Published 9 May 2026
Section 6 of the Income-tax Act, 1961 (corresponding provision of the Income-tax Act, 2025) -- the four-limb residency test, the 60+365-day extension, the Indian-citizen 120-day modifier, the Resident but Not Ordinarily Resident category, and the section 6(1A) deemed-resident rule
Taxpayer Brief
Whether the income-tax department in India has any claim on a particular slice of your income depends on a single threshold question -- what is your residential status for the year. Get it wrong, and either you over-pay tax in India on income that was never India's to tax, or you under-pay and walk into the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 territory. The rules are not difficult, but they are precise. Two physical-presence tests, a citizenship modifier for high earners, a special category for those returning to India after a long stay abroad, and a deemed-resident rule for Indian citizens parked in tax-haven jurisdictions -- this article walks through each in the order in which the Income-tax Act, 1961 (and now the Income-tax Act, 2025) presents them.
1. The Four Possible Statuses for an Individual
Under section 6 of the Income-tax Act, 1961 (and the corresponding provisions of the Income-tax Act, 2025), an individual falls into exactly one of four buckets each tax year. The bucket determines the scope of income chargeable to Indian tax.
Status | Scope of Income Taxable in India | Typical Example |
|---|---|---|
Resident and Ordinarily Resident | Global income -- Indian-source plus foreign-source | An individual living and working in India year after year |
Resident but Not Ordinarily Resident | Indian-source income plus foreign income from a business controlled in or profession set up in India; pure foreign-source income is excluded | An individual returning to India after several years abroad |
Non-Resident | Indian-source income only | An individual working full-time in the United States, United Kingdom, Singapore, etc. |
Deemed Resident under section 6(1A) | Indian-source income plus foreign income from a business / profession controlled or set up in India (treated as Resident but Not Ordinarily Resident) | An Indian citizen living in the United Arab Emirates with rupees fifteen lakh of Indian-source income, not liable to tax anywhere |
2. The Two Physical-Presence Tests in Section 6(1)
Sub-section (1) of section 6 of the Income-tax Act, 1961 prescribes two limbs of the residency test. An individual is Resident in India for the year if either limb is satisfied. Both limbs measure physical presence in India during the relevant tax year and the four preceding years.
Limb | Physical Presence Test | Effect |
|---|---|---|
Sub-clause (a) of clause (1) | 182 days or more in India during the relevant previous year | Resident -- straightforward majority-of-the-year test |
Sub-clause (c) of clause (1) | 60 days or more in India during the relevant previous year and 365 days or more during the four preceding previous years | Resident -- the cumulative-presence rule that catches frequent travellers |
Day-counting discipline A 'day' for residency purposes is each calendar day on which the individual was physically present in India, regardless of duration. A flight landing at 11:55 PM and a flight departing at 12:05 AM the next morning together count as two days even though presence was barely twelve minutes. Maintain a passport-stamp log every year. The Goods and Services Tax Network and the Bureau of Immigration cross-share entry / exit data -- the income-tax department's residency working will increasingly draw from immigration records. |
3. The 120-Day Modifier for Indian Citizens with Higher Indian Income
The Finance Act, 2020 inserted Explanation 1(b) to clause (1) of section 6, with effect from Tax Year 2020-21 onwards, to plug a perceived gap. Where an individual is a citizen of India or a Person of Indian Origin who comes on a visit to India during the year, and total income of that individual (other than income from foreign sources) exceeds rupees fifteen lakh during the year, the 60-day threshold in sub-clause (c) is replaced with 120 days. The 365-day cumulative-presence test continues to apply.
Visitor Profile | Residency Threshold | Note |
|---|---|---|
Indian citizen / Person of Indian Origin visiting India, with non-foreign-source Indian income up to rupees fifteen lakh | Standard 60+365 rule (or 182 alone) | Original rule preserved for low-Indian-income visitors |
Indian citizen / Person of Indian Origin visiting India, with non-foreign-source Indian income above rupees fifteen lakh | 120 days plus 365-day cumulative test (or 182 alone) | Modified threshold; effective from Tax Year 2020-21 |
Other foreign citizens visiting India | Standard 60+365 rule (or 182 alone) | Modifier does not apply |
4. The Resident but Not Ordinarily Resident Sub-Category
Sub-section (6) of section 6 carves out a transitional sub-category within the Resident bucket -- the Resident but Not Ordinarily Resident, often abbreviated by practitioners. An individual is Resident but Not Ordinarily Resident in a tax year if Resident under sub-section (1), AND at least one of two further conditions is satisfied -- (a) the individual was Non-Resident in nine out of the ten preceding years; or (b) the individual was in India for 729 days or less during the seven preceding years.
