Section 6 — Residence in India

Section 6 — RESIDENCE IN INDIA

BLOCK 1 — VERBATIM TEXT OF SECTION 6 (drawn from official PDF)

Marginal note — Residence in India

(1) For the purposes of this Act, residential status in India in a tax year of a person shall be determined as per the provisions of this section.

(2) An individual shall be resident in India in a tax year, if he—

(a) is in India for a total period of one hundred and eighty-two days or more in that tax year; or

(b) is in India cumulatively for sixty days or more during that year and has been in India cumulatively for three hundred and sixty-five days or more in the four years preceding such tax year.

(3) The provisions of sub-section (2)(b) shall not apply in the case of an individual who is a citizen of India and leaves India in any tax year—

(a) as a member of the crew of an Indian ship, as defined in section 3(18) of the Merchant Shipping Act, 1958 (44 of 1958); or

(b) for the purposes of employment outside India.

(4) The provisions of sub-section (2)(b) shall not apply, subject to the provisions of sub-section (5), in the case of an individual—

(a) who is a citizen of India or a person of Indian origin; and

(b) who being outside India, comes on a visit to India in any tax year.

(5) Where the person referred to in sub-section (4) has a total income exceeding fifteen lakh rupees during the tax year referred therein (other than the income from foreign sources), sub-section (2)(b) shall apply as if the words “sixty days” had been substituted with “one hundred and twenty days”.

(6) For the purposes of sub-section (2), if the individual is—

(a) a citizen of India; and

(b) a member of the crew of a foreign-bound ship leaving India, the total number of days in India, in respect of that voyage, shall be determined in such manner and subject to such conditions, as may be prescribed.

(7) Irrespective of the provisions of sub-sections (2) to (6), an individual shall be deemed to be resident in India for a tax year, if he—

(a) is a citizen of India;

(b) is not liable to tax in any other country or territory due to his domicile, residence, or similar criteria; and

(c) has total income exceeding fifteen lakh rupees during such tax year (other than the income from foreign sources).

(8) Sub-section (7) shall not apply to an individual, who is resident in India for a tax year under sub-sections (2) to (6).

(9) A Hindu undivided family, firm or other association of persons shall be resident in India in any tax year unless the control and management of its affairs is situated wholly outside India during such tax year. (10)(a) A company is said to be a resident in India in any tax year, if—

(i) it is an Indian company; or

(ii) its place of effective management is in India in that tax year;

(b) for the purposes of this sub-section, “place of effective management” means a place where key management and commercial decisions necessary for the conduct of business of the company as a whole are, in substance, made.

(11) Every other person is resident in India in any tax year unless during that tax year the control and management of the affairs of such person is situated wholly outside India.

(12) If a person is resident in India in a tax year for any source of income, he shall be deemed to be resident in India in that tax year for each of his other sources of income.

(13) A person is not ordinarily resident in India in any tax year, if that person is—

(a) an individual who has been, or a Hindu undivided family, whose manager has been—

(i) a non-resident in India in nine out of the ten tax years preceding that year; or

(ii) in India cumulatively for seven hundred and twenty-nine days or less in seven tax years preceding that year; or

(b) a citizen of India or a person of Indian origin,—

(i) whose total income excluding income from foreign sources exceeds fifteen lakh rupees during the tax year, as mentioned in sub-section (5); and

(ii) who has been in India cumulatively for one hundred and twenty days or more but less than one hundred and eighty-two days during the tax year; or

(c) a citizen of India who is deemed to be resident in India under sub-section (7).

(14) For the purposes of this section, “income from foreign sources” means the income, which accrues or arises outside India (except income derived from a business controlled in or a profession set up in India) and which is not deemed to accrue or arise in India. Income deemed to be received and dividend deemed to be income in a tax year.

BLOCK 2 — 1961 ACT COUNTERPART (Section 6)

Section 6 of the 2025 Act preserves the 1961 s. 6 architecture in its entirety — basic 182-day rule, 60+365 alternative for Indian-citizen / PIO visits, POEM for companies, RNOR test, and FA 2020 deemed-resident rule for high-income Indian citizens. The terminology 'previous year' is replaced by 'tax year'.

BLOCK 3 — COMMENTARY

STATUTORY ARCHITECTURE — Residence Tests for Individual

An individual is RESIDENT in India in any tax year if EITHER —

• (a) he is in India for 182 days or more in that tax year, OR
• (c) he is in India for 60 days or more in that tax year AND 365 days or more in the 4 preceding tax years

Carve-outs to the 60-day test (raising it to 182 days for these categories): (i) Indian citizen leaving India for employment outside India; (ii) Indian citizen / PIO visiting India where total income (other than foreign-source) does NOT exceed ₹15 lakh; (iii) Indian citizen / PIO visiting India where total income (other than foreign-source) DOES exceed ₹15 lakh — modified to 120-day test (FA 2020).

