NRI residential status for Indian income tax — the current day-count framework

Residential status is the gatekeeper of Indian income tax. Whether you are a Non-Resident (NRI), a Resident but Not Ordinarily Resident (RNOR), or a Resident and Ordinarily Resident (ROR) decides what income the Indian tax department can reach — from just your Indian-source income (NRI), to Indian + foreign-business-controlled- from-India income (RNOR), to your worldwide income (ROR).

Status is decided for each financial year separately (1 April to 31 March) based on physical presence and a handful of special tests. This article sets out the current framework — including the Section 6(1A) deemed-resident rule introduced in Budget 2020 and the 120-day window for Indian-citizen visitors earning over ₹15 lakh in India — and shows how each outcome is taxed.

The Income-tax Act, 2025, which replaces the 1961 Act from 1 April 2026, retains the same residency framework in renumbered sections; the day-count logic below applies unchanged.

The four tests

An individual is a Resident of India in a financial year if either of two basic conditions is met:

The 182-day test — physical presence in India for 182 days or more during the relevant financial year, or
The 60-day + 365-day test — physical presence for 60 days or more in the relevant financial year and 365 days or more in the four preceding financial years combined.

If neither condition is met, the individual is a Non-Resident (NRI).

The 60-day limb is modified in three important cases — this is where most NRI cases are actually decided:

Indian citizen leaving India for employment abroad — the 60-day threshold in test 2 is raised to 182 days. (In practice: only the 182-day test in test 1 applies; test 2 rarely catches the departing NRI in the year of departure.)
Indian citizen being a crew member of an Indian ship — same 182-day substitution.
Indian citizen or Person of Indian Origin (PIO) visiting India — the 60-day threshold is raised to 182 days, except if the individual's total Indian-source income exceeds ₹15 lakh in the year, in which case the threshold is 120 days (the Budget 2020 rule).

So the actual threshold to become a resident in a given year, depending on the individual, looks like:

Individual	Threshold (year-of-question presence, combined with 365 days in prior 4 years)
Foreign national visiting India	60 days
Indian citizen / PIO visiting with Indian income ≤ ₹15 lakh	182 days
Indian citizen / PIO visiting with Indian income > ₹15 lakh	120 days
Indian citizen departing for overseas employment (year of leaving)	182 days
Crew of an Indian ship (Indian citizen)	182 days (plus special voyage-day rule, below)

The 182-day test in test 1 applies to everyone regardless.

Section 6(1A) — the deemed-resident rule

Introduced by the Finance Act 2020 and operative from FY 2020-21 onwards:

An Indian citizen (not an OCI / PIO) with total Indian-source income exceeding ₹15 lakh in a year who is not liable to tax in any other country or territory by reason of domicile, residence, or any other similar criterion is deemed a resident of India — regardless of actual day count.

The target is the "stateless NRI" — Indian citizens who work or base themselves in zero-tax jurisdictions (the UAE for a long period pre-2023, some Caribbean islands, parts of Monaco, etc.) and therefore pay tax nowhere.

Three refinements of practical consequence:

"Liable to tax" means within the tax net of the other country, not necessarily paying tax there. The CBDT clarified (Circular 36/2020, reaffirmed in later guidance) that UAE residents holding a UAE tax residency certificate are generally treated as liable to tax in the UAE for this purpose. The UAE's introduction of corporate tax from June 2023 narrowed the population this rule catches further, but it still matters for individuals without UAE ties.
Applies to Indian citizens only — OCI and PIO holders with foreign citizenship are outside the deeming rule.
Automatically RNOR — an individual caught by Section 6(1A) is by operation of law a Resident but Not Ordinarily Resident, not an ROR. The tax exposure is therefore limited to Indian income plus foreign business controlled from India (see RNOR treatment below) — significant, but not worldwide.

RNOR — the transitional status

An individual who is a resident in a year is further classified as Resident but Not Ordinarily Resident (RNOR) if either:

They were a Non-Resident in India in 9 out of the 10 financial years preceding the year in question, or
They were in India for 729 days or less in the 7 preceding financial years.

