NRI Tax Planning Before March 31: Capital Gains, TDS & Smart Strategies (2026 Guide)

Every year, thousands of NRIs lose money due to poor year-end tax planning. They either overpay tax, miss eligible exemptions, or fail to optimise TDS before March 31. This, however, can be easily avoided with proper tax planning that considers TDS rates, total Indian tax liability, double taxation relief, ITR filing requirements, capital gains, and available deductions and exemptions.

Under the Income Tax Act, 1961, NRIs can legally reduce their tax liability before March 31 through structured planning. This includes optimising the use of NRE and NRO accounts in accordance with FEMA regulations, claiming eligible deductions under Sections 80C and 80D (subject to eligibility), availing long-term capital gains exemptions under Sections 54 and 54EC (subject to conditions), and claiming relief under applicable DTAA provisions while filing the ITR. NoBroker, a leading legal services platform, can assist you with end-to-end NRI tax planning and compliance. This guide provides a clear action plan for effective NRI tax planning before March 31.

Why March 31 Is Crucial for NRI Tax Planning?

March 31, 2026, marks the end of the financial year FY 2025-26 and is the final deadline to complete eligible tax-saving investments, review TDS deductions, and take corrective compliance actions that directly impact an NRI’s tax liability for the year. Timely NRI tax planning helps optimise deductions, minimise excess TDS, and avoid interest liabilities.

Why is March 31st relevant for NRI Tax Planning?

Before the financial year closes, NRIs should review and complete the following: [1]

• Finalising deductions under Section 80C (ELSS, life insurance, principal repayment of home loan, and eligible NPS contributions)
• Claim additional NPS deduction under Section 80CCD(1B) (up to ₹50,000, if eligible)
• Pay medical insurance premiums under Section 80D (for self, spouse, children, and resident parents, subject to conditions)
• Claim home loan interest deduction up to ₹2 lakh for self-occupied property under Section 24(b)
• Plan capital gains exemptions under Sections 54, 54F and 54EC (applicable only to long-term capital gains and subject to reinvestment timelines)
• Advance tax payment (if applicable)
• TDS review and correction, and applying for a lower/nil TDS certificate where eligible
• Avoiding interest under Sections 234B and 234C for shortfall or deferment of advance tax
• Financial year closing and documentation readiness for ITR filing

Quick NRI Tax Checklist to know Before March 31st (2026)

A quick year-end review of capital gains, TDS deductions, eligible investments, and advance tax payments can help NRIs avoid excess tax outflows and interest charges. This checklist below can help you complete all necessary compliance and tax-saving actions before the financial year closes:

Action	Why It Matters	Deadline Impact
Review capital gains	Plan exemptions under Sections 54/54F/54EC & compute LTCG accordingly	Potential tax savings of 10-20%
Apply Form 13 (Section 197)	Obtain Lower or nil TDS Certificate	Immediate TDS reduction (if approved)
Invest under Section 80C	Claim eligible deductions (ELSS, NPS, home loan principal, etc.)	Before March 31
Pay advance tax	Avoid interest under Sections 234B & 234C	Prevents interest liability
Review NRO account interest	Verify TDS on bank interest income	Helps claim refund of excess TDS
Claim DTAA relief	Avoid double taxation on the same income	Reduces global tax exposure

Capital Gain for NRI – How to Reduce Tax Before March 31st?

Reviewing capital gains for NRI before March 31st can help them meet financial-year deadlines and plan exemptions under Sections 54, 54F, or 54EC, where applicable. NRIs are taxed on capital gains arising from Indian-sourced assets such as immovable property, shares, and mutual funds under the Income Tax Act, 1961.

