NRI Income Tax Lawyer for US Residents

Who Counts as an NRI for Indian Income Tax Purposes

Your Indian income tax residency is a separate question from your US immigration status, and it is decided year by year based on how many days you actually spent in India, not on whether you hold a Green Card, H-1B, or Indian passport. Under the Income Tax Act, 1961, you are typically treated as a Non-Resident for a financial year if you were in India for fewer than 182 days during that year. There are additional, narrower day-count conditions that can pull certain people into resident status even under 182 days — most relevant to those with substantial Indian income who also spend a shorter stretch of time in India in the same year — and the details vary based on your specific facts, so this is a general orientation, not a substitute for checking your own day count with a chartered accountant each year.

This distinction matters because your residential status, not your citizenship or visa category, determines how much of your worldwide income India can tax. An H-1B professional in Seattle, a Green Card holder in Edison, and a naturalized US citizen of Indian origin in Chicago can all be Non-Residents for Indian tax purposes in the same year, provided their India day count stays under the threshold. Keep a simple travel log each financial year (April to March, the Indian tax year) — it is the first thing we and your CA will ask for if a notice ever raises a residency question.

What Income Is Taxable in India for an NRI — and What Isn't

As a Non-Resident, India generally taxes only income that is earned, accrued, or received within India — your foreign income, including your US salary, is outside India's tax net. The confusion usually starts with the Indian-sourced income many NRIs still hold: a rented-out flat, an inherited house, or bank accounts left open from before they moved abroad.

Taxable in India

Rental income from a property you still own in India is taxable, whether the tenant is a relative paying a nominal amount or a market-rate corporate lease. Capital gains from selling Indian property, shares, or mutual funds are taxable, computed as short-term or long-term depending on the holding period, with different rates and indexation treatment applying to each. Interest earned on an NRO (Non-Resident Ordinary) account is taxable and typically has TDS deducted automatically by the bank before it even reaches your statement.

Generally Exempt

Interest on an NRE (Non-Resident External) account is exempt from Indian income tax for as long as you hold Non-Resident status, which is why many of our clients route their India-side liquid savings through NRE rather than NRO accounts. Your foreign income — US salary, US investment gains, US business income — is not taxed by India at all once you are a Non-Resident; India has no claim on income that neither arises in India nor is received there. The two get confused constantly, and it's worth double-checking which bucket each of your Indian accounts falls into before assuming either "everything is taxed" or "nothing is taxed."

TDS on Property Sale by NRIs and the Lower-Deduction Certificate

When you sell property in India as an NRI, the buyer is legally required to deduct TDS under the Income Tax Act, 1961 before paying you, and the default rate applied to NRI sellers is materially higher than the rate for resident sellers — and it is usually calculated on the entire sale price, not your actual profit, unless you take a specific step in advance. For a Los Angeles-based NRI selling a flat purchased twenty years ago in Pune for a fraction of today's price, the real capital gain after indexation might be modest, but a buyer applying the default rate to the full sale consideration can withhold a startlingly large sum at closing.

Applying for a Lower-Deduction Certificate

The corrective step is an application to the jurisdictional Assessing Officer for a certificate under the relevant provision of the Income Tax Act, 1961 authorizing the buyer to deduct TDS only on the computed capital gain, or, in some cases, at a nil rate if there is no taxable gain at all. This application needs supporting documents — the original purchase deed, cost of any improvements, valuation evidence, and PAN details — and processing is not instant, so it should be filed well before you sign the sale agreement, not after the buyer has already withheld tax at the full rate. We coordinate this filing with a chartered accountant on the client's behalf so the certificate is in hand before the registration date, not chased down afterward through a refund claim that can take months. This same TDS mechanics are covered from the transaction side, alongside repatriation, on our buying and selling property in India from the USA page.

Common Reasons NRIs Receive an Indian Income Tax Notice

Most notices we see are not the result of wrongdoing — they're triggered by a data mismatch or a reporting gap that a quick, well-documented reply resolves.

Form 26AS / AIS Mismatch

The Income Tax Department cross-checks your filed return against Form 26AS and the Annual Information Statement (AIS), which pull data from banks, registrars, and other reporting entities. If NRO interest, TDS on a property sale, or dividend income appears in these statements but wasn't reflected in your return — often because a filer overseas simply didn't know it had been reported — an automated mismatch notice follows.

Unreported Property Sale

Selling property triggers reporting by the Sub-Registrar and the buyer's TDS filing, so the transaction is visible to the Income Tax Department even if you never filed a return reflecting the capital gain. NRIs who assume "TDS was already deducted, so I'm done" are frequently surprised to receive a notice asking why no return was filed to reconcile the actual gain against the TDS withheld.

High-Value Transaction Reporting

Banks, mutual fund houses, and property registrars report certain high-value transactions to the tax department under statement of financial transaction rules — a large NRO deposit, a big mutual fund redemption, or a high-value property purchase can each generate a data point that doesn't match your filing history, prompting an inquiry even when the transaction was entirely legitimate.

