NRIs get no senior-citizen exemption bump: same slabs whatever your age

For a resident taxpayer, turning 60 brings a small consolation from the tax office: under the old regime the basic exemption limit rises from Rs 2,50,000 to Rs 3,00,000, and at 80 it climbs to Rs 5,00,000. Non-resident Indians get none of that concession. A non-resident individual is taxed at exactly the same slab rates whatever their date of birth, as the Income Tax Department states plainly in its non-resident individual guidance for Assessment Year 2026-27.

This single line of statute quietly costs an ageing NRI thousands of rupees a year, and it catches out families who assume that a 68-year-old parent living in Dubai enjoys the same Rs 3,00,000 head-start as a 68-year-old parent living in Delhi. They do not. The age-based exemption bump is reserved for those who are resident in India for the relevant financial year, and residency, not citizenship or age, is what the slab schedule turns on. Your residential status for FY 2025-26 decides which exemption ladder you climb.

What the Section Says

The rates of income tax for individuals are fixed each year by the Finance Act, in Part III of its First Schedule. For FY 2025-26 (AY 2026-27) the old-regime slab schedule sets three separate nil-tax thresholds, and each one is expressly conditioned on the taxpayer being resident in India during the previous year. The relevant limbs read, in substance: Rs 2,50,000 for an ordinary individual; Rs 3,00,000 "in the case of every individual, being a resident in India, who is of the age of sixty years or more but less than eighty years"; and Rs 5,00,000 "in the case of every individual, being a resident in India, who is of the age of eighty years or more". The words "being a resident in India" are the load-bearing phrase. Strip out residency and only the Rs 2,50,000 general limit survives.

A non-resident of any age therefore falls back to the Rs 2,50,000 threshold under the old regime. There is no age relaxation, no super-senior relaxation, and no proportionate relief. The table below sets out the old-regime position for FY 2025-26.

The default new tax regime under Section 115BAC does not distinguish by age at all, for residents or non-residents. Its single nil-tax slab of Rs 4,00,000 applies to everyone. The full FY 2025-26 new-regime ladder runs: nil up to Rs 4,00,000; 5% from Rs 4,00,000 to Rs 8,00,000; 10% from Rs 8,00,000 to Rs 12,00,000; 15% from Rs 12,00,000 to Rs 16,00,000; 20% from Rs 16,00,000 to Rs 20,00,000; 25% from Rs 20,00,000 to Rs 24,00,000; and 30% above Rs 24,00,000. A 4% health and education cess sits on top of the computed tax in both regimes.

Two related benefits stack on the same residency requirement, which is why the disadvantage compounds. The Section 87A tax rebate (up to Rs 60,000 in the new regime where total income does not exceed Rs 12,00,000, and up to Rs 12,500 in the old regime where total income does not exceed Rs 5,00,000) is available only to an individual "being a resident in India". A non-resident cannot claim it in either regime. Separately, Section 80TTB, which lets resident senior citizens deduct up to Rs 50,000 of deposit interest, is confined to a "senior citizen" defined as a resident individual of 60 or more, so it too is off-limits to non-residents. What an NRI can still claim, if they opt for the old regime, is the smaller Section 80TTA deduction of up to Rs 10,000 on savings-account interest, which is open to any individual other than a senior citizen, including on an NRO savings account.

Worked Example

Consider Rohan, aged 82, an Overseas Citizen of India settled in the United States and non-resident for FY 2025-26. His only Indian-source income is Rs 12,00,000 of NRO fixed-deposit interest and net house-property rent. Compare his old-regime liability with that of a friend of the same age who is resident in India on the identical Rs 12,00,000 of total income.

Rohan pays Rs 13,000 more than his resident counterpart on the same income, purely because the Rs 5,00,000 super-senior exemption is replaced by the Rs 2,50,000 general limit, exposing an extra Rs 2,50,000 slice to the 5% and, through the cascade, changing where the higher slabs bite. For a non-resident aged between 60 and 79 the loss is smaller but real: the Rs 3,00,000 senior limit falls to Rs 2,50,000, a Rs 50,000 slice taxed at 5%, so about Rs 2,600 including cess on the same figures. You can reproduce these numbers on the income tax calculator.

The new regime tells a different but equally costly story, because there the slabs are age-blind for everyone; the sting for the NRI is the lost rebate. Take an NRI with Rs 12,00,000 of taxable income electing the default regime: tax is nil up to Rs 4,00,000, Rs 20,000 on the Rs 4,00,000 to Rs 8,00,000 band at 5%, and Rs 40,000 on the Rs 8,00,000 to Rs 12,00,000 band at 10%, giving Rs 60,000 plus 4% cess of Rs 2,400, a total of Rs 62,400. A resident on the same Rs 12,00,000 pays nothing at all, because the Section 87A rebate of up to Rs 60,000 wipes out the entire liability at that income level. Same income, same regime, same age, and a Rs 62,400 gap driven solely by residency. Run your own comparison on the old vs new regime calculator before you file.

