Your residential status income tax position decides what India taxes: a resident pays on worldwide income, while a non-resident (NRI) pays only on income earned or received in India. Under section 6 you are resident for the year if you spend 182 days or more in India, or 60 days or more in the year plus 365 days or more in the four years before it.
The 60-day test is relaxed for Indian citizens and persons of Indian origin who visit, and for citizens who leave for a job abroad. Status is fixed afresh every year. The rules below apply to FY 2025-26; the 2025 Act keeps the same tests for tax year 2026-27. Other income heads are explained in the five heads guide.
Quick facts
Basic test
182 days or more in India in the yearSecond test
60 days in the year and 365 days in the previous four yearsVisiting Indian citizen or PIO
60 days becomes 182; or 120 days if Indian income is above ₹15 lakhDeemed resident
Citizen with Indian income above ₹15 lakh, not taxable in any other countryNRI taxed on
Income earned, accrued or received in IndiaTreaty relief
DTAA under section 90, or section 91 where no treatyLaw for tax year 2026-27
Section 6, Income-tax Act, 2025
Residential status income tax tests under section 6
| Person | Resident if in India for |
|---|---|
| Any individual | 182 days or more in the year |
| Any individual (second test) | 60 days or more in the year and 365 days or more in the four years before |
| Indian citizen leaving India for employment, or as crew of an Indian ship | 182 days or more; the 60-day test does not apply |
| Indian citizen or person of Indian origin visiting India, Indian income up to ₹15 lakh | 182 days or more |
| Indian citizen or person of Indian origin visiting India, Indian income above ₹15 lakh | 182 days, or 120 days plus 365 days in the previous four years |
Indian income here means income other than from foreign sources. A day of arrival and a day of departure are both usually counted as days in India, so keep passport stamps and tickets.
Resident but not ordinarily resident (RNOR)
A resident is treated as not ordinarily resident in any of these cases:
- He was non-resident in nine of the ten years before this one, or
- He was in India for 729 days or less in the seven years before this one, or
- He becomes resident only through the 120-day rule, or
- He is a deemed resident: an Indian citizen with Indian income above ₹15 lakh who is not liable to tax in any other country because of residence or domicile.
RNOR status matters most to people moving back to India. For the first two or three years their foreign salary, foreign rent and foreign interest usually stay outside Indian tax.
What each status pays tax on
| Income | Resident (ordinarily) | RNOR | Non-resident |
|---|---|---|---|
| Received or earned in India | Taxed | Taxed | Taxed |
| Earned abroad from a business controlled or profession set up in India | Taxed | Taxed | Not taxed |
| Other income earned and received abroad | Taxed | Not taxed | Not taxed |
Interest on an NRE account is exempt under section 10(4)(ii) for a person who is resident outside India under the exchange control rules. A resident must also report foreign assets in the return. NRIs and RNORs do not fill the foreign asset schedule.
Worked example: is Ravi an NRI for FY 2025-26?
Facts. Ravi, an Indian citizen working in the Gulf, spends 75 days in India in FY 2025-26. Over the previous four years he spent 400 days in India.
Step 1. 75 days is below 182, so the basic test fails.
Step 2. He is a citizen visiting India. If his Indian income (rent and NRO interest) is ₹6 lakh, the 60-day test is replaced by 182 days, so he is a non-resident. India taxes only the ₹6 lakh.
Step 3, change one fact. If his Indian income were ₹18 lakh and he spent 130 days in India, the 120-day test with 400 earlier days would make him resident, but only RNOR. His Gulf salary would still stay outside Indian tax.
NRI income tax rules and regulations: slabs, TDS and returns
- Slabs: NRIs use the same new or old regime slabs as residents. The section 87A rebate is only for residents, so an NRI with ₹10 lakh of Indian income pays tax that a resident would not.
- Senior slabs: the higher old regime exemption for those aged 60 and over is only for residents.
- TDS: banks deduct tax on NRO interest at 30% plus surcharge and cess unless a treaty rate is claimed. A buyer of property from an NRI deducts TDS under section 195; see TDS on NRI property.
- Return: file ITR-2, or ITR-3 if there is business income. ITR-1 is not open to NRIs. For AY 2026-27 the due date for non-audit cases was 31 July, with belated returns till 31 December.
DTAA income tax relief
A DTAA (double taxation avoidance agreement) is a treaty between India and another country that decides which country taxes an item and at what maximum rate. Under section 90 you may use the treaty rate if it is lower than Indian law. Where there is no treaty, section 91 gives a one-sided credit.
- Get a tax residency certificate (TRC) from the country where you live.
- File Form 10F on the e-filing portal and give it with the TRC to the Indian payer so TDS is cut at the treaty rate.
- A resident claiming credit for tax paid abroad files Form 67 with or before the return.
- Claim the relief in the ITR schedules for foreign tax and treaty income.
Notices sent to NRIs often come from a mismatch between AIS entries and the return, for example a property sale with no capital gains shown. Answer them on the portal under Pending Actions.
Residence under the Income-tax Act, 2025
| Point | FY 2025-26 | Tax year 2026-27 |
|---|---|---|
| Law | 1961 Act: section 6 | 2025 Act: section 6 again |
| Day tests | 182 days; 60 plus 365 | Same tests |
| 120-day and deemed resident rules | ₹15 lakh Indian income | Carried over |
| Period counted | Previous year (financial year) | Tax year |
The sub-section numbers in the new section 6 are arranged differently, so quote the test rather than an old clause number in letters to a bank or employer.
Residency mistakes to avoid
| Error | Fix |
|---|---|
| Assuming you stay an NRI after moving back | Recount each year; you may be RNOR or resident |
| Keeping NRE accounts after becoming resident | Tell the bank and convert them to resident accounts |
| Filing ITR-1 as an NRI | Use ITR-2 or ITR-3 |
| Claiming 87A as an NRI | The rebate is for residents only |
This page is a general guide to residence rules and is not personal advice. Day counts and treaty claims turn on your facts, so get them checked by a chartered accountant first.
Sources we checked
- Income-tax Act, 1961, section 6
- Income-tax Act, 2025, section 6
- Income-tax Act, 1961, sections 90 and 91
- Income-tax Act, 1961, section 10(4)(ii)
Frequently asked questions
What is residential status in income tax?
It is your tax status for a year: resident and ordinarily resident, resident but not ordinarily resident, or non-resident. It depends mainly on days spent in India and decides which income India can tax.
How is residential status as per income tax decided under section 6 of income tax act?
Section 6 sets the tests for residence of individuals, HUFs, firms and companies. For individuals it is the 182-day test and the 60 plus 365 day test, with changes for visiting citizens.
What is DTAA in income tax?
A double taxation avoidance agreement is a treaty that stops the same income being taxed fully in two countries. You claim it with a tax residency certificate and Form 10F.
Do NRIs get the ₹12 lakh tax-free limit?
No. The 87A rebate that makes income up to ₹12 lakh tax free in the new regime is only for resident individuals. NRIs get the basic slab exemption only.
Do NRIs have to file an income tax return?
Yes, when Indian income crosses the exemption slab, or to claim a refund of excess TDS.