Simple Non-Filing in a Year With Indian Income

Many NRIs stop filing Indian returns once they move abroad, forgetting that a rented-out flat or an NRO account still generates taxable Indian income that legally requires a return once it crosses the basic exemption threshold. A gap of several years with unfiled returns despite ongoing rental income is one of the more common patterns behind a notice.

Responding to a Notice From Abroad Through an Authorized Representative

You do not need to fly to India to answer an income tax notice — nearly the entire process, from viewing the notice to filing your reply, now runs through the Income Tax Department's e-filing portal and faceless assessment system. The practical challenge for most clients isn't the technology; it's knowing which section the notice was issued under, what documents the Assessing Officer actually wants, and how tightly the response window is drawn.

Step One: Read the Notice Section Carefully

The section quoted on the notice (for example, a scrutiny notice, an income escaping assessment notice, or a straightforward intimation flagging a mismatch) determines the deadline and the level of detail expected in your reply. Treating every notice as equally urgent, or equally minor, is a common mistake — some carry a short, firm response window, while others simply invite a clarification.

Step Two: Authorize a Representative

Because appearing in person from the USA isn't practical, we typically act under a Power of Attorney or a formal authorization filed with the Assessing Officer, allowing us to view the notice, submit documents, and represent you in faceless proceedings without your physical presence in India. Many clients set this up proactively, before any notice arrives, precisely so a future notice doesn't sit unanswered while they scramble to arrange authorization from the USA.

Step Three: Reconcile the Numbers With a Chartered Accountant

Once the notice is understood, the reply itself is usually a numbers exercise — reconciling reported income against Form 26AS/AIS, recomputing a capital gain with proper indexation, or producing TDS certificates that prove tax was already withheld. We work directly with your existing chartered accountant, or one we regularly work with, to prepare this reconciliation and file a documented, on-time response rather than a vague acknowledgment that invites a follow-up notice.

Coordinating Your India-Side Tax Response With Your US CPA

Resolving an Indian notice is only half the picture if you also have US reporting obligations tied to the same income or account — and the two systems are separate, run by separate authorities, with separate professionals required for each. Our firm handles the India-side legal and tax-notice-response work: replying to the Income Tax Department, applying for lower-TDS certificates, and coordinating with your Indian chartered accountant on computations and filings.

We do not prepare or file US federal or state tax returns, and we are not a substitute for a US CPA on questions like FBAR (Foreign Bank Account Report) filing, FATCA reporting of foreign financial assets on Form 8938, or how Indian rental income and capital gains should be reported to the IRS, potentially with foreign tax credit relief for tax already paid in India. If you own Indian property, NRO/NRE accounts, or Indian mutual funds, both sides of the compliance picture typically need attention in the same year, and we're glad to coordinate directly with your US CPA so the Indian tax certificate or reconciliation they need arrives in a form they can actually use for the US filing.

Why NRIs in the USA Choose Us for Tax Notice Response

How We Handle an India Income Tax Notice, Start to Finish

1. Free Consultation From the USA

   Send us the notice (or describe the portal alert) and we review the section, deadline, and what's actually being asked, on a call in your time zone.

2. Authorization Setup

   We arrange a Power of Attorney or formal authorization so we can access your e-filing portal and represent you in faceless proceedings.

3. Data Reconciliation

   We compare your filed return against Form 26AS/AIS, TDS certificates, and property records to pinpoint the exact source of the mismatch.

4. CA Coordination

   We work with a chartered accountant to recompute capital gains, interest, or rental income accurately, and prepare any missing documentation.

5. Filing the Response

   We submit a complete, documented reply within the deadline, and track the case through to closure or further correspondence.

6. Forward Planning

   Where relevant, we help set up a lower-TDS certificate or better account structuring so the same issue doesn't recur next year.

Related Reading & Services

Tax notices often surface alongside a property transaction or a pending fund transfer, so these related pages fill in the rest of the picture. If your notice relates to a property sale, our buying and selling property in India from the USA page covers the transaction-side TDS and documentation in detail, our capital gains & TDS on property sale service goes deeper into the TDS deduction and lower-TDS certificate specifically, while our banking and repatriation of funds service explains how Form 15CA/15CB and FEMA rules govern moving sale proceeds to the USA once your tax position is settled. For a deeper walkthrough of exactly what to do in the days after a notice arrives, read our blog post NRI Income Tax Notice: What To Do. Illinois-based readers can also see local context on our Illinois NRI legal services page, including how the Chicago Indian consulate jurisdiction affects related paperwork. If you're renting out property while abroad, see our guide to NRI rental income tax and TDS rules, and if you're concerned about a past FEMA compliance gap, see our dedicated FEMA violations and RBI notices service page for the full compounding process, or read our blog post FEMA violations by NRIs: penalties and compounding. On the US-side reporting question that often comes up alongside an Indian tax notice, see FATCA & FBAR: What NRIs in the USA Must Report on Indian Bank Accounts.

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