The Basics

Each financial year, you are either a Resident or a Non-Resident (NRI) in India for tax purposes. The decision is made fresh every year.

Rule 1 — The 182-Day Rule [Section 6(1)(a)]

If you spend 182 days or more in India between April 1, 2025 and March 31, 2026, you are a Resident. Simple. If you spend less than 182 days, move to Rule 2.

Rule 2 — The 60-Day + 365-Day Rule [Section 6(1)(c)]

You are a Resident if both of these are true:

1. 1
   Current year stay
   You were in India for 60 days or more in FY 2025-26 (this threshold changes depending on who you are — see table below).
2. 2
   4-year look-back
   You were in India for 365 days or more in total across the four previous years — FY 2021-22, 2022-23, 2023-24, and 2024-25.

This rule catches frequent visitors who keep each trip short. A pattern of just 100 days a year reaches 400 days in four years — already over the 365-day limit. But the 60-day part changes depending on who you are, as set out in Explanation 1 to Section 6(1).

The Modified Thresholds — Who Gets a Longer Stay?

The 60-day limit in Rule 2 is replaced with 120 days or 182 days in specific cases:

What counts toward ₹15 lakh? Rent from Indian property, NRO account interest, dividends from Indian companies, capital gains on Indian assets, salary for services rendered in India. NRE/FCNR interest (exempt under Section 10(4)(ii)) and genuinely foreign salary or rental income do not count.

Who is a PIO? A Person of Indian Origin is someone who, or whose parent or grandparent, was born in undivided India. Most OCI cardholders qualify. A pure foreign national with no Indian ancestry is not a PIO and does not get the 182-day or 120-day relaxation.

Special note for seafarers: Under Explanation 2 to Section 6(1) read with Rule 126 of the Income Tax Rules, Indian citizens who are crew members of a foreign-bound ship can exclude the sign-on to sign-off period from their “stay in India” for that voyage. Seafarers should always assess their days using Rule 126.

The Deemed Residency Rule [Section 6(1A)]

This is a separate rule added by Finance Act 2020. It applies only to Indian citizens. You are deemed a Resident — regardless of how many days you spend in India — if both conditions are met:

• Your total income (other than income from foreign sources) exceeds ₹15 lakh in the year, AND
• You are not liable to tax in any other country by reason of domicile, residence, or any similar criterion.

If you live in a country that has income tax (USA, UK, Canada, Australia, Singapore), this rule generally does not apply — because you are liable to tax there. This rule targets Indian citizens in zero-tax countries like the UAE, Bahrain, Monaco, and the Bahamas.

If caught by this rule, you are automatically classified as RNOR under Section 6(6)(d). Only your Indian income is taxed — your foreign income remains untouched. This rule does not apply to US citizens with OCI cards, and does not apply if you are already a Resident under Section 6(1).

RNOR — A Useful Middle Category [Section 6(6)]

Once determined to be a Resident, you are further split into two categories:

Under Section 6(6)(a), you qualify as RNOR if either of these is true: (1) you were a non-resident in 9 out of the 10 previous years, OR (2) you were in India for 729 days or less during the 7 previous years. Two automatic RNOR routes were added by Finance Act 2020:

• Section 6(6)(c): An Indian citizen or PIO visiting India with income above ₹15 lakh, who was in India for 120 days or more but less than 182 days in the year, is RNOR.
• Section 6(6)(d): An Indian citizen who is deemed Resident under Section 6(1A) is automatically RNOR.

A Simple Decision Sequence

Each year, work through these steps in order:

1. 1
   Identify your category
   Indian citizen? PIO? Foreign national? Leaving for a job this year? This decides which day limit applies to you under Rule 2.
2. 2
   Count your days in India this year
   182 or more? You are a Resident. Stop here.
3. 3
   Apply Rule 2 — first leg
   Find your applicable limit (60, 120, or 182 days). Do your current-year days meet or exceed it? If yes, move on. If no, you are an NRI.
4. 4
   Apply Rule 2 — second leg
   Add up your days in India over the last 4 years. 365 or more? You are a Resident. Less than 365? You are an NRI.
5. 5
   Check the deemed residency rule
   Indian citizen with Indian income above ₹15 lakh and no tax residency anywhere? You are a deemed Resident (and automatically RNOR) under Section 6(1A) regardless of days.
6. 6
   Determine ROR or RNOR
   If you are a Resident, check whether you qualify as ROR or RNOR under Section 6(6). RNOR means only your Indian income is taxed.

Worked Examples

Three real-world scenarios to illustrate how the rules apply in practice.

Common Mistakes to Avoid

These errors regularly catch NRIs off guard and can unexpectedly trigger Resident status.

• Counting only weekdays. Every calendar day counts — weekends, festivals, and arrival/departure days too.
• Trusting the passport stamp alone. Stamps sometimes miss exit dates (especially at e-Passport gates). Cross-check with boarding passes, e-tickets, and credit card statements.
• Ignoring the 4-year look-back. Many NRIs comfortably under the limit this year forget that their last 4 years might add up to over 365 days.
• Thinking the departure-year benefit applies forever. It applies only in the year you actually leave for the job. After that, the regular 182-day or 120-day limits apply.
• Counting NRE/FCNR interest toward ₹15 lakh. This interest is exempt under Section 10(4)(ii) and is not part of total income. NRO interest, rent, Indian dividends, and Indian capital gains do count.
• Foreign nationals assuming they get PIO thresholds. A US citizen with no Indian ancestry is on the strict 60-day rule — not 182 days.

What to Do If You Are Near a Limit

If your stay is approaching 120 or 182 days, take these steps proactively.

• Maintain a day-wise calendar from April 1. Don’t rely on memory at year-end.
• Watch your ₹15 lakh income line carefully. Only Indian-sourced income counts. Crossing it drops your threshold from 182 to 120 days.
• Plan visits forward, not backward. If you have already spent 90 days by November, every further trip is risky. Consider pushing visits to the next financial year.
• Track your rolling 4-year total. A 100-day-per-year pattern reaches 400 days over four years — well above the 365-day second leg.
• Keep documents. Passport scans, flight tickets, hotel bookings, and bank statements may all be needed if your status is questioned by the Assessing Officer.

Frequently Asked Questions

Related Services

Our firm provides end-to-end NRI tax and compliance support across all aspects of your Indian financial obligations.

• NRI Taxation ServicesResidential status determination, NRI ITR filing, DTAA relief, and repatriation advisory
• Direct Tax AdvisoryIncome tax planning, ITR filing, and tax-efficient structuring for individuals and businesses
• Corporate Advisory ServicesFEMA compliance, RBI reporting, and advisory for NRIs with Indian business interests
• Business Support ServicesOutsourced accounting and financial management for NRI-owned Indian entities

This article reflects the law for FY 2025-26 (AY 2026-27) under the Income Tax Act, 1961. This is general guidance only. For advice on your specific facts, please consult a qualified Chartered Accountant.

© D P Shewale & Co LLP.