How tax-free income works for NRIs.
Exempt income is not counted in your taxable income at all. Under the Income-tax Act, 2025 the exemptions have been moved into schedules, but the main ones that matter to NRIs are unchanged.
Many exemptions depend on your status. NRE interest, for example, is tax-free only while you live outside India for FEMA purposes. Once you return, the same interest can become taxable. That is why we confirm your residential status first.
Income that is tax-free for NRIs.
| Income | Tax-free in India? | Main condition |
|---|---|---|
| NRE account interest | Yes | You are a person resident outside India under FEMA |
| FCNR (B) deposit interest | Yes | You are a non-resident or RNOR |
| Gifts from relatives | Yes | Given by a relative as defined in the law, such as parents, siblings or spouse |
| Gifts on marriage and inheritance | Yes | Received on your marriage, or under a will or inheritance |
| Agricultural income from India | Yes | From farmland in India; it can raise the rate on your other income |
| Long-term gains on listed shares and equity funds | First ₹1.25 lakh a year | Gains above ₹1.25 lakh are taxed at 12.5% |
| Life insurance maturity | Yes, within limits | Premium within the limits set for the policy's issue date |
| PPF interest and maturity | Yes | Only for accounts opened while you were resident |
| Share of profit from a firm | Yes | Tax is paid by the firm; interest and salary from it are taxable |
Gifts and inheritance in more detail.
Gifts from relatives are tax-free whatever the amount. Gifts from people who are not relatives are taxable if they add up to more than ₹50,000 in a year. Money or property given by a resident of India to a non-resident is treated as Indian income, so the relative rule matters.
Inherited money and property are not taxed when received. Tax arises only later, when you earn rent or sell the asset. See Gifts and Inheritance for more.
Parents, children, siblings, spouse
And their spouses, and the siblings of your parents and spouse.
On marriage or under a will
Gifts received on your own marriage and anything inherited.
Friends and others above ₹50,000
The full value is taxable once the yearly total crosses ₹50,000.
Stamp duty value counts
For gifts of property, the stamp duty value is used to work out the gift amount.
Tax-free in India, but not always in the UK.
If you are UK resident, HMRC taxes your worldwide income. Indian exemptions do not apply in the UK, so income such as NRE and FCNR interest is generally reportable on your UK Self Assessment return.
Usually taxable in the UK for UK residents, even though India does not tax it.
People new to the UK may qualify for the four-year foreign income and gains regime, which can exempt foreign income in the UK.
Interest certificates from your Indian bank make the UK return straightforward.
We flag every item of Indian income your UK accountant needs. See UK tax implications and double taxation avoidance.
When exemptions come to an end.
- Moving back to IndiaNRE accounts must be re-designated once you return, and interest becomes taxable.
- FCNR deposits on returnInterest stays exempt while you are RNOR, then becomes taxable.
- PPF after maturityAn NRI cannot extend a PPF account past maturity.
- Insurance premiumsHigh-premium policies lose the maturity exemption.
Planning your return to India? Our Returning Indian page explains the RNOR window.
How we review your exempt income.
List every source of Indian income
Accounts, deposits, gifts, insurance and investments.
Check each exemption
We test the conditions against your status and the documents.
Show it correctly in your Indian return
Exempt income is disclosed in the return schedule, so your AIS matches.
Flag it for your UK return
We give you a note of what HMRC will expect to see.
Why NRIs in the UK choose us for India tax.
We work with the India side of your tax while keeping your UK Self Assessment and treaty position in view.
Every computation is checked by a second Chartered Accountant before anything is filed.
A written scope and fee before work starts, with no surprise charges later.
Encrypted document sharing and e-verification, so nothing needs a trip to India.
Returns, TDS refunds, FEMA questions and property sales handled by the same team.
Clear explanations of what you owe, why, and what to keep for next year.
Exempt income advice for NRIs throughout the UK.
We help NRIs living in every part of the UK understand which Indian income is tax-free, and make sure the same income is handled correctly on their UK return.
London
South East
Midlands
North of England
East and South West
Scotland, Wales, NI
Exempt income for NRIs FAQs.
Want to be sure what is really tax-free?
Send us a list of your Indian income. We will check every exemption and flag what HMRC needs to know.
This page is general guidance based on Indian income-tax and FEMA rules as they stand, including the Income-tax Act, 2025 that applies from 1 April 2026. It is not legal or financial advice for your situation. Rates, limits and deadlines can change, so please speak to us before acting on it.