How to Reduce Capital Gain for NRI Before March 31st:

• Claim exemptions under Section 54 by reinvesting LTCG from the sale of a residential property to another residential property in India within the prescribed timelines
• Claim exceptions under Section 54F by reinvesting net sale consideration from non-residential assets to a residential property (Capped at ₹10 crore investment value)
• Claim exceptions under Section 54EC by reinvesting capital gains in government-notified bonds such as NHAI, REC, PFC and IRFC within 6 months from the date of transfer (capped at ₹50 lakh investment limit)
• Apply for a lower or nil TDS certificate under Section 197 (Form 13) to prevent excess tax deduction.
• Set off eligible short-term and long-term capital losses against gains while filing ITR
• Carry forward capital losses by filing ITR within the due date under Section 139(1)
• Utilise the ₹1.25 lakh LTCG exemption limit under Section 112A (for listed equity shares and equity-oriented mutual funds, where applicable)
• Review Section 115E for concessional 10% LTCG (without indexation) on specified foreign exchange assets
• Claim relief under applicable DTAA provisions (Section 90/91) to avoid double taxation.

Tax on Property Sale for NRIs (Section 195)

Under Section 195 of the Income Tax Act, 1961, any person purchasing an immovable property from an NRI is required to deduct TDS at applicable rates. The TDS is deducted on the entire sale consideration, not just on capital gains, and is irrespective of the property's value.

Applicable TDS Rates:

• For LTCG: With a lower TDS Certificate, 12.5% TDS aligns on capital gain (if the property is held for more than 24 months)

Plus applicable surcharge and 4% health & education cess

• For STCG: NRI seller's applicable income tax slab rates (if the property is held for 24 months or less)

Plus applicable surcharge and 4% health & education cess

Note: TDS on the sale of property must be deposited within 7 days of the end of the month in which the deduction was made. The buyer must also file Form 27Q and issue a TDS certificate (Form 16A) to the NRI seller.

Example:  Rajesh Mehta, an NRI based in Dubai, sells his Mumbai property in February 2026 for ₹1 crore, which resulted in a long-term capital gain of ₹40 lakh after deducting an indexed cost of ₹60 lakh.

His actual tax liability comes out to be ₹5,00,000 (₹40 lakh × 12.5%) plus 4% cess of ₹20,000, resulting in a total tax of approximately ₹5,20,000. However, under Section 195, the buyer must deduct TDS at 12.5% on the full sale value of ₹1 crore, amounting to ₹12,50,000, plus applicable surcharge and cess. This can lead to significant excess deduction, which can be avoided if Rajesh obtains a lower TDS certificate under Section 197.

Section 54, 54F & 54EC Reinvestment Options

Taxpayers can save on their long-term capital gains tax by reinvesting into another residential property or government-notified bonds, the details of which are listed below:

Section	Investment Type	Time Limit
54	Purchase/construct a residential house	2 years (purchase) / 3 years (construction)
54F	Invest the full net sale consideration into 1 residential house	Within 2 years
54EC	Capital gains bonds	Within 6 months

Capital Gains on Shares & Mutual Funds

NRIs are taxed on gains from Indian securities under Sections 111A, 112A, and 195.

Capital Gains Tax Rules for NRIs:

• Equity Shares & Equity Mutual Funds:
  • LTCG: 12.5% (holding >12 months) on gains exceeding ₹1.25 Lakh (Section 112A).
  • STCG: 20% (holding <12 months).
• Debt Mutual Funds & Unlisted Shares:
  • Taxed at the applicable slab rate
  • Indexation benefits are not available for most debt mutual funds.

How to Reduce TDS for NRIs Before March 31st?

NRIs often face higher TDS deductions because tax is withheld on gross payments rather than on actual taxable income. But they can avoid excess tax outflow and refund delays by reviewing their TDS before March 31st.

What Is Form 13 Income Tax for NRI? (Section 197)

Form 13 is an online application filed under Section 197 of the Income Tax Act, 1961, to obtain a lower or nil TDS certificate. If approved, the Assessing Officer will authorise the deductor to deduct tax at a reduced rate based on the NRI’s estimated actual tax liability instead of the default higher rate.

When is Form 13 Required?

