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Whether you're an NRI for tax purposes comes down to a strict day-count test, not your passport or how long you've lived abroad — get it wrong and you could owe tax on income you thought was safely offshore.
Residential status is determined fresh every tax year under Section 6 of the Income Tax Act, 2025 — the same section number carried over from the 1961 Act. You're a Resident if you meet either of these conditions:
Condition A: You were in India for 182 days or more during the tax year, OR
Condition B: You were in India for 60 days or more during the tax year, AND 365 days or more across the preceding 4 years.
If you meet neither condition, you're a Non-Resident Indian (NRI) for that year. This is decided year by year — you can be resident one year and NRI the next depending purely on your day count.
Condition B's 60-day threshold is relaxed to 182 days (effectively removing Condition B) for two specific groups:
| Who qualifies | Relaxed threshold |
|---|---|
| Indian citizens leaving India for employment abroad, or as a crew member of an Indian ship | 182 days (not 60) |
| Indian citizens or Persons of Indian Origin (PIOs) visiting India | 182 days, subject to the 120-day high-income rule below |
This is why a person who leaves India mid-year for a new job abroad usually stays a resident that year, but becomes an NRI the following year — the relaxation only protects the year of departure and applies specifically to leaving for employment, not for job-hunting or freelance work abroad.
Effective from 1 April 2026, the 182-day relaxation for visiting citizens/PIOs shrinks to 120 days if both of these apply:
Total Indian income exceeds ₹15 lakh in the tax year (excluding foreign income), AND
You were in India for 120 days or more (but less than 182), and stayed 365+ days across the preceding 4 years.
Meeting this test doesn't make you a full Resident — it makes you Resident but Not Ordinarily Resident (RNOR), a middle category explained below. This rule specifically targets high-earning NRIs who visit India frequently while keeping most of their income offshore.
| Status | What gets taxed in India |
|---|---|
| Non-Resident (NRI) | Only income earned or received in India |
| Resident but Not Ordinarily Resident (RNOR) | Indian income + foreign income only if derived from an Indian business/profession |
| Resident and Ordinarily Resident (ROR) | Global income — everything, everywhere |
You land in RNOR (rather than jumping straight to full Resident) if you've been a non-resident in 9 of the preceding 10 years, or present in India for 729 days or fewer across the preceding 7 years. This matters most in transition years — the year you move back to India, RNOR status can shield your foreign salary, pension, or investment income from Indian tax for a year or two before ROR status kicks in.
A separate provision — Section 6(7) of the 2025 Act (previously Section 6(1A) of the 1961 Act) — deems an Indian citizen a resident even with zero days in India, if their Indian income exceeds ₹15 lakh and they aren't liable to tax in any other country. This targets citizens structuring their affairs to avoid tax residency anywhere. If deemed resident under this clause, you default to RNOR status, not full Resident.
1. Assuming NRI status is permanent once granted. It's reassessed every single tax year based on that year's day count — a long India trip for a family emergency can flip you back to Resident.
2. Confusing the FEMA definition of NRI with the Income Tax definition. They use different day-count rules and different purposes (banking/investment vs. taxation) — being NRI under one doesn't automatically mean NRI under the other.
3. Missing the 120-day trap. High earners who visit India for 4-5 months a year assuming the old 182-day cushion still fully applies can be surprised to land in RNOR status instead of NRI.
Key Takeaway: Residential status still lives in Section 6 of the new Act, unchanged in substance from the 1961 Act — 182 days, or 60+365 days, with relaxations for those leaving for employment. The one real shift is the 120-day rule for visiting NRIs/PIOs earning over ₹15 lakh in India, effective from FY 2026-27. Want to know which bank accounts you can actually use once you've confirmed NRI status? See NRE vs NRO Accounts Explained.
No — FEMA uses its own residency test tied to the purpose and duration of stay for banking and investment purposes, while the Income Tax Act uses the day-count tests under Section 6. It's possible to be a resident under one and non-resident under the other in the same year.
No — the core tests remain in Section 6, unchanged in wording and numbering from the 1961 Act. The main substantive change is the 120-day rule for high-income visiting NRIs/PIOs, effective from FY 2026-27.
RNOR status means your Indian income is taxed, and so is any foreign income derived from an Indian business or profession — but other foreign income generally stays outside Indian tax, unlike a full Resident whose global income is taxed.
Yes, if your stay crosses 182 days in a tax year, or crosses 60 days (120 days for high earners) combined with 365+ days over the preceding 4 years, you'll be classified as Resident or RNOR for that year instead of NRI.
Disclaimer: This article is for general educational purposes only and does not constitute personalized financial, investment, tax, or legal advice. Figures, rates, and rules mentioned may change over time — verify current details with an official source or a qualified professional before making financial decisions.