Residence in India

Section 6 — RESIDENCE IN INDIA

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).