Living Abroad, Taxed in India: Do NRIs Owe Advance Tax by 15 December?
You live in Dubai, London or Toronto. Your Indian tenant pays rent every month, the bank deducts tax on your NRO deposit, and you assume India has taken what it is owed.
Often it has not. When a payer skips TDS, or your Indian tax is more than the TDS, the gap is yours to pay in advance instalments, and the third one falls due on 15 December 2026.
Quick answer: An NRI must pay advance tax if the tax on Indian income for tax year 2026-27, after TDS actually deducted, is ₹10,000 or more (section 404, old section 208). By 15 December 2026, 75% of it should be paid. Senior-citizen relief and the new-regime rebate apply only to residents.
Contents
Do NRIs have to pay advance tax at all?
Yes. Advance tax is payable on the "current income" of every assessee, resident or not (section 403(1) of the Income-tax Act, 2025; old section 207). For a non-resident, current income means only income taxable in India: income received in India or accruing or arising in India.
Three rules decide whether you actually pay:
Threshold. Advance tax applies only where the tax payable for the year, as computed under the advance tax provisions, is ₹10,000 or more (section 404).
Credit for TDS. You reduce the estimated tax by TDS on your income, but only where the payer has actually deducted it (section 405).
No age relief for NRIs. The exemption for individuals aged 60 or more without business income is limited to individuals resident in India (section 403(3)).
Tax year 2026-27 (1 April 2026 to 31 March 2027) is the first full year under the 2025 Act, so these are the section numbers that will appear in interest computations and notices for this year.
Why TDS often does not cover an NRI's tax
Section 405 computes advance tax as the tax on your estimated income minus the tax "deductible or collectible at source". The condition that matters is in the same section: the TDS counts only if the person responsible has paid or credited the income after deducting tax.
This closes an argument non-residents once won. In Director of Income Tax v. Mitsubishi Corporation (Supreme Court, Civil Appeal No. 1262 of 2016, decided 17 September 2021), the Court held that a non-resident was not liable to interest under old section 234B where the payer failed to deduct tax, but only for years before financial year 2012-13.
From 2012-13 a proviso to old section 209(1)(d) said TDS not actually deducted cannot be subtracted. Section 405 of the 2025 Act carries the same rule. So if a tenant, buyer or client pays you without TDS today, the tax on that income is part of your advance tax.
Which NRIs usually need to pay?
In practice the NRIs who end up owing advance tax fall into a few patterns:
Rent from an Indian tenant who pays without deducting tax under section 393 (old section 195). Individual tenants often do not realise the obligation; see the NRI landlord's TDS guide.
Income from an Indian partnership firm or a business carried on in India.
Interest on loans to relatives or private companies, where the borrower does not deduct TDS.
Capital gains where TDS was deducted at a lower rate under a certificate, and the final gain or tax turns out higher.
Professional or consulting fees paid by Indian clients without TDS.
NRIs whose only Indian income is bank interest, mutual fund redemptions or listed shares sold through a broker usually have TDS at full rates. They rarely owe advance tax and are more likely to be waiting for a refund; see why banks deduct 31.2% on NRO interest.
Worked example 1: ₹2 lakh monthly rent, no TDS
Priya is a non-resident living in Dubai. For tax year 2026-27 her Indian income is:
Rent of ₹2,00,000 a month from a flat in Pune, ₹24,00,000 for the year. Her tenant, an individual, pays the full rent without TDS.
Interest of ₹1,50,000 on an NRO fixed deposit, on which the bank deducts TDS at 31.2%, that is ₹46,800.
She pays no municipal taxes on the flat and has no home loan. She stays in the new tax regime under section 202 (old section 115BAC).
Computation | Amount (₹) |
|---|---|
Rent (annual value) | 24,00,000 |
Less: 30% standard deduction, section 22(1)(a) | (7,20,000) |
Income from house property | 16,80,000 |
NRO FD interest | 1,50,000 |
Total income | 18,30,000 |
Tax at new-regime slabs (₹20,000 + ₹40,000 + ₹60,000 + 20% of ₹2,30,000) | 1,66,000 |
Add: health and education cess at 4% | 6,640 |
Tax before TDS | 1,72,640 |
Less: TDS actually deducted (bank only) | (46,800) |
Advance tax payable for the year | 1,25,840 |
The balance is well above ₹10,000, so section 404 applies. No section 156 rebate is available because Priya is not resident.
Her cumulative advance tax targets are ₹18,876 by 15 June, ₹56,628 by 15 September, ₹94,380 by 15 December 2026, and ₹1,25,840 by 15 March 2027.