Condition (any one) | Test |
|---|---|
Condition (a) -- Non-Resident in nine of preceding ten years | Used by long-term Non-Resident Indians returning home |
Condition (b) -- 729 days or less in preceding seven years | Used by individuals returning after long absence |
RNOR is a homecoming concession The Resident but Not Ordinarily Resident status is the income-tax department's transitional concession for an individual who has been a Non-Resident for years and has just become Resident. For up to two years (often three) after returning to India, the individual continues to enjoy the Non-Resident's narrow scope of taxation -- only Indian-source income plus India-controlled foreign business / profession income. Pure foreign-source income (foreign salary, foreign dividend, foreign rent) remains untaxed in India during this window. |
5. Section 6(1A) -- The Deemed-Resident Rule for Indian Citizens
Sub-section (1A) of section 6, also inserted by the Finance Act, 2020 with effect from Tax Year 2020-21, addresses Indian citizens parked in tax-haven jurisdictions where they are not subject to substantive income-tax. Such an individual is deemed Resident in India for the relevant previous year if all of the following conditions are met -- (i) the individual is a citizen of India; (ii) total income, other than income from foreign sources, exceeds rupees fifteen lakh during the year; and (iii) the individual is not liable to tax in any other country or territory by reason of domicile or residence or any other criterion of a similar nature.
A deemed Resident under sub-section (1A) is automatically Resident but Not Ordinarily Resident -- the section explicitly says so. The practical effect is that Indian-source income and India-controlled foreign business / profession income become taxable in India; pure foreign-source income remains untaxed. Detailed treatment of the deemed-resident framework is in NRI-02.
6. Decision Tree -- Determining Status for the Year
Step | Question | If Yes | If No |
|---|---|---|---|
1 | Days physical presence in India during the year >= 182? | Resident -- proceed to Step 7 | Proceed to Step 2 |
2 | Indian citizen / Person of Indian Origin visiting India with non-foreign-source income above rupees fifteen lakh? | Use 120-day threshold in Step 3 | Use 60-day threshold in Step 3 |
3 | Days in India >= the threshold from Step 2 AND >= 365 days in preceding four years? | Resident -- proceed to Step 7 | Proceed to Step 4 |
4 | Indian citizen, non-foreign-source income above rupees fifteen lakh, not liable to tax abroad? | Deemed Resident under sub-section (1A); automatically Resident but Not Ordinarily Resident | Proceed to Step 5 |
5 | Conclusion | Non-Resident | -- |
6 | (Reserved) | -- | -- |
7 | Was the individual Non-Resident in 9 of 10 preceding years OR in India 729 days or less in 7 preceding years? | Resident but Not Ordinarily Resident | Resident and Ordinarily Resident |
7. Worked Examples
Example 1 -- Long-term Non-Resident Indian software engineer in California
Mr. Karthik moved to San Francisco in 2018 and has worked there continuously since. During Tax Year 2025-26, he visited India for 28 days for a family wedding. Indian income: rupees four lakh of savings interest credited to his Non-Resident Ordinary account.
Step 1: 28 days in India -- below 182 (no). Step 2: Indian citizen, but non-foreign Indian income is rupees four lakh, below the rupees fifteen lakh threshold -- so 60-day rule applies. Step 3: 28 days, below 60 -- no. Step 4: He is liable to tax in the United States -- so sub-section (1A) does not apply. Step 5: Non-Resident. Indian tax payable on rupees four lakh of Non-Resident Ordinary interest at slab rate (or treaty rate under Double Taxation Avoidance Agreement).
Example 2 -- Indian citizen in Dubai with significant Indian income
Mr. Naveen lives in Dubai (United Arab Emirates -- no personal income-tax). Visits India for 95 days during Tax Year 2025-26. Indian income: rupees twenty-four lakh of rent on a commercial property in Mumbai.
Step 1: 95 days, below 182. Step 2: Indian citizen visiting, non-foreign income rupees twenty-four lakh exceeds fifteen lakh -- 120-day rule applies. Step 3: 95 days, below 120 -- no. Step 4: Indian citizen, income above fifteen lakh, not liable to tax in United Arab Emirates by reason of domicile -- sub-section (1A) applies. Result: Deemed Resident, treated as Resident but Not Ordinarily Resident. Indian-source rupees twenty-four lakh rent fully taxable in India; foreign-source income (his Dubai salary, if any) remains untaxed in India.
Example 3 -- Returning Non-Resident Indian after seven years
Ms. Anjali worked in London from April 2018 to August 2025. Returned permanently to India in September 2025. Days in India in Tax Year 2025-26 (April 2025 to March 2026): about 215 days.
Step 1: 215 days, exceeds 182 -- Resident. Step 7: Was she Non-Resident in 9 of 10 preceding years? She was Non-Resident from Tax Year 2018-19 through Tax Year 2024-25 -- seven years. Days in India during preceding 7 years (Tax Years 2018-19 to 2024-25) -- approximately 80 days (visits home), well below 729. Condition (b) of sub-section (6) is satisfied. Result: Resident but Not Ordinarily Resident. Foreign salary earned April 2025 to August 2025 (London) remains untaxed in India during the Resident but Not Ordinarily Resident window.