Additionally, post-Budget 2020:

An Indian-citizen/PIO visitor who became resident via the 120- day route (income > ₹15 lakh) is automatically RNOR in that year.
An individual deemed resident under Section 6(1A) is automatically RNOR in that year.

In practice, most returning NRIs get 2–3 years of RNOR after they come back to India:

Year of return: presence crosses 182 days → Resident. But they have been NRI in most of the preceding years → RNOR.
Year after return: Resident again → RNOR again if they still clear the 9-of-10-NRI or 729-day test.
The RNOR window expires when both transitional tests fail.

This RNOR window is the single most important tax-planning opportunity for an NRI deciding when and how to return. See our returning-NRI bank accounts article for how to structure the transition.

How each status is taxed

Income type	NRI	RNOR	ROR
Indian-source income (salary from Indian employer, rent on Indian property, interest on NRO, capital gains on Indian assets, dividends from Indian companies)	Taxable	Taxable	Taxable
Income received in India (even if earned abroad)	Taxable	Taxable	Taxable
Income from a business or profession set up in India but actually operated abroad	Taxable	Taxable	Taxable
Income from a business controlled from India	Not taxable	Taxable	Taxable
Foreign salary for work done abroad, foreign dividends, foreign rents, foreign capital gains	Not taxable	Not taxable	Taxable
Schedule FA (foreign asset) reporting	Not required	Not required	Required

The key transition moment is from RNOR to ROR: Schedule FA kicks in, worldwide income becomes assessable, and the Black Money Act on undisclosed foreign assets starts to bite. Most of the planning value of the RNOR window sits exactly in that pre-ROR window.

Day counting — precision matters

The arithmetic of residential status is day-by-day, not month-by-month:

Day of arrival in India counts as a day in India.
Day of departure from India counts as a day in India.
Crossing the international date line, transit through airports, and mid-flight status do not create ambiguity — the stamp on the passport is the reference.
For part-days straddling midnight at immigration, the physical stamp controls.

Crew of Indian ships (Indian citizens) get a special rule: the period spent at sea on an eligible voyage is excluded from the day count, with the definition tied to start and end ports. This is a crew-specific concession and does not apply to aircraft crew or cruise passengers.

Evidence of physical presence

In a contested case — audit, assessment, or appeal — the Assessing Officer looks at:

Passport with immigration stamps — the primary evidence.
Foreigner Regional Registration Office (FRRO) records for OCI / PIO holders where applicable.
Bureau of Immigration records (requestable by the AO).
Travel-agent or airline records, boarding passes.
Hotel and rental receipts corroborating stay abroad.
Employer letter evidencing foreign employment.
Utility and phone bills in the overseas location.

Maintaining a travel log — a simple spreadsheet with arrival and departure dates, purpose, and flight numbers — is strongly recommended for anyone whose status is close to a threshold. The CA preparing your return relies on your number; the AO, if queried, will want your evidence.

Worked examples

Example 1 — Classic NRI. Mr A is an Indian citizen working in London since 2015. He visits India for 40 days in FY 2025-26. He is NRI (under 182 days in the year, and even if 365+ days in prior 4 years, 40 < 60 original threshold and he isn't earning over ₹15 lakh of Indian income; the 182-day special threshold for Indian citizens-abroad applies).

Example 2 — Close to the line. Ms B is an Indian citizen, London-resident, but earning ₹18 lakh of Indian rental income every year. She visits India for 130 days in FY 2025-26, and has been in India 450 days over the prior 4 years. Because her Indian income exceeds ₹15 lakh, the 120-day threshold applies. She crosses it → she is a Resident, and automatically RNOR for that year under Section 6(6).

Example 3 — Deemed resident. Mr C is an Indian citizen based in Dubai, earning ₹25 lakh of Indian rental and interest income. He does not hold a UAE TRC and is not in any country's tax net. He spends 70 days in India in FY 2025-26. He fails all the physical-presence tests, but Section 6(1A) catches him: he is deemed resident, automatically RNOR. His foreign salary (paid in Dubai) remains outside Indian tax; his Indian income is taxable with normal filing.