Common Mistakes

The errors below surface repeatedly in ITR processing and scrutiny for non-resident returns filed for AY 2026-27.

Claiming the senior-citizen exemption in the return. Software and manual computations sometimes apply the Rs 3,00,000 or Rs 5,00,000 slab because the taxpayer is over 60. When the residential status field is set to "Non-Resident", the Rs 2,50,000 limit governs, and the mismatch triggers a proposed adjustment under Section 143(1)(a). Verify the exemption against your ticked residency box, not your age.

Assuming Section 87A makes the tax nil. Non-residents routinely file expecting zero tax on incomes below Rs 12,00,000 in the new regime or Rs 5,00,000 in the old regime. The rebate is resident-only; the demand that follows is a genuine liability, not a system error. Read our explainer on responding to an outstanding demand and a Section 245 notice if a rebate-denial demand lands.

Claiming Section 80TTB deposit-interest relief. A non-resident senior cannot take the Rs 50,000 Section 80TTB deduction; at most the Rs 10,000 Section 80TTA relief on savings interest is available, and only under the old regime. Booking Rs 50,000 here is a common over-claim.

Ignoring TDS at the higher non-resident rates. Interest on NRO deposits suffers TDS at 30% plus surcharge and cess under Section 195, not the 10% of Section 194A that applies to residents. Many NRIs forget to reconcile this in Form 26AS and either under-report the gross or miss the refund. Check the deduction against the TDS calculator.

Overlooking treaty relief. Where a Double Taxation Avoidance Agreement applies, a lower withholding rate on interest may be available on furnishing a Tax Residency Certificate and Form 10F, but the DTAA reduces the rate, it does not convert Indian-source interest into exempt income. India retains its taxing right; the treaty only shares it.

FAQ

Does an NRI get the Rs 3,00,000 senior-citizen exemption at 60?

No. The Rs 3,00,000 limit for those aged 60 to 79 and the Rs 5,00,000 limit for those 80 and above apply only to individuals who are resident in India, as the Finance Act slab schedule specifies. A non-resident of any age is taxed from Rs 2,50,000 under the old regime for FY 2025-26.

Is the position different under the new tax regime?

The new regime under Section 115BAC makes no age distinction for anyone, so residents and non-residents share the same Rs 4,00,000 nil slab. The remaining disadvantage is the Section 87A rebate of up to Rs 60,000, which stays resident-only, so an NRI at Rs 12,00,000 pays Rs 62,400 where a resident pays nil.

Can a non-resident senior claim the Rs 50,000 deduction on deposit interest?

No. Section 80TTB is restricted to resident senior citizens. A non-resident may instead claim up to Rs 10,000 under Section 80TTA on savings-account interest, including NRO savings interest, but only if they opt for the old regime.

Does the standard deduction apply to an NRI with salary income?

Yes. The standard deduction under Section 16(ia), Rs 75,000 in the new regime and Rs 50,000 in the old regime for FY 2025-26, is available on salary income regardless of residency, because it is not conditioned on being resident.

Which basic exemption applies if I return to India mid-year?

It depends on your residential status for the whole financial year under Section 6, not the date you land. If your stay makes you resident for FY 2025-26 and you are 60 or over, the higher old-regime exemption applies for that year; if you remain non-resident, the Rs 2,50,000 limit holds.

Do NRIs pay a higher rate of tax than residents at the same income?

The slab rates themselves are identical. The difference comes from the lower basic exemption in the old regime for seniors, the denial of the Section 87A rebate, and higher TDS under Section 195. The marginal rates are the same; the reliefs are not.

Should an NRI choose the old or the new regime?

It depends on the income mix and available deductions. Because the senior exemption and the 87A rebate are both denied, many older NRIs with modest deduction claims find the new regime's wider Rs 4,00,000 slab and lower rates cheaper. Model both on the income tax new-regime calculator before you commit.

Turning 60 or 80 changes nothing on an NRI's tax return: the exemption ladder starts at Rs 2,50,000 under the old regime, the Section 87A rebate is unavailable, and only residency, decided year by year under Section 6, can move you onto the higher rungs. Compute the liability on both regimes, reconcile every rupee of Section 195 TDS in Form 26AS, and never let age-based software defaults overstate an exemption you are not entitled to claim.