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What does skipping it cost? Sections 424 and 425
Two interest provisions apply, and they stack.
Section 425 (old 234C), deferment. Interest on the shortfall at each instalment date: 3% for June, September and December, and 1% for March. There is no June interest if at least 12% was paid, and no September interest if at least 36% was paid.
Section 424 (old 234B), default. If advance tax paid by 31 March is less than 90% of the assessed tax, simple interest at 1% a month or part of a month runs from 1 April after the tax year until the tax is paid or the return is processed.
Using Priya's numbers, and ignoring the rounding the rules apply to the base amounts:
Scenario | Section 425 | Section 424 | Approximate total |
|---|---|---|---|
A: catches up in December, pays ₹94,380 by 15 Dec and the balance by 15 March | ₹566 (June) + ₹1,699 (Sept) | Nil (100% paid) | About ₹2,265 |
B: pays nothing until 31 July 2027, then pays ₹1,25,840 as self-assessment tax | ₹566 + ₹1,699 + ₹2,831 + ₹1,258 | ₹5,034 (4 months at 1%) | About ₹11,390 |
Paying by 15 December saves Priya roughly ₹9,000 in interest. The money was owed anyway; the interest is the price of paying late.
Worked example 2: a 68-year-old NRI landlord
Mr. Desai, 68, has lived in the United States for twenty years and is a non-resident. His only Indian income is ₹75,000 a month of rent, ₹9,00,000 a year, from a tenant who deducts no tax.
House property income: ₹9,00,000 less 30% = ₹6,30,000.
Tax under the new regime: 5% of ₹2,30,000 = ₹11,500, plus 4% cess of ₹460 = ₹11,960.
Section 156 rebate: not available, as he is not resident.
Section 403(3) senior exemption: not available, as he is not resident.
Because ₹11,960 is above ₹10,000, Mr. Desai is liable to advance tax. A resident aged 68 with exactly the same income would owe no tax after the rebate and would in any case be outside advance tax.
This is the case NRI retirees most often miss. The amounts are small, but interest notices and an outstanding demand on the portal are an avoidable irritation, especially when they later sell the property and need clean records.
A large capital gain later in the year
Section 425(4) (old proviso to section 234C) gives relief for income that is hard to forecast: capital gains, dividends, income under section 2(49)(n) and business income arising for the first time.
No section 425 interest arises on a shortfall caused by such income if the tax on it is paid in the remaining instalments, or by 31 March of the tax year.
Example: an NRI sells a plot in January 2027 under a lower deduction certificate, and the final capital gains tax exceeds the TDS by ₹3 lakh. Paying the ₹3 lakh by 15 March, or at the latest by 31 March 2027, avoids section 425 interest on it, and payment by 31 March also counts towards the 90% test in section 424.
For the TDS and certificate side of a property sale, see NRI property sale: TDS, capital gains and repatriation.
How to pay advance tax from abroad
Use the e-Pay Tax facility on the income-tax e-filing portal. You can pay with your PAN without logging in, or after logging in.
Choose advance tax as the type of payment (minor head 100), not self-assessment tax, and check the year shown on the challan before paying.
Pay through one of the modes the portal offers, such as net banking of an Indian bank. Many NRIs use their NRO account.
Keep the challan receipt. Its details are needed when you file the return, and the payment should appear in your annual tax statement.
Payment is treated as made on the date the bank completes it, so do not leave it to the evening of 15 December, particularly across time zones.
Decision checklist before 15 December
List every Indian income stream for 1 April 2026 to 31 March 2027: rent, interest, gains, firm income, fees.
For each, note whether the payer actually deducts TDS, and at what rate.
Compute tax at the applicable rates, add surcharge if any and 4% cess, and subtract only TDS actually deducted.
If the balance is ₹10,000 or more, check what you have paid so far against the 75% target for 15 December.
If you expect a capital gain before 31 March, plan to pay its tax by 15 March or 31 March.
If TDS will far exceed your real tax next year, consider a lower deduction certificate rather than waiting for refunds.
Confirm your residential status for the year before relying on any of this; see when an NRI becomes a tax resident of India.
Common mistakes
Counting TDS the tenant never deducted. Section 405 gives credit only for tax actually deducted. The tenant's default does not reduce your advance tax.
Assuming senior-citizen relief applies. The section 403(3) exemption is for residents only.
Assuming the ₹12 lakh no-tax limit applies. The section 156 rebate is for residents only.
Paying as self-assessment tax in March. Choosing the wrong payment type can delay credit; pick advance tax for payments made during the tax year.