Without Form 13, deductors must apply the prescribed TDS rates under Section 195. Form 13 is required for:

• Selling property in India
• Receiving large rental income
• Earning interest or other taxable income is subject to high TDS.
• DTAA benefits reduce actual tax liability

How to Apply for Form 13?

• Visit the TRACES portal and register as a taxpayer using your PAN.
• Navigate to the Statements/Forms tab and select Request for Form 13
• Provide information regarding the nature of income, deductor's TAN, estimated income for the financial year, and reasons for the requested exemption.
• Upload required documents, including last 4 years' income tax returns, estimated computation of income for the current financial year, PAN card, details of the deductor, and sale agreement and valuation report (if applicable)
• Submit the form using a DSC or EVC.
• The assessing officer will review your application within 30 days.

Section 195: TDS on Rental Income

Section 195 of the Income Tax Act, 1961, mandates that any person making rental payments to an NRI landlord must deduct TDS if the income is taxable in India. The tax must be deducted at source before the payment is made or credited, and there is no minimum threshold limit for TDS deduction in such cases.

NRIs are subject to 30% TDS on gross rental income, plus applicable surcharge and 4% health and education cess. TDS is deducted from the gross rent, without taking into account deductions such as the 30% standard deduction under Section 24(a) or interest on borrowed capital under Section 24(b). Since actual taxable income is calculated after these deductions, this often results in excess TDS. The NRI can correct this by filing an income tax return and claiming the appropriate deductions and refund of excess tax withheld. The tenant is required to file Form 27Q quarterly and issue Form 16A, which enables the NRI to claim TDS credit.

Common TDS Mistakes NRIs Make

The most common TDS mistakes usually stem from residency rules, documentation gaps, and mismatches. Common mistakes include:

• Assuming 10% TDS applies (resident rates do not apply to NRIs))
• Not applying for a lower or nil TDS certificate.
• Misunderstanding the DTAA benefits to be automatic.
• Failing to report capital gains properly
• Ignoring form 26AS or AIS mismatches
• Not updating PAN details with deductors.
• Buyer deducting TDS at the maximum rate without reviewing the actual gain.
• Using NRO accounts without reviewing TDS implications

Tax-Saving Investment Products for NRIs (Before Deadline)

NRIs can claim deductions under the old tax regime on Indian taxable income before the FY 2025-26 deadline. Section 80C allows deductions up to ₹1.5 lakh, and an additional ₹50,000 deduction is available under Section 80CCD(1B) for eligible National Pension System contributions. These deductions in NRI mutual funds help reduce total taxable income if investments are made before March 31st.

Section 80C Investment Options for NRIs

Under Section 80C of the Income Tax Act, 1961, NRIs can claim up to ₹1.5 lakh deduction on eligible investments. [2]

• ELSS mutual funds (3-year lock-in; LTCG taxed under Section 112A after ₹1.25 lakh threshold)
• Life insurance premiums for self, spouse, or children (premium ≤10-20% of sum assured)
• ULIPs
• Home loan principal repayment
• 5-year tax-saver fixed deposits (via NRO account)

National Pension System (NPS):

• ₹1.5 lakh under Section 80CCD(1)
• Additional ₹50,000 under Section 80CCD(1B)
• Total possible deduction: ₹2 lakh
• An account can be opened through e-NPS using an NRE/NRO account.

Not Eligible:

• Public Provident Fund: NRIs cannot open new PPF accounts (existing accounts can continue until maturity)

NRE vs NRO Account Taxation Review

NRE accounts offer tax-free interest and full repatriation, ideal for foreign-source income, while NRO accounts are for India-sourced income, with interest taxed at 30% (plus surcharge & cess) and limited repatriation. The choice between NRE vs NRO account taxation depends on the source of funds, repatriation needs, and overall tax planning strategy.

Feature	NRE	NRO
Interest Tax	Exempt in India	Taxable in India
Repatriation	Fully repatriable	Limited (Subject to RBI rules)

Income Tax Filing for NRI – What to Complete Before March 31st.

