Na2IrO3 (NIO) is known to be a spin–orbit (SO) driven j = 1/2 pseudo-spin Mott–Hubbard (M–H) insulator. The mixing of j = 1/2 pseudo-spin derived from t2g orbitals with the eg orbitals has not been probed yet from the viewpoint of local structural distortions. Using a combination of theoretical calculations and X-ray spectroscopy, we show that the energetics in the vicinity of Fermi level (EF) is governed by SO interactions, electron correlation, and local octahedral distortions. The j = 3/2 and 1/2 pseudo-spin states have an admixture of both t2g and eg characters due to a local structural distortion. Reduction of the local octahedral symmetry also enables Ir 5d–O 2p hybridization around the EF resulting in an M–H insulator with enhanced charge-transfer character. The possibility of the Slater insulator phase is also ruled out by a combination of the absence of room-temperature density of states in valence band spectra, calculated moments, and temperature-dependent magnetization measurements.