Ignoring small gaps. Where the balance is under ₹10,000 there is no advance tax, but the tax is still payable with interest under section 423 (old 234A) if the return is late.
Forgetting the return. Paying advance tax does not replace the return. NRIs with taxable Indian income still file; see NRI return filing in India.
Practitioner insights
Where TDS on rent at 31.2% would far exceed the NRI's real tax, a lower or nil deduction certificate in Form 128 under section 395 (old Form 13, section 197) aligns TDS with actual liability. Once the tenant deducts at the certificate rate, that TDS is credited in the advance tax computation.
A tenant who fails to deduct faces interest under section 398(3) (old 201(1A)) and can be treated as an assessee in default. Raising this early often gets compliance going, which in turn reduces the landlord's advance tax.
Where a DTAA rate is lower than the domestic rate for interest or fees, the payer can apply it only with the treaty documents (tax residency certificate and Form 41, old Form 10F). Without them, budget for TDS at domestic rates and a refund later.
Interest under sections 424 and 425 is mandatory and compensatory. It is recomputed automatically when income changes in assessment, so a later addition can also increase it.
Summary table: old and new references
Item | Income-tax Act, 1961 | Income-tax Act, 2025 |
|---|---|---|
Liability for advance tax; senior-resident exemption | Section 207, 207(2) | Section 403(1), 403(3) |
₹10,000 threshold | Section 208 | Section 404 |
Computation; credit only for TDS actually deducted | Section 209(1)(d) and proviso | Section 405 |
Instalment dates and percentages | Section 211 | Section 408 |
Interest for late return | Section 234A | Section 423 |
Interest for default in advance tax | Section 234B | Section 424 |
Interest for deferment of advance tax | Section 234C and proviso | Section 425 and 425(4) |
Self-assessment tax | Section 140A | Section 266 |
Rebate for resident individuals | Section 87A | Section 156 |
New tax regime rates | Section 115BAC | Section 202 |
TDS on payments to non-residents | Section 195 | Section 393(2) |
Lower deduction certificate | Section 197, Form 13 | Section 395, Form 128 |
Frequently asked questions
Do NRIs have to pay advance tax in India?
Yes, if their tax on Indian income for the year, after TDS actually deducted, is ₹10,000 or more (section 404 of the Income-tax Act, 2025; old section 208). Non-residence gives no exemption. Most NRIs whose only Indian income suffers full TDS end up with nothing to pay.
What is the advance tax due date in December 2026?
15 December 2026. By then, at least 75% of the estimated advance tax for tax year 2026-27 should be paid (section 408; old section 211). The final instalment, 100%, is due by 15 March 2027.
Is a senior citizen NRI exempt from advance tax?
No. The exemption in section 403(3) (old section 207(2)) applies only to an individual resident in India aged 60 or more with no business or professional income. A non-resident senior citizen must pay advance tax if the ₹10,000 threshold is crossed.
My tenant did not deduct TDS on rent. Do I still have to pay advance tax?
Yes. Section 405 lets you reduce advance tax only by tax the payer has actually deducted. If the tenant skipped TDS, the full tax on that rent counts towards your advance tax, while the tenant separately faces consequences for the default.
What interest applies if an NRI misses advance tax?
Section 425 (old 234C) charges interest on each instalment shortfall: 3% for the June, September and December instalments and 1% for March. Section 424 (old 234B) adds 1% a month from 1 April if less than 90% of the assessed tax was paid by 31 March.
Does the ₹60,000 rebate under the new regime help NRIs?
No. The rebate in section 156 (old section 87A) is available only to an individual resident in India. An NRI pays tax from the first rupee above the ₹4 lakh basic exemption in the new regime.
Can an NRI pay advance tax from a foreign bank account?
Advance tax is paid through the e-Pay Tax facility on the income-tax e-filing portal using the payment modes it offers, which are Indian banking channels. Many NRIs pay from their NRO account's net banking, choosing advance tax as the payment type.
Related reading
Sources
Income-tax Act, 2025 as amended by the Finance Act, 2026 (text on incometaxindia.gov.in): sections 22, 156, 202, 266, 393, 395, 398, 403 to 408 and 423 to 425. Income-tax Act, 1961: sections 87A, 115BAC, 140A, 195, 197, 201(1A), 207 to 211 and 234A to 234C. Director of Income Tax v. Mitsubishi Corporation, Supreme Court of India, Civil Appeal No. 1262 of 2016, judgment dated 17 September 2021. Figures in the worked examples are illustrative and ignore rounding.
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