Before March 31st, NRIs are recommended to review their Indian income and finalise their tax planning for the financial year FY 2025-26. This includes verifying Form 26AS and AIS for TDS credits, declaring interest earned on NRO accounts, computing capital gains, and preparing documentation such as Form 10F and a Tax Residency Certificate if claiming DTAA benefits. 

Should NRIs File Income Tax Return?

Yes, an NRI should file an income tax return if their total income earned in India exceeds the basic exemption limit of ₹2.5 lakhs (under the old regime) and ₹3 lakhs (under the new regime). Taxable income for the same includes rental income, interest on NRO accounts, capital gains and salary for services rendered in India.

Considerations for NRI Tax Filing:

• Required for capital gain transactions, and if income exceeds the threshold limit, TDS needs to be claimed, losses need to be carried forward, or for high-value transactions.
• Filed through Form ITR-2 for capital gains and Form ITR-3 for business income
• Should be filed before July 31st of the assessment year

Advance Tax, Belated & Revised Returns

NRIs are required to pay advance tax if their total tax liability for the year exceeds ₹10,000. Advance tax is payable in instalments on June 15th, September 15th, December 15th and March 15th. If advance tax is not paid, or less than 90% of the total tax is paid, interest under Sections 234B and 234C is levied at 1% per month (or part thereof). 

If the original return is not filed by July 31st, a belated return can be filed by December 31st of the assessment year, subject to a late filing fee of ₹5,000 (₹1,000 if total income does not exceed ₹5 lakh). If errors are discovered after filing, a revised return can be submitted under Section 139(5) within the prescribed timeline.

NRI Taxation in India Under the Income Tax Act

Under the Income Tax Act, 1961, NRIs are taxed in India only on income earned, accrued or received in India, such as rental income, salary for services rendered within India, and capital gains from Indian assets. Taxability depends entirely on residential status, which is determined by the number of days spent in India during the financial year. An individual is treated as a resident if they stay in India for 182 days or more in a financial year, or meet the 60-day plus 365-day condition (subject to special rules for Indian citizens and Persons of Indian Origin). If these conditions are not satisfied, the individual qualifies as a Non-Resident for tax purposes.

An individual returning to India may qualify as Resident but Not Ordinarily Resident, which provides limited tax relief. Under the RNOR status, foreign income is not taxable in India unless it arises from a business or profession carried on in India.

If their income exceeds ₹2.5 lakhs (under the old regime) and ₹3 lakhs (under the new regime), NRIs need to file an income tax return. In addition to income tax, a surcharge (ranging from 10% to 37%, depending on total income) and a 4% health and education cess may apply. Utilizing Double Taxation Avoidance Agreements can help reduce tax burdens on NRIs and enable tax credits and exemptions. 

Best Online Platforms for NRI Tax Filing Before March 31st

 Choosing the right platform for NRI tax filing before March 31st will help ensure accurate computation of capital gains, proper TDS credit claims, DTAA documentation, and timely compliance. If you’re looking for effective NRI tax filing services, especially for property sales, TDS under Section 195, or DTAA claims, NoBroker can help. With a team of verified legal experts, over 10 years of experience, and hassle-free service booking, it is a leading online platform for NRI tax filing.

Platform	Best for	Approx Fee	NRI Expertise
NoBroker	End-to-end NRI tax & property-linked cases		High
ClearTax	Self-filing with assisted plans	₹1,000 - ₹7,000	Moderate
Quicko	Capital gains & stock investors	₹1,000 - ₹5,000	Moderate
TaxBuddy	Assisted with filing with CA support	₹1,500 - ₹6,000	Moderate

Note: Fees vary depending on the complexity of the matter (capital gains, DTAA claims, business income, Form 13 applications, etc.).

Common NRI Tax Planning Mistakes Before March 31st

Because of limited awareness of Indian tax rules, many NRIs end up paying excess tax, facing refund delays, or incurring interest liabilities. Most of these issues can easily be avoided with proper year-end planning before March 31st. The most common NRI tax planning mistakes include:

Mistake #1: Miscalculating residential status

Tax residency depends on an NRI’s count of total days spent in India. A person is considered a resident for tax purposes if they have spent 182 or more days in India.

