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…
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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…
Section 6 — RESIDENCE IN INDIA
STATUTORY ARCHITECTURE — Residence Tests for Individual
An individual is RESIDENT in India in any tax year if EITHER —
These are s.6(2)(a) and (b) of the 2025 Act (formerly s.6(1)(a) and (c) of the 1961 Act). Carve-outs to the 60-day test (raising it to 182 days for these categories, under s.6(3) to (5)): (i) Indian citizen leaving India as a member of the crew of an Indian ship or 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(7)
Section 6(7) of the 2025 Act (formerly s.6(1A) of the 1961 Act, inserted by the Finance Act, 2020) deems 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(13))
Under s.6(13) of the 2025 Act (formerly s.6(6) of the 1961 Act), a person who is resident is not ordinarily resident if he —
— 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 s.6(3) of the 1961 Act '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 s.6(10) of the 2025 Act.
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
rule 8 of the Income-tax Rules, 2026, made for s.6(6) (rule 126 of the Income-tax Rules, 1962 under the 1961 Act) — computation of the period of stay in India of an individual who is a citizen of India and a member of the crew of a foreign-bound ship: the period of an eligible voyage, between the dates of joining and signing off entered in the Continuous Discharge Certificate, is excluded. Rule 75 of the Income-tax Rules, 2026 (rule 21AB of the Income-tax Rules, 1962) — information to be furnished by a non-resident claiming treaty relief, in Form No. 41 (formerly Form No. 10F), and the application by a resident for a certificate of residence in Form No. 42, issued in Form No. 43. CBDT Circular No. 11 of 2020 dated 8 May 2020 (F. No. 370142/18/2020-TPL), issued under s.119 of the 1961 Act — for determining residential status under s.6 of the 1961 Act for the previous year 2019-20 only, an individual who came to India on a visit before 22 March 2020 and could not leave by 31 March 2020 excludes the stay from 22 March to 31 March 2020, with corresponding exclusions for periods of quarantine and for departures on evacuation flights. The circular does not deal with the deemed-residence rule in s.6(1A) of the 1961 Act.
PRACTICAL POINTS & LITIGATION DEFENCE
(i) For an Indian citizen or person of Indian origin coming on a visit to India whose total income, other than income from foreign sources, exceeds ₹15 lakh, the 60-day limb of s.6(2)(b) of the 2025 Act is read as 120 days (s.6(4) and (5); formerly clause (b) of Explanation 1 to s.6(1) of the 1961 Act), so stays are counted from passport entry and exit records. (ii) Deemed resident u/s 6(7) of the 2025 Act (formerly s.6(1A) of the 1961 Act) for high-net-worth Indian citizens not liable to tax anywhere — major anti-avoidance rule. FOREIGN-COUNTRY tax residency is the decisive fact; a TRC from the foreign jurisdiction is evidence against the condition in s. 6(7)(b). (iii) RNOR status (returning NRIs) rests on evidence of foreign residency (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, POEM exposure is tested on the ABOI test, with board meeting locations, executive residency and revenue split as the relevant facts. (v) Day-count disputes are governed by Pradip J. Mehta and Suresh Nanda on precise computation — including arrival/departure days, checked against passport stamps.
CROSS-REFERENCES