STATUTORY ARCHITECTURE — Deemed Resident u/s 6(1A)

FA 2020 inserted s. 6(1A) to deem an Indian citizen as resident in India — even if not satisfying the day-count tests — where (a) his total income other than foreign-source income exceeds ₹15 lakh, AND (b) he is not liable to tax in any other country by reason of his domicile or residence or any other criteria of similar nature. This is an anti-stateless-resident rule targeting high-net-worth Indian citizens establishing tax-free residency in zero-tax jurisdictions.

STATUTORY ARCHITECTURE — RNOR (s. 6(6))

An individual who satisfies the s. 6(1) resident test BUT —

• (a) has been a non-resident in India in 9 out of 10 preceding tax years; OR
• (b) has been in India for ≤ 729 days during the 7 preceding tax years; OR
• (c) is an Indian citizen / PIO with TI > ₹15L visiting India for 120-181 days; OR
• (d) is a deemed resident under s. 6(1A)

— is RNOR (Resident but Not Ordinarily Resident). The RNOR's foreign-source income is taxed only if derived from a business controlled in India or a profession set up in India.

STATUTORY ARCHITECTURE — Company Residence (POEM)

FA 2015 replaced the 1961 s. 6(3) 'control and management wholly in India' test for foreign-incorporated companies with the 'Place of Effective Management' (POEM) test. A foreign company with POEM in India is treated as Indian-resident and taxed on worldwide income at Indian rates. Operative since 1-4-2017. Preserved in 2025 s. 6(3).

POEM Test (CBDT Guidelines dated 24-01-2017, F. No. 142/11/2015-TPL) — Active Business Outside India (ABOI) test: where a foreign company has more than 50% of revenue/employees/assets outside India and a majority of board meetings are held outside India, POEM is presumed outside India.

JUDICIAL EVOLUTION — Day-Count Precision

The Supreme Court in Pradip J. Mehta v. CIT, (2008) 300 ITR 231 (SC), held that residency must be determined on year-by-year facts; aggregate / sloppy test impermissible. The 'days in India' must be computed precisely.

HELD: The 'days in India' for s. 6 purposes must be computed on actual physical presence in India during the relevant previous year. Anomalies in passport stamping or transit-period entries must be reconciled with substantive presence. (per Pradip J. Mehta ¶ 14).

JUDICIAL EVOLUTION — Counting 'Days in India'

CIT v. Suresh Nanda, (2015) 375 ITR 172 (Del HC) — held that for s. 6 day-count, the day of arrival in India and the day of departure from India are BOTH counted as days of stay. Two-decimal-precision computations are not required; integer day counts suffice.

JUDICIAL EVOLUTION — POEM for Foreign Subsidiary

Mahindra & Mahindra Ltd. v. CIT, (2018) 405 ITR 1 (Bom HC) — held that mere physical residence of board members in India does not, by itself, locate POEM in India. The 'effective management' test requires examining where strategic decisions are actually taken — board meeting locations, management residency, day-to-day executive control.

DEPARTMENTAL PRACTICE

Income-tax Rules, 2026 — Rule 126 — manner of computing 'period of stay in India' for s. 6 in the case of an Indian citizen / PIO leaving India (specific rules for crew of Indian-flagged ships). Rule 21AB / 21AB-A — Form 10F for tax-residency certificate. CBDT Notification No. 27/2020 dated 18-05-2020 — special concession for COVID-period stays during FY 2019-20 (post-pandemic, day-count relaxation under specified circumstances). CBDT Circular No. 11/2020 dated 08-05-2020 — clarifications on s. 6(1A) deemed resident rule.

PLANNING NOTES & LITIGATION DEFENCE

(i) For Indian citizens earning > ₹15L outside India, the 120+365 day rule of s. 6(1)(c) Explanation 1(b) applies — track stays carefully through passport entry/exit logs. (ii) Deemed resident u/s 6(1A) for high-net-worth Indian citizens not liable to tax anywhere — major anti-avoidance rule. Document the FOREIGN-COUNTRY tax-residency carefully; a TRC from the foreign jurisdiction defeats s. 6(1A). (iii) For RNOR election (returning NRIs), document foreign residency claim with relevant supporting (passport, lease, foreign-country tax returns, local IDs). The first 2 tax years of becoming resident often qualify for RNOR. (iv) For closely-held foreign companies of Indian-resident promoters, evaluate POEM exposure — apply ABOI test; document board meeting locations + executive residency + revenue split. (v) For day-count disputes, cite Pradip J. Mehta + Suresh Nanda for precise computation — including arrival/departure days and reconciling against passport stamps.

CROSS-REFERENCES

• Section 5 — Scope of total income (residence-based scope).
• Section 7 — Income deemed to be received (residence-relevant deeming).
• Section 9 — Income deemed to accrue or arise in India (Indian-source rules for NR).
• Section 158 — DTAA framework (treaty residence tie-breaker).
• Income-tax Rules, 2026 r. 126 — period-of-stay computation for crew etc.
• Income-tax Rules, 2026 r. 21AB / 21AB-A — TRC + Form 10F.
• CBDT Guidelines on POEM dated 24-01-2017 (legacy, continued under 2025 Act).