An Indian citizen or a foreign citizen of Indian origin who stays abroad for employment/carrying on business or vocation for 6 months or more or under circumstances indicating an intention for an uncertain duration of stay abroad is a Non-Resident Indian (NRI).
(Those who stay abroad on business visit, medical treatment, study or such other purposes, which do not indicate an intention to stay there for an indefinite period, are not considered as NRI’s).

TDS stands for Tax Deducted at Source.

NRIs have been offered a separate concessional tax regime in respect of certain types of income under Chapter XII A comprising section 115C to 115I. The said chapter has been introduced in the Income tax Act with a view to encouraging and inviting Non-residents Indian to invest their foreign earnings in India.

The rate prescribed for TDS from NRI's income is the maximum rate of tax at which relevant Income is taxable in India . However, in majority of the cases of NRI, the actual tax liability is lower than this. However, the higher deduction of tax so made is generally not claimed as refund by filing Return of Income. In order to assist such situation, the Income-tax Act has provided procedure under section 197 whereby a NRI can apply to the Assessing officer (in prescribed form) to issue specific certificate authorizing the payer of income (who normally deducts tax at highest prescribed rate) to deduct tax at a lower rate or nil rate. The NRI should estimate his income, tax liability and likely TDS and then apply for partial or complete Tax Exemption Certificate.

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