federal Tax Authority confirming UAE tax residency for the year in which the treaty benefit is claimed.
The treaty’s MAP provisions allow competent authority resolution of disputes between the Indian and UAE tax authorities. With the UAE’s new CT regime in force, MAP cases involving UAE corporate tax are now arising and being processed; the procedural framework continues to develop through experience.
For NRIs structuring through UAE Free Zone entities to benefit from the 0 percent CT rate, the treaty’s interaction with the UAE Qualifying Income classification needs careful planning. The substance requirements and the arm’s length pricing of cross-border transactions both matter.
Practitioner Checklist for NRI Annual Compliance
Step 1: Annual residency assessment for India. Day count, source-country tax position, deemed residency conditions, RNOR computation. Documented in a one-page memorandum signed by the client.
Step 2: India return preparation. ITR-2 (or ITR-3 if applicable) with all schedules. Schedule FA workpaper for RNOR and resident taxpayers; not required for NRIs. E-verification through Aadhaar OTP or net-banking. Filing by July 31 (extended to October 31 for international transactions).
Step 3: US return preparation. Form 1040 (or 1040-NR for non-US-resident NRIs with US source income) with FEIE, FTC, FBAR and Form 8938 as applicable. Filing by April 15 with automatic extension to October 15 for taxpayers abroad.
Step 4: UAE compliance for NRIs with UAE business interests. CT return for the relevant taxable person. TP Disclosure Form with the CT return. Master File and Local File where applicable.
Step 5: Treaty positions documented. TRCs in hand. Foreign tax credit computations supported by the foreign tax payment evidence. MAP filings initiated where double taxation arises and the materiality justifies the process.
Step 6: Year-end review meeting. The annual review with the partner walks through the year’s positions, the changes for the next year and any planning opportunities.
How Innobrant Engages NRI Clients
Our NRI practice is led by Director, CA Jashwanth Pasupuleti, with cross-border tax experience across India, the USA, the UAE, Canada and the UK. The engagement model is partner-led from the annual residency assessment through the year-end review, with the supporting financial consulting team executing the day-to-day preparation work.
For NRIs with US tax filings, we coordinate with the client’s US CPA firm or US tax preparer where one exists, or prepare the US filings ourselves where the client wants the full engagement under one roof. For NRIs with UAE business interests, we coordinate with UAE-licensed advisors for the local-representation aspects of the UAE CT compliance.
Engagements are scoped on an annual cycle with fixed-fee pricing reflecting the scope. Multi-year engagements include the annual review meeting and the year-on-year continuity of the same team. We do not market on lower fees; we position on partner involvement, cross-border experience and the continuity of the relationship across years.
Frequently Asked Questions
I am a US citizen living in India. Which countries do I file in? Both. The US taxes its citizens on worldwide income regardless of residence. India will tax you as a resident under the standard residency test if you spend enough days in India. The double taxation is resolved through the foreign tax credit on the US side and through the treaty mechanism. Innobrant supports both filings as a single integrated engagement.
I am an Indian citizen living in the UAE. Do I file in India? Generally not, unless you have Indian source income above the basic exemption limit, or you are caught by the deemed residency provision (rare for NRIs with normal employment income). UAE imposes no personal income tax. Your UAE employer’s tax compliance does not require you to file personally.
I have a foreign bank account but I am an NRI. Do I report it on Schedule FA? No. Schedule FA applies to RNOR and resident taxpayers, not to NRIs. If you become RNOR or resident in a future year, you will need to report foreign assets from that year onward.
How do I claim the foreign tax credit on my Indian or US return? The foreign tax credit is claimed in the return for the year in which the foreign income is reported, subject to documentation showing the foreign tax was paid. The mechanics differ between the Indian Section 90 credit and the US Section 901 credit, and the per-country and per-category limitations need to be computed at engagement.Does Innobrant work with NRIs across multiple countries? Yes. Our cross-border NRI practice covers the India-USA, India-UAE, India-Canada and India-UK corridors with coordinated filing across each side.