Mistake #2: Not converting bank accounts:

Upon receiving your residency status, you must immediately inform your bank and convert your savings account into an NRO/NRE account. Failure to do so can lead to penalties, frozen accounts or tax complications.

Mistake #3: Ignoring taxation on NRO account income

NRE account interest is completely tax-free in India, but NRO account income is fully taxable under the applicable slab rates. All NRO rental income, interest, and dividends must be reported and should match AIS.

Mistake #4: Overlooking DTAA and missing documentation: 

Failing to understand the DTAA benefits and to file the necessary paperwork can result in double taxation. Filing Form 67 before the ITR deadline can help claim the foreign tax credit.

Mistake #5: Ignoring high TDS on property sales: 

NRIs are subject to a much higher TDS rate than residents on the total sale value. Applying for a lower deduction certificate through Form 13 ensures that TDS is deducted only on the actual capital gain.

Mistake #6: Misunderstanding investment eligibility:

Even though NRIS can maintain existing PPF accounts until maturity, they cannot create new ones. Furthermore, investments in PPF and NSC are not eligible for Section 80C deductions.

Mistake #7: Missing ITR deadline:

ITRs must be filed under ITR-2/3 before the deadline to claim refunds for excess TDS deducted. Failure to do so can lead to a fine of up to ₹5,000 or the right to carry forward capital losses.

Final Action Plan for NRIs Before March 31st (Step-by-Step)

NRIs should complete their tax planning actions before March 31, 2026, to optimise their Indian tax liability, avoid interest under Sections 234B/234C, and prevent excess TDS. Below is a NoBroker-recommended final action plan to follow before the financial year closes.

Step #1: Review Indian income:

Compile all income earned in India during FY 2025-26, including rent, capital gains, dividends, and interest from NRO accounts. Cross-check Form 26AS and AIS to ensure TDS credits are correctly reflected.

Step #2: Calculate capital gains:

Gains on property and equity sales need to be assessed. Property LTCG is taxed at 12.5% without indexation, while STCG on equity is taxed at 20%. Equity LTCG under Section 112A is taxed at 12.5% on gains exceeding ₹1.25 lakh.

Step #3: Apply for Lower TDS:

If TDS on your property sale exceeds your actual tax liability, you can apply for a lower or nil TDS certificate via Form 13.

Step #4: Reinvest under Section 54/54F:

To avoid tax on capital gains, you can evaluate reinvestment options in residential property or government-notified bonds within the specific timeframe under Section 54 and Section 54F. If reinvestment is pending, consider depositing unutilised amounts in the Capital Gains Account Scheme before the ITR due date.

Step #5: Pay advance taxes:

If your total tax liability exceeds ₹10,000 after accounting for TDS, you will need to pay the remaining amount as advance taxes by March 31 to avoid interest on late payments.

Step #6: Select Tax regime:

Evaluate whether the old regime (with deductions such as 80C, 80D, etc.) or the new regime under Section 115BAC (lower slab rates but limited deductions) is more beneficial based on your income composition.

Step #7: File or revise ITR return: 

Make sure that all your income is declared, and file or revise your ITR to correct any errors.

Step #8: Claim DTAA relief, if possible:

If income is taxed in both India and your country of residence, claim relief under the applicable Double Taxation Avoidance Agreement by furnishing TRC, Form 10F, and filing Form 67 where required.

Why NoBroker for NRI Tax Planning?

NRI tax planning can be complex, especially when managing capital gains, TDS, DTAA claims, and selecting the appropriate foreign regime. NoBroker simplifies the process with end-to-end NRI tax planning support handled by verified legal and tax experts. With 10+ years of experience, NoBroker helps you maximise deductions, avoid excess TDS, meet March 31st deadlines, and file your returns accurately, so you stay compliant in India without the extra stress.