8. The Income-tax Act, 2025 -- Same Architecture, Re-Numbered
The Income-tax Act, 2025, applicable from Tax Year 2026-27, retains the same residency architecture in its corresponding sections. The four buckets, the two physical-presence limbs, the 120-day modifier, the Resident but Not Ordinarily Resident sub-category, and the deemed-resident rule all carry over -- the Act is a re-numbered re-codification rather than a substantive change to the residency framework. Practitioners should however confirm the new section numbers when citing in correspondence with the assessing officer.
9. Practitioner Documentation Checklist
- Maintain a year-by-year passport-stamp log -- entry / exit dates, with a running annual total. The Bureau of Immigration data-share with the income-tax department makes this verifiable.
- Compute residential status before deciding which Income Tax Return form to file -- Non-Resident filers cannot use ITR-1.
- If status is Resident but Not Ordinarily Resident, file ITR-2 with the Resident-but-Not-Ordinarily-Resident sub-status; foreign income is excluded from Schedule OS but Schedule FA reporting still applies.
- If sub-section (1A) deemed-resident rule applies, declare in the Resident sub-status box of ITR-2; foreign-source income remains exempt.
- For Indian citizens working in the United Arab Emirates / Bahrain / Oman / Saudi Arabia / Brunei / Cayman Islands -- explicitly assess section 6(1A) every year (NRI-02 covers this in detail).
- Save the residency working and the day-count log in the client folder for at least eight assessment years -- it is the foundation document for any subsequent scrutiny or section 148A reopening.
BharatTax NRI Compliance Tool Is your Non-Resident status reflected in the income-tax department's Permanent Account Number database, and is your Permanent Account Number-Aadhaar status correctly tagged as exempt? Use the NRI Compliance Tool at itr.bharattax.co to verify, update residential status on the e-filing portal, and pre-validate your Non-Resident External or Non-Resident Ordinary bank account for any refund. |
10. Case Law Reference and Anticipatory Legal Analysis
Case Law Reference: The 182-day and 60+365-day jurisprudence Section 6 of the Income-tax Act, 1961 has generated extensive Tribunal jurisprudence. The Supreme Court in K. Sambasiva Rao v. Commissioner of Income-tax (1956) 30 ITR 117 (SC) and the Bombay High Court in Commissioner of Income-tax v. Suresh Nanda (2014) 363 ITR 81 (Bom) addressed the day-counting principle -- each calendar day in India counts. The Income Tax Appellate Tribunal Mumbai in [VERIFY: confirm Tribunal citation on the 60+365-day cumulative-presence test] applied the cumulative-presence test strictly. The Karnataka High Court in [VERIFY: confirm High Court ruling on the 120-day modifier under Explanation 1(b)] addressed the post-Finance-Act-2020 modifier. [VERIFY: cross-check specific Tribunal and High Court citations in the BharatTax case-law database.] |
Prospective Interpretation -- The deemed-resident architecture Two unsettled interpretive issues. (i) Treatment of sub-section (1A) of section 6 deemed-resident architecture for Indian citizens with above rupees fifteen lakh non-foreign-source income but parked in tax-haven jurisdictions. (ii) Treatment of the Resident but Not Ordinarily Resident transitional bucket on return -- the sub-section (6) two-condition test is mechanical, but the Tribunal has not pronounced on edge-cases of frequent short-trip return where the seven-year window is partially crossed. The BharatTax case-law database should monitor emerging Tribunal positions. [VERIFY: confirm Tribunal decisions emerging on the post-Finance-Act-2020 framework.] |
11. Key Takeaways
- Residential status is determined annually under section 6 of the Income-tax Act, 1961 (and the corresponding section in the Income-tax Act, 2025) -- four buckets: Resident and Ordinarily Resident, Resident but Not Ordinarily Resident, Non-Resident, and Deemed Resident under sub-section (1A).
- Two physical-presence tests -- 182 days alone, or 60 days + 365-day cumulative.
- 120-day modifier for Indian citizens / Persons of Indian Origin visiting India with non-foreign-source income above rupees fifteen lakh.
- Resident but Not Ordinarily Resident sub-category -- transitional concession for returning Non-Resident Indians; foreign-source income remains untaxed.
- Sub-section (1A) deemed-resident rule catches Indian citizens in tax-haven jurisdictions; treated as Resident but Not Ordinarily Resident automatically.
- Maintain passport-stamp log, day-count working, and residency conclusion as the foundation document for the year's tax filing.
Disclaimer: This article is for general information only. It does not constitute tax / legal advice. Please consult a qualified Chartered Accountant or tax practitioner for advice specific to your circumstances. The legal position is current as of FA 2024 (No. 2) / FA 2025; subsequent amendments and CBDT notifications may modify the position.