Example 4 — Returning NRI. Ms D, an Indian-citizen NRI since 2012, returns to India permanently on 1 July 2025. She is in India for 275 days in FY 2025-26 → Resident. She was NRI in at least 9 of the 10 preceding years → RNOR for FY 2025-26. Her foreign salary earned before the return and credited to her foreign account remains tax-free in India. The next year (FY 2026-27), she is Resident again and still qualifies for RNOR under the same tests — probably one more year of the shelter before she becomes ROR in FY 2027-28.

Special cases

Dual tax residence and DTAA tie-breakers

An individual can be a tax resident of two countries simultaneously (say, the US under the substantial presence test and India under the 182-day test). In that case, the tie-breaker rules under the applicable DTAA — permanent home, centre of vital interests, habitual abode, nationality — determine which country has the primary taxing right for treaty purposes. See our India DTAA article.

Dual tax residence is an ITR-2 reporting item (Schedule TR — Tax Residency) and drives the Form 67 foreign-tax-credit mechanics.

OCI holders

An OCI is typically a foreign citizen (of Indian origin) and is treated for residency purposes like an Indian-origin visitor — not an Indian citizen. The 120-day threshold (income > ₹15 lakh) and 182-day threshold (otherwise) therefore apply. Section 6(1A) deemed residence does not catch an OCI, because it specifically requires Indian citizenship.

Permanent returners — "year of return" planning

The classical planning question: should I return on 1 April or on 30 September? The answer depends on what you are optimising for.

Return on 1 April → full year's presence, Resident → RNOR. Foreign salary after return is taxable in India (as it is received by an Indian resident, even if work is performed abroad or earned during an overlap period) unless the specific DTAA article relieves it.
Return on 30 September → ~182 days in India, potentially NRI for that year (if prior-year rule is not triggered). Your foreign salary for the first half of the year is cleanly outside Indian tax. Next year you start as a Resident → RNOR.
Return late in the year (e.g., 1 February) → clearly NRI for that year. Next year starts as Resident → RNOR.

The right answer depends on where the income mix sits. For most returners with stable foreign salary and significant foreign investment income, returning late in the Indian financial year preserves NRI status for the year of return and preserves foreign income from Indian tax; the full RNOR window then runs from the next financial year.

Common pitfalls

Ignoring the 60-day limb because "I was here less than 182 days". The 60-day + 365-day test catches many travellers who visit India often.
Counting the year of departure or arrival wrong. Day of arrival and day of departure both count as India days, not abroad days.
Forgetting Section 6(1A) if you are an Indian citizen in a no-tax or low-tax jurisdiction. A 0-day visit to India does not save you if you earn ₹20 lakh in Indian income and have no foreign tax net. Maintain foreign tax residency evidence (TRC).
Relying on OCI to escape Section 6(1A). OCIs are outside the deeming rule — but only because they are foreign citizens. An Indian citizen applying for OCI after the fact does not retroactively escape 6(1A) for pre-OCI years.
Missing the RNOR window. A returner who mis-characterises themselves as ROR in year 1 voluntarily brings foreign income into the Indian tax net that was never going to be subject to Indian tax.
Not keeping a travel log. If you are in an AO dispute three years later, reconstructing day count from memory or partial records is painful.
Using calendar year instead of financial year. India's tax year is 1 April to 31 March. Annualising a calendar-year US schedule directly will mislead.

Bottom line

Residential status under the Indian tax system is mechanical — it is a day-count question, modified by the 120-day / 182-day special thresholds, and overlaid with the Section 6(1A) deemed-resident rule for Indian citizens earning meaningful Indian income while paying tax nowhere. Know where you sit before you plan the year — and particularly before you plan a permanent return. The Income-tax Act 2025 preserves the framework; the numbers and logic above will continue to drive individual tax outcomes for NRIs through the 2026-27 assessment year and onwards.