How foreign rental gains are taxed in India

I have been living in Australia and bought a house in 2023 through a mortgage. I plan to return to India permanently by December 2025. After relocating, I intend to rent out the Australian property and continue servicing the mortgage using the rental income. Will this rental income be taxed in India? Can I claim a deduction for the mortgage interest?

- Harshal Bhuta

Depending on your stay in India over the preceding years, you may qualify as a Resident but Not Ordinarily Resident (RNOR) under Indian tax laws. Individuals with RNOR status are not liable to pay tax in India on foreign income, unless it is derived from a business controlled or a profession set up in India. For you, rental income from Australian property qualifies as foreign-sourced, since it originates from an immovable asset located outside India. So, for the financial years in which you qualify as RNOR, this income will not be taxable in India. However, once your status changes to Residen